AUSTRALIA GOLD EXPORTS TO CHINA: Two-Thirds Of Its Gold Mine Supply

Not only is Australia exporting a great deal of iron ore, base metals and energy resources to China, it’s also shipping a lot of gold to meet the country’s insatiable demand.  How much gold??  Turns out to be one heck of a lot.

Just a few years ago, China received very little gold from Australia.  However, since 2011, a trickle has now turned into a torrent.   According to the Australian Government Bureau of Resources and Energy Economics China Resources Quarterly Reports, China received just 31 metric tons (mt) of gold from Australia in 2011.

Australia, the second largest gold mining country in the world, produced 259 mt of the yellow metal in 2011 (GFMS Gold Survey 2014).  Thus, 31 mt of Australia gold exports to China that year was only 12% of its total mine supply.

Looking at the chart below, we can see just how much more gold Australia exported to China in the following years:

Australian Gold Mine Production vs Chinese Exports

In 2012, Australian gold exports to China more than tripled compared to the year before reaching 110 mt, representing 44% of its 251 mt gold mine supply.  Then in 2013 when the paper price of gold was smashed (starting in April and then again in June), the clever Chinese couldn’t pass up on what they saw as a real bargain by loading up with even more of the precious yellow metal.

Australia enjoyed two gold records in 2013;  1) it had the highest gold production in a decade at 266 mt, and 2) it exported a staggering 176 mt of the precious metal to China.  In just two years,  Australian gold exports to China increased from 12% of its mine supply in 2011 to 66% in 2013.

While it’s true that Australia also imports gold ($4.6 billion – 2013), exporting 66% of its of total gold mine supply to China alone is a significant figure.

Now, in the first nine months of 2014, Australia’s gold exports to China are down compared to the same period last year, but not by much  Here are the figures, according to the Australian Government’s most recent China Resources Quarterly Report:

2013 Q1-Q3 Australia Gold Exports to China

Q1 = 36.9 mt

Q2 = 44.5 mt

Q3 = 43.3 mt

Total = 124.7 mt

2014 Q1-Q3 Australia Gold Exports to China

Q1 = 47.0 mt

Q2 = 40.1 mt

Q3 = 29.7 mt

Total = 116.8 mt

Year to date gold exports to China are only down 8 metric tons (6%).  However, if gold demand in China picks up in the last quarter of the year (due to lower prices in October), total Australian gold shipped to the Chinese mainland could reach 160 mt in 2014.

This next chart shows Australia’s total gold exports, including forecasted figures out to 2018.  In 2013, Australia exported a total of 277 mt of  gold.  Gold exports to China alone were 176 mt or 64% of this total.

Australian Gold Evports 3

(chart courtesy of Australian Govt (BREE) – Bureau of Resources and Energy Economics September 2014 Quarterly Report)

According to the Australian Govt. BREE September 2014 Quarterly Report:

In the past three years, gold exports to China increased 1173 percent and the share of exports to China has increased from 5 percent in 2010, to 64 percent in 2013.

As the world continues to produce record annual gold production, the majority  of it heads to China.  As we can see from the data presented in this article, the Australians are just another example of the trend taking place in the West.  Thus, the Aussies believe PAPER ASSETS & FIAT CURRENCY are a much better investment than owning gold.

Which is why they continue to export the majority of their barbarous relic to the Chinese… and of course, the Chinese are more than happy to exchange fiat currency for real money.

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10 Comments on "AUSTRALIA GOLD EXPORTS TO CHINA: Two-Thirds Of Its Gold Mine Supply"

  1. I suppose some day the paper currency in my hip pocket will also say “made in China”!

    Steve, a serious question, do we know how China is paying Australia? What is the medium of exchange?

  2. The Chinese and Australians have signed a China-Australia Free Trade Agreement (ChAFTA) yesterday. Ending 9 years of free trade talks. The Chinese president also announced that Sydney is now a center for Yuan trading, thus bypassing the US dollar, saving 7% on trade deals between them.

    With this new trade deal, I suspect the gold flow to China will increase substantially from present levels in the future. Now, as to payment for this gold, I suspect the Australians would prefer Yuan rather than US dollars, since most nations are distancing themselves from reliance on the US dollar as a reliable store of wealth.

  3. “Thus, the Aussies believe PAPER ASSETS & FIAT CURRENCY are a much better investment than owning gold.”…But then Aus elected Abbott as PM,classic ossimoron.
    and..
    If I found 11 tons lying around I’d be quite pleased.So why are the totals for 2013 ,277 and 266? I like riddles.What has to be broken before you can use it? the financial system?An egg?

  4. My guesstimate on Chinese Gold demand by the year 2020 = 3,500 tons per year…. and India around 1,500 tons per year depending on import taxes/rules.

    • A nice percentage of the gold imported to China is only in the Country for as long as it takes to smuggle it into India. The Indian people will get their gold, no matter what the Indian government and mafia do to import restrictions.

  5. “Thus, the Aussies believe PAPER ASSETS & FIAT CURRENCY are a much better investment than owning gold.”

    That assumes your average Aussie knows there is an alternative, which, based on personal experience (I am Australian), he or she certainly does not.

    • I assume the Aussie mines are not nationalized, therefore the miners simply sell to the market.

      The Aussie Govt is probably doing as all other Govts around the world, continuing to produce an economic environment which causes the population to be more concerned about just paying the bills and worring about tomorrow’s needs.

      When the world’s affluent public stops buying unnecessary things like entertainment, eating beans rather than meat, buying a small portion of PM’s; then the “gig” is up.

      • Correct, the mines are no nationalised (yet)

        I tend to agree with you – the recent governments here are no diffierent from most others – they see no alternative to the current monetary paradigm so would not consider accumulating PMs. They couldn’t afford it right now, even if they did see things differently.

  6. What do they do with the rest of it?
    I think the Aussies only hold 80 or so tons.
    What do they get for it in return? Debt reduction or trinkets. It’s like buying land from the Indians.

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