The Story of Gold in Australia

Most people are familiar with the First Australian Gold Boom and the many gold rushes of the 1850s.The official discovery of gold is recognised as dating from February 1851 when Edward Hammond Hargraves “discovered” gold at Lewis Ponds Creek, near Bathurst, in the then colony of NSW. In fact, the presence of gold was already known but had not been made public. The interest in gold that the find near Bathurst generated was reinforced when gold was discovered on Donald Cameron’s pastoral run at Clunes, Victoria in July 1851, just after the colony of Victoria was proclaimed.

The First Boom lasted a around a decade and its peak annual production reached around three million ounces (~100 tonnes) of gold. While this was Australia’s smallest boom in terms of gold produced, it had by far the biggest impact. The social and economic changes wrought by the First Boom were enormous. Immigrants flooded in to boost the population, especially in the colonies of Victoria and New South Wales. The inland was opened up, new towns established and a transport network developed. Many of the diggers who followed the gold then settled permanently, so the pastoral industry flourished. Essentially, the First Boom was “low tech”, with individuals and small groups of prospectors, some of whom had gained experience on the Californian fields, using simple equipment such as gold pans and cradles to win the alluvial gold. The First Boom was based on many new discoveries and the gold rushes which then followed, as individuals sought riches, or at least a better life.

In Victoria, the discovery of the alluvial deep leads of Ballarat and the quartz reefs of Bendigo in the 1850s provided the basis for several decades of prosperity. In the period from the 1860s onwards, prospecting continued further afield, so that by the 1890s gold had been found in all the Australian colonies. Substantial new goldfields had been developed in Queensland and discoveries in Western Australia showed much promise.

Fewer people know of the Second Australian Gold Boom which began in the early 1890s, following the discovery and development of the famous gold deposits of the Golden Mile in the colony of Western Australia. The Second Boom lasted almost two decades and annual gold production reached a peak of just under four million ounces (~125 tonnes) of gold in 1903. The main focus of this Second Boom was the Kalgoorlie-Boulder field in Western Australia, as well as gold from other newly-discovered Western Australian fields and from several Queensland fields, plus increased production from the older goldfields in Victoria and New South Wales.

While the economic and social impact of the Second Boom was substantial, it was more localised than the First Boom, with the colony of Western Australia being the most affected. Miners and prospectors flocked to the west from the eastern colonies. It was the votes of the miners in the Kalgoorlie region which ensured that Western Australia became part of the Commonwealth of Australia, at the time of Federation in 1901.

The Second Boom had resulted in part from new discoveries of gold and the rushes that inevitably followed. By this time, rather than just individual prospectors or small syndicates, gold mining companies were being formed. However, it was the introduction of new technology, the MacArthur Forrest Cyanide Process, first patented in 1887, which profoundly changed the whole nature of the gold industry, locally and overseas. This also heralded the rise of the professionally-trained technologist.

Costs rose after the First World War, so that by the beginning of the Depression gold production in Australia had declined to some 500,000 ounces (~15.5 tonnes) annually. Production then began to recover prior to the Second World War. The rise in the gold price in 1934 was a key driver that assisted both the established mines and the prospectors seeking some relief from the hardships of the Depression. After the war, production rose slowly to just above one million ounces (~31 tonnes) by the early 1950s and remained at that level until the early 1960s before again declining. Costs continued to rise and the gold sector was being kept alive due to government subsidies and some devaluation of the local currency.

After the gold price was deregulated in 1971, it began to rise slowly, both in US and Australian dollar terms. Prompted by the higher prices, here and there in remote parts of the Australian outback, a few adventurous souls were trying out a new technology for recovering gold, termed “carbon-in-pulp” or “CIP.”

The Third or Modern Australian Gold Boom commenced in 1982. It is by far the largest boom in term of gold produced but despite its size, it is the least known. Throughout this period around 70% to 75% of the gold produced has come from Western Australia, although some gold is also produced in every Australian state.

The Third Boom was based on two principal factors. Firstly, there was the change from a fixed to a floating price for gold and consequent rises in the gold price. Secondly, there was the major change in processing technology. However, the reasons for Australia’s huge increase in gold production went beyond these two major factors. Further metallurgical improvements, the ease of financing new developments and changes in work practices and industrial relations all contributed, as did technological changes over a wide range of the exploration, mining and engineering-related fields.

In 1980 Australian gold production was a little over 500,000 ounces (~17 tonnes) but from 1982 onwards output began to rise. In 1997 it reached a high point of just over 10 million ounces (314 tonnes) before beginning to decline. Nevertheless, by the end of the century, the annual production of gold from mines in Australia was valued at around A$5 billion.

However, the local gold sector had fallen out of favour with Australian investors, although overseas gold producers were attracted, particularly by the low value of the Australian dollar compared with the US dollar. This enabled them to acquire Australian operations cheaply. Within just a few years, overseas control of the local gold producers had increased from 20% to some 70% by 2002.

The first 20 years of the Modern or Third Australian Gold Boom are described in detail in The Great Gold Renaissance, together with the people and companies that made it happen.

In the second 20 years of the current Modern or Third Gold Boom, in the new millennium, the two major factors driving the sector have also been rises in the gold price plus technological change. While the technological change in the first two decades was based principally on processing and associated factors, in the last two decades it has been due principally to the impact of digital transformation.

As the new millennium began, the output of gold slowly declined in Australia but then began to increase again. Notwithstanding, by that time Australia had become the world’s second largest gold producer, a position it still retains today. In 2020 gold production from mines in Australia reached an all-time record of some 10.5 million ounces (327 tonnes) which was valued at around A$27 billion. Although output fell a little in 2021 and the price also fell below the peak, the value of production remained substantial at around A$25 billion. Thus, there has been five-fold increase in the value of gold produced in just the last 20 years.

Some of the overseas controlled companies that had keenly acquired Australian operations did not remain for long. They sold the local gold operations they had obtained, so that gradually overseas control was reduced. Some new Australian companies had seized the opportunities that were presented and became significant local gold producers. By 2021, overseas control had fallen to around 40%

The new book, Australia’s Greatest Gold Boom, tells the story of the last twenty years - including how Australia became the world’s second largest gold producing country, how it is currently producing over 10 million ounces of gold annually worth around A$25 billion and how gold became one of the country’s largest single exports. This book also features the contributions of the people and the companies which have been so active over the last 20 years, including those in the many service and associated industries.