Mining Industry's economic contribution to Australia 

This is the fifth article of a six-part series exploring the trends and key themes that are shaping the future of the mining industry. In this article, we talk about the mining industry’s economic contribution in Australia. 

The mining industry is a huge part of Australia’s economy accounting for around ten percent of the gross domestic product (GDP). In Australia, mining has been the largest contributor to economic growth over the last decade, thanks to a mining boom.  Australia’s mining sector is worth more than two-thirds of Australia’s total merchandise exports. Australia has a strong mining equipment, technology and services (METS) sector with leading developments in innovation and automated mining technology servicing the sector. Mining contributes to billions of dollars to federal and state governments each year in taxes and royalties. This funding assists all industries in Australia, making way for new schools, infrastructure, roads, hospitals and more. Major companies in the resources sector donate funding to support community programs and scholarships across our country.

What are the minerals and resources in Australia?

There are many minerals and resources in Australia and these contribute to economy of Australia mostly as exports to other countries for processing into refined products:

• Lithium 
• Iron ore 
• Nickel 
• Aluminium 
• Coal (thermal and metallurgical)
• Gold 
• Diamond 
• Uranium 
• Copper 
• Silver 
• Opal 
• Zinc
• Steel
• Oil shale 
• Petroleum 
• Natural gas 
• Rare earth elements

Where does mining taking place in Australia?

There are over 350 operating mine sites across the country, of which approximately one-third is located in Western Australia (WA), one-quarter in Queensland (QLD) and one-fifth in New South Wales (NSW), making them the three major mining states.

By volume, Australia’s two most important mineral commodities are iron ore (29 mines) – of which 97% is mined in WA – and coal (over 90 mines), which is largely mined on the east coast, in the states of QLD and NSW. In contrast to most global production, the majority (around 75%) of black coal in Australia is produced from open-cut mines.  This ratio of 3:1 open-cut/surface to underground mines also applies to the broader (i.e. non-coal) local mining sector.

What is the outlook of minerals and resources from Australia in 2021-2022?

Australia’s resource and energy export earnings are forecast to hit a record of $425 billion in 2021–22. While new waves of COVID-19 cases and the Russian invasion of Ukraine are likely to have checked the global economic recovery (and hence commodity demand), Australian resource and energy export earnings are likely to be lifted by surging energy prices. Here are some of the expected trends given in the table below:

What are the major markets for Australia’s resources and energy exports?

The billion-dollar markets for Australia’s resources and energy exports in 2021 were dominated by five countries:

• China – AUD$162 billion 
• Japan – AUD$52 billion 
• South Korea – AUD$35 billion 
• India – AUD$19 billion 
• Taiwan – AUD$14 billion

What is the overview of the export earnings in Australia?

Australia’s resource and energy export earnings to again reach a new record in 2021–22. The outlook for Australia’s mineral exports remains strong, as the world economy rebounds from the impact of the COVID-19 pandemic and energy shortages persist. High prices, good volume growth and a weak Australian dollar are driving a surge in export earnings. Some decline in prices is likely in 2023, as supply rises and demand growth moderates. Export earnings are forecast to lift by 33% to a record $425 billion in 2021–22, then fall to $370 billion (in real terms) in 2022–23. Earnings should steady out at $263–293 billion over the rest of the outlook. Energy prices have jumped, on the prospect that the fallout from Russian invasion of Ukraine will intensify energy shortages. Commodity prices should settle back, as inventories rebuild and as world trade re-organises.

What factors affect mining’s economic contribution in Australia?

Like any other economy, there are constraints and factors that affect mining’s economic contribution in Australia which is mainly based these are predominantly production based:

• Labour constraints 
• Heavy rainfall  
• Maintenance activities (planned and unplanned) 
• Natural field decline
• Adverse weather 
• Shutdowns and closures
• COVID-19
• Macroeconomics 
• Supply/demand gaps
• Market volatility 

Conclusions

Mining has long been a cornerstone of the Australian economy. Today, it remains one of the country’s most well-established sectors.  It is a major contributor to national GDP. As a key industry with a first-class contribution, mining supports a high majority of the population with employment (directly employing more than a quarter of a million people), high industry wages, investment, and tax returns to Australians. The mining industry invests in the capabilities of the Australian workforce by creating jobs and new opportunities supporting communities across the country from capital cities to rural and remote regions. Mining is a significant contributor to the economy as it underpins the rise in income, living standards and prosperity over time.

The fifth article of the six-part series explores the Ten mining challenges technology could solve.

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References 

https://www.ausimm.com/insights-and-resources/mining-industry/minings-economic-contribution/

https://doi.org/10.1016/j.resourpol.2021.102009

https://tradingeconomics.com/australia/gdp-from-mining

https://www.abs.gov.au/statistics/economy/national-accounts/australian-national-accounts-national-income-expenditure-and-product/latest-release

https://publications.industry.gov.au/publications/resourcesandenergyquarterlymarch2022/index.html

https://www.trade.gov/country-commercial-guides/australia-mining