As gold prices stagnate, industry performance will be driven by production volumes.
Melbourne, Australia (PRWEB) March 22, 2014
The Gold Ore Mining industry is well established in Australia, with origins dating back to the gold rushes of the mid- to late 1800s. The industry has undergone a strong period of growth over most of the past decade. This growth stems from gold's status as a counter-cyclical commodity, meaning it is viewed as a safe haven asset during times of national and global economic uncertainty. As a result, the onset of the global financial crisis and the recessionary environment that ensued set up the perfect conditions for a modern-day gold rush. In the five years through 2013-14, industry revenue is expected to increase at an annualised 5.4%. IBISWorld industry analyst Alen Allday states, “Investors across the world flocked to gold as a safe monetary asset as the value of global financial assets and currencies tumbled.” This sudden increase in demand caused global gold prices to surge, which pushed up industry revenue and profit. According to Allday, “These conditions also prompted gold producers in Australia to expand production, as higher prices more than offset the higher cost of developing lower grade ores.” However, the gold boom could be short-lived, given gold price declines in 2012-13 and 2013-14 as the global economy strengthens. As a result of these price falls, industry revenue is expected to fall by 5.8% to $11.8 billion in 2013-14, with volumes also expected to decrease.
Over the five years through 2018-19, the industry's fortunes will be largely tied to the rise and fall of global gold prices. Gold prices are expected to fluctuate, which will expose the industry to some degree of revenue volatility. However, prices at the end of the period are expected to remain largely stagnant compared with 2013-14. As a result, the expected increase in gold production will largely drive industry performance. Overall, industry revenue is forecast to increase. However, the slow increase in gold prices and rising costs of production are expected to limit profit growth.
The Gold Ore Mining industry has a moderate level of market share concentration. The industry is also characterised by a substantial number of small gold mining companies. Typically, firms that discover and begin to develop promising ore bodies are acquired by larger players. Industry concentration has increased in the past five years. This reflects the takeover and merger activity played out on the global stage as firms have sought economies of scale to minimise mining costs per gold ounce. Industry concentration is forecast to increase in the next five years through 2018-19 as the largest companies in the industry continue to acquire smaller firms to increase production volumes. The industry’s major players include Newmont Australia, Barrick (PD), Newcrest Mining and Gold Fields Australia. For more information, visit IBISWorld’s Gold Ore Mining report in Australia industry page.
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IBISWorld industry Report Key Topics
The gold mining companies operating in the industry mine gold-bearing ore. Some firms also carry out beneficiation processes, which is are basic, preliminary processes carried out on the gold ore prior to smelting and refining. This can be carried out by floatation extraction methods. Some companies dredge for gold or rework tailings for gold.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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