The success of Australia’s mining sector – now the world’s main mining exporter – is the results of many years of business funding to scale the nation’s manufacturing of key commodities to satisfy international demand, particularly in iron ore and coal. This has occurred in constructive partnership with state and federal governments and has delivered huge advantages to Australians and the Australian financial system.
When the mining business performs nicely, Australians profit economically.
Australia’s mining sector in 2021-221:
- generated A$218 billion in annual export income (equal to 37% of Australia’s complete items and companies export revenues):
- supported over 1.1 million full-time equal Australian jobs;
- paid the very best common wages of any Australian sector;
- had the very best fee of Aboriginal and Torres Strait Islander employment in Australia; and
- contributed an estimated A$63 billion in firm taxes and royalties, supporting the supply of important public companies initiatives and funds.
The mining sector has helped give Australia one of many highest gross home merchandise (GDPs) per capita of any main nation2. It additionally underpinned the nation’s standout financial efficiency by way of the worldwide monetary disaster3 and different latest downturns.
Greater than 17 million particular person Australians personal part of the Australian mining sector instantly or by way of their superannuation holdings and the sector has a powerful ahead pipeline of [~A$200 billion] in proposed investments to additional develop the sector and the advantages it brings to the nation.
Globally, the worldwide mining sector is at a crossroads.
Reaching the temperature goals of the Paris Settlement would require the speedy and widespread deployment of fresh vitality applied sciences like renewable vitality, nuclear energy, battery storage and electrical autos. This transformation will solely be potential by way of the scaling up of mineral manufacturing – with estimates suggesting as much as 140 new copper mines, 60 new nickel mines, 50 new lithium mines and 17 new cobalt mines will probably be wanted by 2030 alone4.
The capital funding required to unlock this manufacturing will probably be vital – estimated at a further US$100 billion per yr. The worldwide competitors to make sure competing and partnering jurisdictions have the fitting coverage settings and business actions in place to seize these alternatives is intense and rising.
Seizing an outsized share of crucial mineral funding flows will probably be essential to Australia’s future financial prosperity – notably provided that the contribution of the nation’s present powerhouses of iron ore, coal and LNG will decline considerably over the subsequent few many years. However Australia’s previous success doesn’t imply it might take future success with no consideration. Australia can solely succeed whether it is as soon as once more prepared and in a position to compete.
The competitiveness of Australia’s mining sector is beneath menace
The competitiveness of Australia’s mining sector depends upon:
- the traits of its sources;
- its entry to world-leading expertise and Mining Gear, Expertise and Providers (METS);
- its capacity to leverage frequent infrastructure investments in transport, vitality, and water in key basins; and
- the steadiness of its regulatory and coverage regime. .
Australia has traditionally carried out nicely in opposition to these standards – however the future seems more and more much less sure.
On Australia’s useful resource high quality – there are many mineral sources scattered the world over. They aren’t created equal. Some have increased high quality ores which are extra priceless as a result of they require much less processing. Some are nearer the floor, making it simpler to extract them. Whereas Australia is nicely endowed with useful resource deposits, the actual fact is there are different competing nations with superior deposits. That is true for foundational commodities comparable to iron ore the place, for instance, Brazilian and West African deposits beneath improvement have increased grades and decrease impurities than ores from Australia’s Pilbara area. It is usually true for future-facing commodities like copper, the place international locations like Chile and the Democratic Republic of the Congo have considerably larger reserve depth, ore high quality, and accessibility.
Entry to expertise can also be changing into an growing problem in Australia. Whereas wages have virtually doubled over the previous 20 years, labour productiveness has remained flat. And regardless of providing the very best pay of all Australian sectors, the sector is dealing with report emptiness ranges, reflecting declining enrolments in mining-related academic packages, and bottlenecks in accessing worldwide staff in areas unable to be stuffed by Australians.
On infrastructure, whereas present areas together with Western Australia’s Pilbara area, Queensland’s Bowen Basin and New South Wales’s Hunter Valley are nicely developed, main further investments in transport, vitality and water will probably be required to unlock the extra distant areas the place local weather crucial commodities like copper and nickel are sometimes discovered. This contains South Australia’s Gawler Craton in and inland elements of Western Australia.
Australia’s secure and pro-investment regulatory and coverage atmosphere has traditionally been a power and will probably be important for future development. However latest examples of sudden and unilateral modifications in tax and royalty regimes in some Australian jurisdictions have put future Australian funding in danger. The growing complexity of regulation at State and Federal degree can also be resulting in longer wait-times for allowing and approvals and industrial relations modifications danger creating further value pressures whereas proscribing the flexibility of business to enhance productiveness.
These funding headwinds are in stark distinction to the numerous areas the place business and authorities have labored cooperatively and collaboratively collectively to ship higher outcomes for Australia’s competitiveness on points like entry to markets and integration, stabilisation of key commerce relationships, digital and cyber, business analysis, expertise improvement, workforce range, and infrastructure.
Unlocking the long run potential of Australia’s mining sector
Minerals like copper, nickel, lithium and cobalt will probably be crucial to enabling the vitality transition. Their extraction and processing even have the potential to be a driver of future financial prosperity. For Australia to grab this chance, a constructive partnership between business and authorities will probably be wanted.
Step one is to align on clear and impressive targets for the sector spanning each financial and social outcomes – and with a transparent understanding of collective accountability and shared dedication.
If Australia had been to extend its manufacturing on the commodities central to the vitality transition (crucial minerals plus copper and nickel), this might ship as much as A$20 billion in annual funding for years to return – supporting high-paying jobs in regional and distant areas, and new alternatives for Indigenous participation.
4 key pillars will probably be required to ship on this formidable agenda for Australia and the expansion of its mining sector:
- Secure and globally aggressive fiscal settings
- Sturdy, clear and streamlined allowing
- Finest-in-class enabling infrastructure
- A world class METS sector and workforce of the long run
To safe our future prosperity, each business and authorities should urgently and actively contribute to bettering Australia’s mining sector competitiveness.
Coverage stability and consistency throughout all ranges of presidency are paramount to draw the doubtless multi-billion-dollar investments in mining and downstream processing tasks the world is seeking to deploy. To draw capital and expertise, it’s essential to evaluate and align home insurance policies and laws, improve fiscal stability, and enhance infrastructure effectivity. This includes addressing excessive enterprise prices, comparable to vitality, transport, expert labour, and regulatory processes.
Collaboration between business and authorities is important for a coordinated strategy to infrastructure planning and funding, harnessing economies of scale and scope in vitality, transport, and different enter industries to cut back the price differential for crucial minerals wanted within the net-zero transition.
Australia’s mining sector is central to enabling the vitality transition and positioning Australia as the worldwide vacation spot for sources funding requires collaboration between business and authorities. By working collectively, we will enhance the worldwide competitiveness of Australia’s mining sector, place Australia as a crucial minerals chief, and make an excellent larger contribution to Australia’s future prosperity.
Learn the complete report – Recapturing Australia’s Competitiveness.
1 Excludes indigenous employment which is predicated on 2016 census knowledge
2 In line with the Worldwide Financial Fund, Australia had a GDP per capita of US$63.5k in 2023. That is the tenth highest globally, behind Luxemburg, Eire, Switzerland, Norway, Singapore, Qatar, United States, Iceland and Denmark. IMF (2023), GDP per capita, current prices.
3 In line with a analysis paper printed by the Reserve Financial institution of Australia, by 2013, the mining growth is ‘estimated to have raised actual per capita family disposable earnings by 13 per cent, raised actual wages by 6 per cent and lowered the unemployment fee by about 1¼ proportion factors’. Peter Tulip (2014), The Effect of the Mining Boom on the Australian Economy.
4 Minerals Council of Australia (2023), Future Critical: Meeting the minerals investment challenge.