Challenging market conditions and relatively high costs in Australia continue to drive a focus on capital discipline and improving productivity and cost competitiveness in the minerals industry. Growth in minerals export volumes continues to support the economy, demonstrating that gains from the Millennium Mining Boom are large and enduring. But our capacity to capture the next wave of mining investment and to secure future export revenues depends critically on regaining national competitiveness via improved policy settings.

The value of minerals exports (excluding oil and gas) declined almost 11 per cent to $146 billion in 2012-13 reflecting softer prices for most commodities. The Bureau of Resources and Energy Economics (BREE) forecasts increased exports to $172 billion in 2013-14, supported by higher volumes and a lower Australian dollar.

Project delays, cancellations and constrained capital budgets will see mining investment decline from the historical highs of recent years. However, there are still significant opportunities for new investment subject to market conditions and improved policy settings.

The minerals sector has taken substantial steps to reduce its costs over the past 18 months. While these efforts will continue, they must be accompanied by the removal of government-imposed cost burdens. The urgency with which policy makers tackle the nation’s structural competitiveness problem will determine Australia’s capacity to secure maximum returns from future minerals resource development.

Direct employment in the minerals industry reached 254,000 persons in November 2013, up 5 per cent from a year earlier. Based on anticipated growth in production, the Australian Workforce and Productivity Agency forecasts minerals industry operations will need around 18,000 more skilled workers through to 2018. The industry employed 11,727 apprentices and trainees as at the June quarter 2013, around 5 per cent of the industry workforce.

The minerals industry remains a major source of government revenues and a large investor in local communities. Estimates by Deloitte Access Economics indicate company tax and royalty payments totalled more than $117 billion between 2006-07 and 2012-13. A new survey of 25 Australian mining companies by Corporate Social Responsibility consultants Banarra found total spending of $34.7 billion on community infrastructure, local suppliers, Indigenous contractors and other community- related activities in 2011-12 alone.

It is important to emphasise that the minerals sector receives “negligible” assistance from government. The Productivity Commission (PC) produces the most reliable, comprehensive and independent analysis of government assistance to all industry sectors in its annual Trade and Assistance Review. In its latest review published in June 2013, the PC estimated the effective combined rate of assistance to the mining sector at 0.3 per cent in 2011-12. The PC report stated that “the estimated effective rate of assistance from tariff and budgetary assistance for mining has been negligible”.

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