Trade & investment
Australia’s openness to trade and investment allows it to maximise its comparative advantages, including in minerals. In 2013-14, mineral commodities accounted for 48 per cent of Australia’s exports of goods and services exports.
Major export earners in 2013-14 were:
- Iron ore ($74.7 billion)
- Coal ($40.0 billion)
- Gold ($13.0 billion)
- Aluminium ores and concentrates, including alumina ($6.3 billion)
- Copper ($5.2 billion).
Australia’s Free Trade Agreements with China, Japan and South Korea mark a new phase in Australia’s integration with three North Asian economic powerhouses. They reinforce minerals trade worth approximately $120 billion a year to Australia.
China-Australia Free Trade Agreement (ChAFTA)
China is Australia’s largest export market, worth $108 billion in 2013-14 – almost one-third of Australia’s total exports.(1) Exports of minerals account for nearly three-quarters of this total ($80 billion) with iron ore alone accounting for more than half ($57 billion). China is Australia’s most important market for iron ore.(2)
Once in force, ChAFTA will eliminate tariffs on minerals imports from Australia that are worth around $16 billion annually. The 3 per cent tariff on metallurgical coal will be removed on the first day of the agreement and the 6 per cent tariff on thermal coal will be removed within two years.(3) This deal is superior to that concluded under the ASEAN-China FTA, which phased out thermal coal tariffs over four years.
ChAFTA will also eliminate tariffs on the following minerals products:
- Refined copper and alloys (unwrought) (currently subject to 1 and 2 per cent tariffs)
- Alumina (8 per cent)
- Nickel mattes and oxides (3 per cent)
- Unwrought zinc (3 per cent)
- Copper waste and scrap (1.5 per cent)
- Unwrought aluminium (5 and 7 per cent tariffs)
- Aluminium waste and scrap (1.5 per cent)
- Unwrought nickel (3 per cent)
- Titanium dioxide (6.5 and 10 per cent tariffs)
- Other mineral substances (3 and 5 per cent tariffs)
Importantly, ChAFTA will consolidate a growing investment relationship, with the total stock of Chinese foreign investment in Australia at $32 billion in 2013,(4) including substantial investment in the minerals sector.
Japan-Australia Economic Partnership Agreement (JAEPA)
Japan is Australia’s second-largest export market, valued at $51 billion in 2013-14.(5) More than half of this total ($25.6 billion) consisted of exports of coal, iron ore, aluminium and copper; and more than one-quarter ($13.2 billion) was contributed by coal alone.(6) Japan is Australia’s biggest coal customer.
JAEPA strengthens the deep and complementary trade and investment relationship between Australia and Japan, by removing tariffs on a number of minerals products over ten years. These include tariffs on:
- Metallurgical coal (3.2 per cent)
- Aluminium hydroxide (3.3 per cent)
- Titanium dioxide (3.2 per cent)
- Unwrought nickel (11.7 per cent)
- Ferro-manganese (6.3 per cent)
Tariffs on the first three of these minerals imports from Australia were removed entirely when JAEPA came into force on 15 January 2015.(7)
Korea-Australia-Free Trade Agreement (KAFTA)
South Korea is Australia’s third-largest export market, worth $22.5 billion in 2013-14.(8) Iron ore and coal are our two largest exports to South Korea, worth $6.1 billion and $5.2 billion (respectively) in the same year. Total minerals exports to South Korea are valued at around $13 billion.(9)
KAFTA began to benefit the Australian minerals industry from its commencement on 12 December 2014. While many Australian mineral and energy exports enter South Korea duty free, tariffs of up to 8 per cent are applied to a range of minerals products, including unwrought aluminium, gold, unwrought lead, cobalt mattes and articles, and titanium dioxide. Under KAFTA, South Korea will remove tariffs on all resource imports from Australia over ten years. Tariffs on unwrought aluminium (1-3 per cent) and titanium dioxide (6.5 per cent) have already been eliminated.(10)
Reports and submissions
(1) Ibid., p. 41.
(2) Department of Industry, Resources and Energy Quarterly – December Quarter 2014, released on 22 December 2014, Canberra, pp. 67-70
(3) Department of Foreign Affairs and Trade, China-Australia Free Trade Agreement – Key Outcomes, p. 2.
(4) Department of Foreign Affairs and Trade, China Fact Sheet, December 2014.
(5) Department of Foreign Affairs and Trade, Composition of Trade 2013-14, released in December 2014, Canberra, p. 41.
(6) Department of Industry, Resources and Energy Quarterly – December Quarter 2014, released on 22 December 2014, Canberra, pp. 67-70
(7) Department of Foreign Affairs and Trade, Japan-Australia Economic Partnership Agreement – Key Outcomes, p. 3; Quick guide: Resources, energy and manufacturing.
(8) Ibid., p. 41.
(9) Department of Industry, Resources and Energy Quarterly – December Quarter 2014, released on 22 December 2014, Canberra, pp. 67-70
(10) Department of Foreign Affairs and Trade, Korea-Australia Free Trade Agreement – Key Outcomes, p. 2; Korea-Australia Free Trade Agreement – Fact Sheet: Trade in Goods, p. 6f.