General News
10 January, 2025
Refinery idea pure gold
A SECRET report that outlined the establishment of a gold refinery at Cairns Airport was later knocked back by Queensland Treasury officials.
The scoping study – seen by Cairns Local News – was funded by the Department of Employment, Economic Development and Innovation (DEEDI) and Cairns Regional Council in 2011 and looked at ways gold flown to Cairns from Papua New Guinea could be processed at an airport-based refinery. The report was never made public.
It is understood most of PNG’s gold is refined at the Perth Mint – more than 4000km from mines in PNG. It takes nearly 10 hours by aircraft, yet Cairns is 1300km from PNG, with a flight time of 1.5 hours.
The proposal, not only looked at a refinery at Cairns Airport, but associated value-added ventures such as coin manufacturing, gold trading and storage, jewellery sales and tourism.
According to the 2023-24 annual report of the Gold Corporation – the owners of the Perth Mint – it turned over $25.37 billion a year with 82,883 visitors and employs more than 700 people. The tourism aspect of the business is in the Perth CBD while the refinery is at Perth Airport.
Currently mining and processing of gold is undertaken at mine sites where the gold is melted into doré bars containing up to 90 per cent gold. Doré bars are then sent to an external refinery to be refined to pure gold.
The Perth Mint in Western Australia is Australia’s largest gold refinery.
“It has the capacity to refine all of the gold mined in the Australian, Pacific Rim and South East Asia region.”
The report said analysis showed that a significant proportion of its profits were generated through value-adding activities such as precious metal investment products, coin manufacture and tourism.
“The conditions that make the Perth Mint successful are also present in Cairns. Cairns is in a unique position that it is the closest viable location to significant growth in the gold mining industry and where value adding activities such as tourism and investment trade with Asian buyers can develop,” the report said.
“Already established as a fly-in, fly-out base for many PNG operations, Cairns offers the necessary location, infrastructure, skills and security required as a centre of gold bullion production and trade in Queensland.
“Discussions with gold producers indicate that a willingness to supply to an alternative refinery in Cairns exists, suggesting that an initial supply of 30-plus tonnes (one million troy ounces – toz) could be secured.
“The presence of competition and expected growth in the gold mining sector also suggests that over time refining capacity requirements would increase. Such arrangements, however, are almost entirely dependent upon inventory finance that can be offered by a government guarantee. This provides security to gold producers whilst minimising inventory finance costs.”
At the time of the report, capital estimates for a Cairns refinery were $10.7 million with an additional allowance of $2m of seed capital for tourism and retail activities.
“These estimates are based on a design capacity of 3.5 million toz of gold and 5.0 million toz of silver. A full-scale refinery developed in conjunction with a tourism facility is estimated to contribute about $22m into the local economy in the first year of operation,” it said.
It is understood if the refinery was running today it would be turning over $1 billion a year.
“The PNG Government has a desire to develop its own refining capacity but due to security and other concerns is unlikely to develop a reliable facility,” the report said.
“The building of stronger links with the PNG mining sector may therefore also be important.
“This could be undertaken through investment partnerships, but also through tourism and promotional activities.
“For example, a tourism facility in Cairns could showcase the history of gold mining in the FNQ region, but also provide modern cultural and educational displays of mining activities in the Pacific region.
“Under government-backed arrangements, preliminary analyses suggest a Cairns-based refining facility would be viable.
“A decision to move to a more detailed study therefore relies upon an in-principle commitment to offer a government guarantee. If so, this would provide a basis for discussion with gold producers and allow a detailed analysis of processing options and value adding capabilities.”
The report said as part of the study meetings were held with Cairns Airport senior managers.
“In general terms, it was suggested that there would be no obvious impediments to locating a facility at the site,” it said.
“It is anticipated that a refinery would require a maximum of 4000sqm, which could be accommodated within the airport zone. The anticipated facility would require a building comprising 1500sqm under cover. The majority of the area would be industrial sheds with offices. Some additional partitioning and a vault would be required for security reasons.”
The report recommended a more detailed study to include a base case full refinery option, a melt sample option and a staged approach.
“This will need to include likely commitments from gold producers against financing options, and provide sufficient engineering detail and costs as a basis for commitment from potential stakeholders,” it said.
