Australia Remains World's Number-Two Gold Producer

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"Less and less of the exploration dollar is being spent in Australia."

Australian gold production increased 17%, helping the country retain its position as the world's second-largest gold producer after China, industry consultant Surbiton Associates reported over the weekend.

Australia's gold production totaled 266 tons, or 8.5 million ounces (Moz.) in 2010, which is the highest yearly output since 2003.

"China was number one with reported production of 341 tons and it looks as though the U.S. will come in as number three with an output of around 240 tons," said Surbiton director Dr. Sandra Close.

South Africa, which produced more than 1,000 tons of gold in 1970 and for decades was the world's largest producer, was expected to record an output of about 200 t for 2010, Close said.

The gold produced from Australian mines in 2010 was worth some A$12 billion at the current spot price, making it one of the country's top export earners.

But Close stressed that continued exploration was vital for the long-term viability of the gold industry.

"We can't afford to be complacent just because Australian gold production is on the rise again."

Mining was an international business and exploration dollars and investment would flow to those areas, which were deemed to be the most attractive and where exploration was encouraged, Close said.

"We are seeing a disturbing trend on the local front, both for gold and for other minerals. The steady increase in expenditure by Australia-listed companies on overseas exploration is becoming more apparentóless and less of the exploration dollar is being spent in Australia and this may well have a negative impact in the longer term."

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