2016 Annual Report

2016 was a year that underlined the tenacity and resilience of the Australian minerals sector. After successive, difficult years of sharply lower commodity prices, the industry delivered record resources exports in calendar year 2016.

It was the dividend of the decade-long investment phase combined with the relentless pursuit of productivity gains over recent years. It was proof that a stronger, expanded mining industry is continuing to make a big contribution to the national economy.

In fact, the mining sector was the biggest industry contributor to Australia’s economic growth in the last 12 months. Productivity in the sector is growing at the fastest rate for 15 years and faster than any other sector. And global commodity price cycles are already recovering. What we now have is an industry that is the cornerstone of our national accounts – the engine of our industry is four times bigger than it was a decade ago.

This guarantees a long-term dividend for the nation. It will deliver jobs, export income, strong regional communities and hundreds of billions of dollars in taxes and royalties over coming decades, enabling all Australians to maintain our high standard of living and generous social welfare net.

That said, we remain under pressure to improve our performance as other countries become increasingly competitive. In particular, we must target innovation and improved productivity to regain our competitive edge. In 2001, Australia was in the top 5 in global rankings of international competitiveness. Now we are 22nd. As a great sporting nation, we would never accept this national performance on the cricket pitch or in the swimming pool.

Restoring our competitiveness is vital to our economic future and the imperative for ‘continuous improvement’ in policy settings remains more important than ever. We must match our company tax structures to that of our competitors to attract the global investment dollar. As our competitors around the world have lowered their tax rates, we have been frozen in stone. A deadlocked political process has made it harder to achieve sensible regulatory reforms: on workplace relations, on coastal shipping, on infrastructure and on environmental assessments. And while we respect the rights of our communities in voicing legitimate questions about our projects, it is unfair to all Australians to allow a tiny minority to cynically exploit our legal system to kill projects and damage our economy in the process.

As we focus on our projects, local communities and international customers, we often overlook the national reach of our sector. Millions of Australians in our great cities have little direct day-to-day exposure to the industry. But we must not forget that the mining industry touches almost all Australians, whether they realise it or not. The footprint of our industry is broader than we all imagine. It extends far beyond the mine site to the software specialists, the business services teams, the lawyers, the accountants, the recruitment companies, the engineering firms and environmental specialists and the investment bankers and fund managers. Many of those employed in the ‘resources economy’ – as the Reserve Bank has described it – can be found in dark suits in the offices of our capital cities, in our small business sector, in our research and innovation hubs, in our manufacturing precincts and in our financial institutions. They may not wear hi-vis gear and hard hats. And they likely don’t kick rocks and drive haul packs. In fact, they may well look and sound like you and me. But they are essential to the fabric of our sector, just as the mining sector is essential to the Australian economy.

Mining is a fundamental cornerstone – it plays to our strengths, our rich resource base, our resilience, our innovation and our 'can do' attitude as a nation. It is vital that we continue to tell this story, not only to the communities in which we operate, but to those Australians in the cities and towns far distant from our operations so that all of us can continue to enjoy the quality of life that is based on mining as the foundation of our economy.

Vanessa Guthrie
Chair, Minerals Council of Australia

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