Australia is a major supplier of minerals to the world, being the largest exporter of iron ore and the second largest exporter of coal. Other key Australian exports include aluminium, gold, copper, uranium, zinc, manganese, diamonds, silver, and rare earth.
A strong economy is important to any nation as it supports increased standards of living, sustainable employment levels and high levels of health care services and education.
The mineral industry is one of Australia’s largest industries in terms of its contribution to our Gross Domestic Product (GDP). It accounts for approximately US$42B (7%) of Australia’s GDP and over half of the nation’s total value in exports in 2017/2018 - around US$187B (52%).
The economic importance of Australia’s mineral industry is particularly prevalent considering the COVID-19 pandemic. Most Australian industry sectors contribution to GDP contracted in the March and June 2020 quarters, including accommodations and food services by 39%, manufacturing by 10%, construction by 8% and transport, postal and warehousing by 21.5%.
Australia’s mineral industry on the other hand has maintained its position as a major contributor to the Australian economy by increasing its production volume to GDP by 0.2%. This is particularly important to Australia’s economic recovery from the pandemic. Furthermore, mining has increased its per-cent contribution to GDP significantly in the past 15 years.
Figure 1: Growth in Australian mineral industry contribution to GDP and economic indicators.Source: Figure reproduced from Department of Industry, Science, Energy and Resources(2020).
Revenue from minerals in the form of state and federal taxes, royalties and income taxation provides governments with consolidated revenue to fund important public services and to support businesses, industries, families, and individuals particularly during the COVID-19 pandemic. Figure 2shows the correlation of the growth in the minerals industry to Australia’s GDP.
Figure 2: Australian Mining contribution to GDP compared to Australia’s total GDP. LHS – Total GDP, RHS – Mining contribution to GDP.Source: Trading Economics(2019).
The minerals industry provides significant employment opportunities to both city based and regional based workers. It is estimated in the decade to 2013, the resources sector added 13% to household disposable income and raised real wages by 6%. The industry employs approximately 263,000 people directly and 845,000 people indirectly.
Rural and Regional Development
It is estimated 56% of direct mining employees live in Australian regional areas, contributing significantly to regional development and sustainability. Australia is a vast and relatively low populated country.
Investment in minerals greatly assists in the development of regional towns and cities creating direct and indirect service companies in regional areas. Many regional towns and public infrastructure projects, such as almost every tropical port, from Gladstone in Queensland to Karratha in Western Australia, would not have been developed without the business requirements of minerals.
Technology and Innovation
The Australian minerals industry is a world leader in the development of technology and innovation related to mineral extraction but then adopted by other industries in the areas of automation, safety, productivity, specialised tooling, and mineral extraction. This innovation contributes to Australia’s productivity and global competitiveness in minerals and other sectors.
Australia has developed significantly from its 1960’s rural agriculture primary exports. Its contribution to government and private education funding provides a circular beneficial loop of learning and development of further technologies. Notably, 65% of the worlds mining software comes from Australia.
Indigenous Training and Employment
According to government research, on average, Indigenous Australians have lower levels of employment than non-Indigenous Australians. Disparities in employment and income are associated with a wider range of other disadvantages, and they can also have adverse intergenerational effects on children from an early age.The minerals industry is the nation’s highest employer and trainer of Australian indigenous people, employing 9,000 Aboriginal and Torres Strait Islander workers which equates to approximately 3.7% of the total mineral’s workforce.
Mining is also important to Australia when considering the negative impacts of such a strong industry. The well-known ‘Dutch Disease’ phenomenon is an important consideration when developing industry policy within Australia. This phenomenon, first touted by The Economist in 1977, explains how a dominant industry can result in other industries diminishing due to currency appreciation, wage growth and skills sector migration. ‘Dutch Disease’ has impacted Australia’s manufacturing industry as our exports have become less competitive and skilled labour migrates from other sectors to minerals.
The Minerals Industry – Engenium’s Bread and Butter
Engenium understands the significance of the minerals industry to Australia and is proud to be associated with this nation building industry. The minerals industry was the birthplace of Engenium. We help junior mining companies move from being a tenement holder of a resource held in the ground, to a producer of essential minerals exported to the global market. Our repeat business with blue-chip mining companies is testament to our scalability to work with any company, large or small.
If you are a junior explorer looking to get your mineral reserve out of the ground and into global markets, or a large producing company looking to ‘sweat your assets’, Engenium can assist with getting your project moving and to completion with a minimum of fuss and capital expenditure.
Project and Business Development Manager, Perth WA
Engenium Pty Ltd