For those with anything but a passionate interest in Australian history, the 1861 Census of the Colony of Queensland – the first since the state’s 1859 split from New South Wales – is probably not the most gripping read. 

The census documents a population of 30,059 ‘souls’, representing a 77.8 per cent rate of growth over its proceeding five years and reflecting the progress of early Australian colonialism.

The rate of growth was not expected to be sustained.

“At this rate of increase [the population] would double every seven years,” the document said.

“This, however, cannot be expected to continue; it may and probably will do so for a short time, but as the population increases, the percentage of increase will diminish, unless some unforeseen circumstance such as the discovery of a paying goldfield, should occur.”

The goldfield comment, informed by the experiences of neighbouring NSW, proved to be remarkable foresight. Alluvial gold was found at Clermont within the year, and by 1864 the colony’s population had more than doubled. By 1868 – seven years from the original census’ release and the year after the discovery of gold at Gympie, the population of Queensland had more than tripled and was less than 100 people short of 100,000.

Gympie is said to have been a turning point for the state’s prosperity. Charters Towers was discovered in the early 1870s, and work began on the esteemed Mount Morgan mine in 1882.

Proving cause and effect in the population growth of Queensland more than 150 years ago is a little outside National Mining Chronicle’s area of expertise, but there is little question of gold’s significance in the state’s early development and growth.

Today, at least at surface level, Queensland’s population of 4.7 million continues to enjoy the benefits of a fruitful gold sector.

In 2015, the State Government generated estimated royalties of more than $40 million, and it has enjoyed a steady overall rise in gold royalty income over the past decade.

However, a recent report compiled by Grant Thornton for the Association of Mining and Exploration Companies (AMEC) revealed the economic benefit of gold to Queensland could soon run dry if the state does not act on its current royalty rate system.

Queensland boasts the highest gold royalty rate of any jurisdiction in Australia. The rate technically floats between 2.5 per cent and five per cent, but when the price of gold is above $890 per ounce – which it has been for more than a decade – the full rate is applied.

With a land area comprising 23 per cent of all of Australia, the state produces six per cent of the nation’s gold output.

Production remained stagnant over the past decade, while production from Western Australia and Australia as a whole increased.

AMEC Chief Executive Officer Warren Pearce told National Mining Chronicle the report and member feedback showed the royalty rate was having a significant impact on exploration and project development in the state, which meant the rate of gold was not increasing.

“What our members are telling us is when they weigh up potential projects in Queensland compared with those in other states, including South Australia, Northern Territory and WA, they run the ruler over it and end up in the NT, WA or SA,” he said.

“That’s a significant lost opportunity for Queensland and for the growth of the resource sector in the state.”

That’s not to say there aren’t projects and gold miners doing well in Queensland at present. Evolution Mining is one which boasts a substantial portfolio of producing projects in the state, while Carbine Resources is exploring its options in bringing Mount Morgan back to life as a tailings operation.

However, AMEC’s concern around Queensland is longer term. With future mines often taking around a decade from development to production and the current system discouraging  exploration, it’s less clear where the Sunshine State’s next generation of gold producers will come from. 

“It means those projects operating in Queensland are more marginal, but it also means those companies don’t invest the same amount of money in exploration to grow the life of their projects,” Mr Pearce said.

“Those existing mines are not able to undertake or spend the same amount of money as they would otherwise like to on exploring within their tenements to potentially increase the life of the mine.

“It also means once those mines come to an end, because there’s no exploration investment in other parts, there’s going to be no new production and no royalty flow through to the state.”

Evolution’s December quarterly report released at the end of January detailed resource definition drilling at each of its Cracow, Mt Carlton and Mt Rawdon mines in Queensland, but only one line on regional exploration in the state.

However, the company said in its half-year financial results release that its exploration focus was on extending the life of its existing projects.

Meanwhile, Queensland’s Department of Natural Resources, Mines and Energy estimated gold exploration spending of $47 million in the 2015-16 financial year. Production came in at 24,167kg, or 852,466 ounces, over the same period.

But with its contribution to national gold output on the decline, the report argued domestic and international competitiveness were compromised by the current gold royalty rate.

Mr Pearce said the state of play was an example of short sightedness in planning.

“I think the Queensland conversation is an unfortunate reality of short-term politics,” he said.

“You keep the royalty rate high and trap those companies that are already in production. You get more in royalties that way, but you don’t ever grow your pool.

“For what is a short-term gain for Queensland there’s a long-term opportunity lost – even if they dropped the rate tomorrow and exploration increased, you could be 10 years away from a new operating gold mine in Queensland.”

The AMEC CEO said he hoped the report tabled by the organisation would create a dialogue with government around the situation in Queensland being an outlier, rather than a sign of things to come elsewhere.

“Certainly when other states look at putting up royalty rates, they all cite Queensland as an example of what’s already happening,” he said.

Queensland Treasury was contacted for comment on the current gold royalty regime, but did not respond before deadline.

 

Picture: Evolution plans to carry out resource definition drilling Mt Carlton mine in Queensland.