Australia's national science agency has extracted gold using non-toxic chemicals for the first time in the nation's history.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) announced on Tuesday that it had successfully developed an alternative method to produce gold without cyanide or mercury.

Gold cyanidation is a process used in more than 90 percent of global gold production whereby low-grade ore is dissolved in cyanide so that gold within can be extracted.

However, the use of cyanide in gold extraction has been banned in the United States, South America and Europe due to environmental and health concerns.

The process developed by the CSIRO in collaboration with West Australian gold miner Eco Minerals Research replaces cyanide with thiosulphate, a non-toxic alternative.

"Science is enabling industry and environment to be partners not competitors, exactly as envisioned in our market vision - turning commodities into higher value, uniquely Australian products," Larry Marshall, chief executive of the CSIRO, said in a media release on Tuesday.

"(It) could be a game-changer for small gold producers or those looking to get ahead of increasing market demand for greener commodities."

According to the CSIRO, building a processing plant based on the new technology would cost approximately 2.5 million Australian dollars (1.8 million U.S. dollars) compared to 30 million Australian dollars (22 million U.S. dollars) for a cyanide-based plant.

Eco Minerals Research intends to use the new process to become Australia's first cyanide-free gold producer.

"The first gold is a major milestone in our progress towards becoming one of the world's first green gold producers," Eco Minerals Research managing director Paul Hanna said.

"In close collaboration with CSIRO we've gone through the design, engineering and fabrication stages and set up a processing facility in (Western Australia), delivering the first gold pour in just 10 months, which is a fantastic achievement."