DROP IN PRICE OF GOLD

Press, Volume LXXXIV, Issue 25580, 23 August 1948, Page 6

DROP IN PRICE OF GOLD

EFFECT OF ALTERED EXCHANGE RATE

MINING COMPANIES CONCERNED From Our Own Reporter

WELLINGTON, August 22. The drop in the price of gold which automatically follows the bringing of the exchange rate back to sterling parity is causing considerable concern to gold-mining companies now operating in New Zealand. The removal of the 12s 6d an ounce tax on gold, which was announced in the Budget, will not nearly make up for the loss of the exchange premium, which increased the price of gold to £lO 10s an ounce gross, a sum which, in actual fact, was said to work out for most West Coast companies at £lO 3s. It seems that as from the date of the Budget, the return will be £8 8s an ounce, paid tnrough the Reserve Bank, with the slight advantage of the remitting of the duty. Over the industry’s production on last year’s figures for the West Coast, the loss on the exchange premium will amount to about £lOO,OOO. while the abolition of the gold tax will- save a little more than £41,000. Production costs, especially in quartz mines, have also greatly increased, and the biggest increase of all came in the Mining Amendment Bill, now before the Goldfields and Mines Committee of the House of Representatives, which provided for the reduction of working hours to 35 a week. Over a period of years, gold-mining has been a declining industry in New Zealand, especially in the big quartz mines. The occupational hazards, including miners’ phthisis, have made it most difficult to secure labour in a highly competitive market. Companies operating dredges also have found that costs have been rising steeply, and it is feared that the effect of the removal of the benefit of the 25 per cent, exchange premium on the price of gold may be a heavy blow to many of the existing companies. Little sympathy for the quartz mining industry was shown by Government speakers in the Mining Amendment Bill debate in dhe House on Friday. the Minister of Mines (Mr A. McLagan) and other speakers saying that they would not regret the closing of quartz mines. The secretary of the Treasury (Mr B. C. Ashwin) said to-night that he knew nothing of a rumoured decision to pay an export bounty on gold through the Reserve Bank.