Jobs on the line as rout starts to hit home
But for miners scattered around Australia's famous goldmining town of Kalgoorlie, the fall means that changes are coming to the industry.
Ashok Parekh (above), the chairman of MacPhersons Resources and A1 Consolidated Gold, said the sudden drop means many will now have to reassess their operations, particularly when it comes to labour costs.
"This drop in the gold price is not the Australian, it is a global market. But when that happens you all have to look at your costs. When your costs are too high you have a problem unless these costs can be reduced by cutting," Mr Parekh said.
But the sudden change could lead to a significant drop in employment in the goldmining sectors, particularly for companies with higher-cost operations, he said.
This could have a negative effect on employment in towns that depended on the mining industry, such as Kalgoorlie, he said.
Kalgoorlie, in Western Australia's Goldfields region, is home to the "Super Pit", one of the richest veins of gold in the world.
But the proprietor of Kalgoorlie's Recreation Hotel and local councillor, Laurie Ayers, said the town of 28,000 was no longer closely tied to gold prices.
"The process of goldmining is not as important as the exploration surrounding it," Mr Ayers said. "[And] it has to drop back a lot to stop the prospectors."
Mr Ayers said Kalgoorlie would not be as badly affected by changes in the goldmining industry as it would have been three decades ago. This was because more minerals had been found and the town had thriving tourism.
A movie staring Ewan McGregor would start filming in town in a few months, with the crew from another multimillion-dollar film due next year, he said.
Frequently Asked Questions about this Article…
The article says the sudden drop in gold prices is a global market move rather than an Australian-specific event. Many struggled to explain why the rout happened, but miners in places like Kalgoorlie are already feeling the effects.
When gold prices fall, miners often have to reassess their operations and focus on reducing costs. The article highlights labour costs in particular — companies with higher-cost operations may need to cut expenses or face profitability problems.
Yes. The article warns that a sharp drop in gold prices could lead to a significant reduction in employment, especially at companies with higher operating costs, which could in turn affect towns that rely on mining jobs.
Kalgoorlie could feel negative effects because parts of its local economy are tied to mining. However, the town is less vulnerable than decades ago because more minerals have been found and tourism is thriving, so the impact may be softened.
Yes. The article points out that higher-cost operations are more vulnerable when gold prices fall. Lower-cost producers or those that can quickly cut costs are generally better positioned to withstand a rout.
According to a local councillor quoted in the article, exploration activity around mining is very important — sometimes more so than the mining process itself. Prospectors are influenced by price levels, and prices would need to fall substantially to halt exploration efforts.
The article notes that Kalgoorlie benefits from diversification: additional mineral discoveries, thriving tourism, and even upcoming film productions (including crews for multimillion-dollar movies) that bring economic activity beyond mining.
The 'Super Pit' in Kalgoorlie is described in the article as one of the richest veins of gold in the world. Its presence highlights the region's importance to the gold industry and why local economic shifts from gold prices matter to investors tracking mining exposure.
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