The mining industry is unquestionably one of the key pillars of Australia in the current global economy. The industry’s contribution to the economy is now $121 billion a year, approximately 8% of GDP. In terms of export income, mining generates $138 billion per annum; more than half (54%) of Australia’s total exports.
Besides this, the multiplier effect of the mining industry is profound as businesses that service resources companies in turn purchase goods and services into wide sections of the economy. It is an industry that affects all Australians and supports a great proportion of jobs. Across the nation, the industry employs 187,400 people directly, and a further 599,680 in support industries. Many people may not realise that they owe their employment to the uplift the resources sector is giving the Australian economy.
As the economic heart-stone of the nation, the mining industry cannot lie idle; it has to keep abreast of market conditions and respond swiftly to changing dynamics with constant focus on effective risk management.
The purpose of our Mining Business Outlook Report is to check the pulse of the industry and to hear first hand from mining leaders about their outlook, perceived challenges and opportunities and their views on government policy. Our 2010 Report found the industry was cautiously optimistic about the economy; companies were not increasing their spending and instead were limiting expenditure with a strong focus on cost control and management.
You only need to look at the last twelve months to see what an extraordinary time it has been for the mining industry. From the Resources Super Profit Tax (RSPT), to the revised Mineral Resources Rents Tax (MRRT), to a minority Federal Government and the introduction of a carbon tax, as well as a strong Australian dollar, increasing commodity prices, a looming skills crisis and unprecedented flooding in Queensland, it is without question a rapidly changing economic and political landscape for the mining industry.
Our 2011 report comes at a time when the mining industry is again in the spotlight. Australia’s Treasurer, Wayne Swan, described the forecasted mining boom, ‘Mark II’, as a mining boom that will be like no other before.
In his recent federal budget announcement, Mr Swan outlined the importance of the mining industry for Australia’s future economic growth and prosperity. The mining industry is set to invest $76 billion in 2011–12, eight times the annual level before the first boom – and $380 billion is in the resources investment pipeline. Further, the boom will help create a further half million jobs, pushing Australia’s unemployment rate down to 4.5% by mid 2013.
We spoke with 45 mining leaders and asked them a number of key questions about the much anticipated ‘Mark II’ boom; how they will respond, what are the challenges and opportunities, and their advice to Canberra.
1 Minerals Council of Australia – 2011–2012 Pre-Budget submission