The Minerals Industry

The minerals industry (encompassing exploration, extraction and processing) is a major contributor to national income, investment, high-wage jobs, exports and government revenues in Australia. It operates in a global industry where competition for markets is intense, where investment opportunities abound in other resource-rich economies and where capital, people and technology are highly mobile.

The industry has been a key driver of higher living standards in Australia over the last decade, including through the global financial crisis (GFC). Reserve Bank of Australia research has found that between 2003-04 and 2011-12 the mining-related share of the economy (including the oil and gas sector) doubled to reach about 18 per cent of nominal GDP. Mining-dependent jobs in the economy grew to around 1.1 million by the end of the period. The minerals industry alone accounts for around half of Australia’s export earnings and pays among the highest tax rates in the economy.

The minerals industry’s number one value and commitment is the safety and health of its workforce, where everyone who goes to work in the industry returns home safely. Having set itself this ambitious goal, the minerals industry is committed to becoming free of fatalities, injuries and diseases.

Australia’s minerals industry has a strong, practical commitment to corporate social responsibility and environmental sustainability. Earning and maintaining a social licence to operate lies at the heart of modern mining operations. The Australian minerals industry is acutely aware that resources can only be found and developed with the support of the community, that communities expect to share in the benefits derived from resource development and that those benefits must balance economic growth, responsible social development and effective environmental management.

Economic dividends
In recent years, the Australian minerals industry has accounted directly for up to 8 per cent of GDP (significantly more when account is taken of related activity), upwards of 20 per cent of business investment and around 50 per cent of national exports. The rise in global demand for mineral commodities over the last decade has helped to propel growth in living standards with benefits spread broadly across Australian society.
  • Average weekly household incomes in Australia climbed by almost 40 per cent over the period described as the “Millennium Boom” (2002-03 to 2011-12). While Western Australia (66 per cent) and the Northern Territory (56 per cent) enjoyed the highest increases in real weekly household income, households in all jurisdictions had increases in weekly earnings of about 30 per cent or more between 2002—03 and 2011—12.
  • Across a range of indicators (including employment, interest rates and income) the Australian economy has performed much better during this period compared with the preceding eight years (Table 2).
  • Mineral commodities make up five of Australia’s Top 10 export earners with total export earnings in 2012-13 estimated at $144 billion. The share of minerals resources in total exports of goods and services has risen from one third to roughly 50 per cent since 2002-03.

  • Table 2: Key Economic Variables: Before and during the Millennium Boom
    Economic variable Unit Period average
        1994—95 to 2002—03 2003—04 to 2011—12
    Employment in Australia index 1.06 1.10
    Employment in mining sector index 0.96 1.53
    Unemployment rate % 7.4 5.0
    Average household income index 1.09 1.16
    Nominal interest rate % 5.6 5.1
    Real interest rate % 5.0 4.5
    Source: ABS with BREE calculations

    Figure 1 Minerals resources exports ($ billion and % total) Source: BREE

    The industry is a vital source of economic activity and jobs in regional and remote Australia, including among Indigenous Australians.
    • Direct employment in the minerals industry was 249,000 in August 2013, below peak levels in 2012 but almost 40 per cent above the level of three years earlier. More than 95 per cent of workers in the industry are full-time employees.
    • The minerals industry accounts for up to 30 per cent of employment in some regions. There is higher full-time employment in mining regions (66 per cent compared with 58 per cent across regional Australia as a whole).
    • The industry is the largest private sector employer of Indigenous Australians and has directly supported the establishment of more than 3,000 Indigenous businesses in the Pilbara since 2008.
    • The National Resources Sector Employment Taskforce established by the Australian Government in 2009 estimated that each additional job in the mining industry generates up to three jobs in other industries.[i]

    Wages, workplace training and skills development are much higher than the national average.
    • As at May 2013, average (full-time) earnings in mining industry were $2,477 per week, 66 per cent more than the all industries average.
    • More than one third of employees in the minerals industry have attained a Certificate III/IV level qualification or equivalent — nearly twice the all-industry average. One in five employees in the industry holds a bachelor’s degree or higher.
    • More than 5 per cent of the minerals industry workforce is either a trainee or apprentice with many more undertaking training that is not part of a formal qualification.
    • Through the Minerals Tertiary Education Council (MTEC), the industry has spent more than $32 million over the last decade to directly subsidise minerals-related higher education courses.

    Mining (including oil and gas) is a major contributor to investment in research and development (R&D) in Australia.
    • Mining R&D expenditure was $4.1 billion in 2011-12 (22 per cent of total business R&D expenditure), the second largest industry share behind manufacturing. Mining’s share of total business R&D has more than doubled in the last decade.

    WHAT OTHERS HAVE SAID … ABOUT MINING AND INDIGENOUS DEVELOPMENT

    In the last decade, the private sector, especially the resource extraction industries, have set bold Indigenous employment targets and to meet them provided on the job training, contracting and procurement practices to ensure that Aboriginal people and their enterprises succeed. There are hundreds of Aboriginal businesses, and even more Aboriginal not for profit corporations with income streams, delivering economic outcomes to communities on an unprecedented scale.

    Professor Marcia Langton AM, Chair of Australian Indigenous Studies, University of Melbourne, 53rd Boyer Lectures, 18 November 2012.

    Minerals resource companies have been Australia’s largest taxpayers in recent years.
    • The industry has paid more than $145 billion in Federal company income tax and State royalties since 2001-02.
    • The industry’s tax ratio has risen over the last decade — even before additional taxes like the carbon tax and the Minerals Resource Rent Tax. Deloitte Access Economics calculate an average industry-wide tax ratio of 42.3 per over the six years from 2007-08 to 2012-13, up from 40.1 per cent over the previous six years.
    • Mining is consistently among the highest taxed industries in Australia according to Australian Taxation Office data, with a net company tax rate well above the average of all industries.

    Figure 2: Minerals industry tax take — before MRRT and carbon tax Source: Deloitte Access Economics estimates: Tax ratio = royalties and company tax / taxable income before deducting royalties

    Social contribution
    The minerals industry is working to ensure tangible and measurable benefits accrue from minerals resource development in Australia in line with community expectations.
    • Research by KPMG has shown that across nine mining regions the industry is helping to boost incomes, attract families and reduce unemployment at a faster rate than for non-mining regions.
    • The industry’s regional development agenda focuses on supporting community resilience and economic diversity and ensuring that the opportunities provided by minerals development are complemented by government investment in health, education and other critical infrastructure and services.
    • Minerals resource companies and the MCA are part of an Australian pilot of the Extractive Industries Transparency Initiative (EITI) — a tool to independently verify and report payments made by companies to government to support voluntary disclosure mechanisms.

    Ensuring current and future generations of Indigenous Australians realise opportunities from minerals resource development continues to be a major focus of industry activities.
    • More than 60 per cent of minerals operations in Australia neighbour Indigenous communities. Indigenous employment at some mining sites accounts for up to 25 per cent of total employment.
    • Through the MCA, the minerals industry has led development of a new vehicle (the Indigenous Community Development Corporation) to incentivise intergenerational wealth transfer and to support community and enterprise development from mining-related agreements with traditional owners.
    • The industry supports a more efficient and effective Native Title system that takes full account of the rights and interests of Indigenous Australians.

    The minerals industry is working to expand the role of women in Australian mining.
    • Since 2006, the share of women working in the minerals industry has more than doubled (from 6 per cent to 14.6 per cent), in particular across technical, professional and corporate roles.
    • On behalf of the industry, the MCA is developing strategies to support the greater participation of women in mining decision-making and in the mining supply chain, including through analysis of the gendered impacts of mining agreements.
    • Since 2009, the MCA has worked with Thiess Australia to award the annual Thiess MCA Women in Engineering Scholarship. In 2012, the MCA inaugurated an initiative that awards scholarships for women to complete the Company Directors Course through the Australian Institute of Company Directors, to prepare them for Board roles.

    Environmental stewardship
    The minerals industry supports well-planned and integrated land use.
    • Less than 2 per cent of Australia’s land mass is currently under mine lease with only around 0.2 per cent being actively mined.
    • The industry is committed to ensuring mined lands are available both for alternative land uses consecutively with mining (including for biodiversity conservation through habitat management) and to support alternative post-mining uses (including agriculture).
    • Through the MCA, the minerals industry is engaged with the agricultural and conservation sectors to identify approaches which facilitate strategic assessment of land uses prior to development.

    The industry is committed to increased efficiency and transparency of water use.
    • Mining accounts for 3.6 per cent of Australia’s water consumption with each unit of water being recycled several times through an operation.
    • Mining generates very high economic value added per unit of consumption compared with other industries — the gross value-add per GL of water used by mining is $243 million compared with $166 million for manufacturing and $4 million for agriculture.
    • The minerals industry is a strong supporter of water reform and has implemented a landmark industry-wide water accounting framework to drive water use efficiency and transparency.