Australia has slipped from second to third place in the world ranking of gold producing countries, as Australia"s gold output continues to decline, Melbourne-based mining consultants, Surbiton Associates Pty Ltd said following the release of its latest Australian Gold Quarterly Review.

Australian gold mines produced 249 tonnes of gold in 2006, the lowest yearly total since 1993. Production fell by some 5% compared with the 2005 total of 263 tonnes. However, the value of gold produced increased substantially.

Surbiton Associates managing director Dr Sandra Close says: "The average spot gold price of around Aus$800 per ounce for 2006 was over Aus$200 per ounce higher than for 2005.

"So the value of Australian gold production for the year increased almost 30% to A$6.4 billion."

Australia has not been the only country to produce less gold in 2006.

"South Africa still remains the world's number one gold producer, with the United States regaining the number two spot for 2006 and Australia slipping to number three," Dr Close said.

"But I expect there will be further changes in the next few years."

Dr Close pointed to the substantial decline in South African gold production recently, with output falling by 100 tonnes over the last three years. According to the Chamber of Mines of South Africa, production for 2006 was 275 tonnes, down from 297 tonnes in 2005, and was the lowest production for 84 years.

"Australia overtook the US as the world's second largest producer in 2004 but based on the preliminary US figures they have regained the second spot now," Dr Close said.

"US production in 2006 was 252 tonnes, just 1% lower than 2005, with a boost late in the year from Newmont's new Phoenix and Leeville operations in Nevada."

Dr Close said that while Peru and Russia are also substantial producers, the emerging force in gold production is China and the next few years may well see quite a shake up in the rankings.

"It looks like the crouching tiger is getting ready to pounce," Dr Close said. "According to Chinese government sources, China's gold production jumped 7% in 2006 to 240 tonnes, nearly 20 tonnes more than in 2005 and output in 2007 is estimated to rise another 20 tonnes to 260 tonnes."

On the local scene, although Australian production in 2006 was down, output in the December 2006 quarter was similar to that of the previous corresponding quarter and was 4% higher than the September 2006 quarter.

Super Pit retained its place as the largest Australian producer just ahead of Telfer for the full 2006 year but Telfer was the largest producer in the December quarter.

"The latest period was both encouraging and disappointing from a production point of view," said Dr Close. "Some of the new projects are beginning to ramp up to full production but some have run into trouble and have not lived up to expectations."