Mining
Current Mining Situation
Mining has been one of most important industries for the Australian economy since the mid 1800s. With more than $260 billion currently invested in new projects and those being expanded, the industry should remain in that position for the foreseeable future. Australia is the world’s largest exporter of coal, iron ore, bauxite, alumina, lead, and zinc. It is also a leading exporter of uranium, diamonds, gold, copper, nickel, and liquid natural gas (LNG). According to the Bureau of Resources and Energy Economics (BREE), in 2010/2011 the resources sector generated a record $190 billion in export earnings; a 14 per cent increase on the previous year. Earnings from energy and mineral commodities are expected to increase to $210 billion in 2012/2013. This is due to the resource price recovery since the Global Financial Crisis (GFC).Where is the Resources Wealth?
The highest export earner in the resources sector is iron ore, followed by coal, then gold. However, LNG, alumina, and gold have shown the most growth in export earnings over the past two years are. Investment of more than $170 billion in LNG projects should establish Australia as the world’s biggest exporter within the next 10 years. Overview of Australia’s resources and energy exports:| Commodity |
2010-11 ($m) |
2011-12 ($m) |
Growth % |
| Alumina |
5,507 |
7,144 |
29.7 |
| Aluminium |
3,839 |
3,374 |
-12.1 |
| Copper |
8,418 |
9,043 |
7.4 |
| Gold |
15,558 |
19,722 |
26.8 |
| Iron ore |
62,788 |
66,936 |
6.6 |
| Nickel |
3,902 |
4,138 |
6.0 |
| Zinc |
2,263 |
2,331 |
3.0 |
| LNG |
12,392 |
16,037 |
29.4 |
| Metallurgical coal |
30,310 |
29,682 |
-2.1 |
| Thermal coal |
17,358 |
18,590 |
7.1 |
| Oil |
13,012 |
13,319 |
2.4 |
| Uranium |
732 |
799 |
9.2 |
Professional services firm, Pricewaterhouse Coopers, interviewed 30 senior executives in the Australian energy and resources sector for its June 2012 report, Mind the Gap – solving the skills shortages in resources.
Five key reasons for the shortage of skilled labour were indentified: Source: PWC; interviews with 30 senior executives in the energy & resource sector
In an attempt to address the skills shortage, the Federal Government introduced Enterprise Migration Agreements (EMAs) in 2012 to allow companies to hire skilled migrant workers on a temporary 457 visa. EMAs are only available on projects with capital investment greater than $2 billion, with a workforce of more than 1,500 people.
The government awarded the first EMA to Hancock Prospecting in May 2012. The company employed 1,715 foreign workers on 457 visas for its $9.5 billion Roy Hill iron ore project in Western Australia’s Pilbara region.
Mining Resources Rent Tax (MRRT)
The Federal Government’s Mining Resources Rent Tax was introduced on the first of July 2012 as a means to give the people of Australia a greater share of the profits that mining companies are making from government land. The tax is levied on companies at a rate of 30 per cent once they reach $75 million in annual profit.Many mining companies have criticised the tax in the press, through public demonstrations, and via a television advertising campaign. They have argued that the MRRT will slow investment in new projects and lead to widespread job losses.
However the Managing Director of Barrick Gold’s (the world’s largest gold producer) Australian operations has said that the imposition of the tax does not significantly impact the company’s operations. Read more
The MRRT is also supported by the Australian Council of Trade Unions (ACTU) and the largest union in the mining industry, the Construction, Forestry, Mining, and Energy Union (CFMEU).