The Australian Coal Industry – Adding value to the Australian Economy

Executive Summary

In February 2013 the Reserve Bank of Australia published a working paper that measured the size of the “resource economy”. The Reserve Bank estimated that the resource economy accounted for 18 per cent of gross value added in 2011-12.

This paper complements the Reserve Bank analysis. We employ the same technique (input-output analysis) and data drawn from the Australian Bureau of Statistics to estimate the size of the Australian “coal economy” (that is, coal exploration and extraction and coal related activities).

Using the same approach as the Reserve Bank we find that the coal economy accounts for about 3.1 per cent of gross value added in 2011-12. That is nearly $43 billion. Given almost all of the black coal industry is located in NSW and Queensland and almost all brown coal mining is in Victoria, this activity is mostly located in those three states.

Over the past 30 years, coal has been one of Australia’s major export industries. In fact, for most of that period it was the major export industry. Coal represents the main export earner for both Queensland and NSW.

Coal, however, is not just an export industry. What is particularly important is the relationship between coal and electricity generation. The modern Australian economy is highly dependent on access to reliable and cheap electricity. Coal mining and the coal economy underpin our prosperity.

We report that the coal economy has backward linkages from coal mining to Exploration and Mining Support Services, Construction Services, Coal mining itself, Finance, Petroleum and Coal Product Manufacturing, Rail Transport, Non-Residential Property Operators and Real Estate Services, Wholesale Trade, Transport Support services and storage and Professional, and Scientific and Technical Services.

Similarly the coal economy has forward linkages to Electricity Generation, Iron and Steel Manufacturing, Non Ferrous Metal Ore Mining, Iron Ore Mining, Coal mining itself, Cement, Lime and Ready-Mixed Concrete Manufacturing, Non Metallic Mineral Mining, Pulp, Paper and Paperboard Manufacturing, Basic Non-Ferrous Metal Manufacturing, Grain Mill and Cereal Product Manufacturing, Oil and gas extraction, and Rental and Hiring Services (except Real Estate).

Download complete article