SYDNEY, March 2 (Reuters) - Output of gold in Australia, the world's No. 2 producer, rose to its highest in a decade in 2013 as richer ores were mined to combat weak bullion prices, a survey released on Sunday showed.
The practice, known as high-grading, caused output to jump by 7 percent, or 18 tonnes, to 273 tonnes (8.8 million ounces) last year, worth about $9 billion and the highest since mid-2003, according to a tally by Melbourne-based consultant Surbition Associates.
"The 2013 total gold output of 273 tonnes is the highest annual figure since 2003," said Dr. Sandra Close, a Surbiton director. "Producers are responding to lower gold prices by treating less low grade material and this results in higher output and reduced costs."
The downside in processing higher-grade ore is that some lower grade ore that was economic to treat at higher prices is no longer profitable, Close said, suggesting output could go down once the richer material is mined out.
Rising bullion prices in 12 of the past 13 years made lower-grade ore profitable to extract, allowing miners to expand their reserves. But a 28 percent decline in the price of gold in 2013 to just above $1,200 at year-end means that mining some of those reserves would no longer pay off. Gold was quoted at $1,327 an ounce on Sunday.
In Australian dollars, bullion fell only 16 percent to around A$1,345 per ounce, owing to a decline in the Australian dollar.
Since January 2014, Australian dollar gold prices have increased by 11 percent to around A$1,485 per ounce.
Higher output from mines operated by AngloGold Ashanti Ltd and Newcrest Mining Ltd in 2013 more than offset declines from ones owned by Barrick Gold Corp and Newmont Mining Corp, including the 50-50 Super Pit joint venture, once Australia's biggest mine.
Newmont's wholly owned Boddington mine, some 700 km (400 miles) away, is currently Australia's biggest gold mine.
Despite the increase in 2013, Australia remains a distant second to China, which produced around 430 tonnes in 2013, based on industry estimates.