The success of Australia's mining sector – today the world's leading mining exporter – is the result of decades of industrial investment to scale the country's production of key raw materials to meet global demand, especially iron ore and coal. This has come in constructive partnership with the state and federal governments and has brought enormous benefits to Australians and the Australian economy.
When the mining industry performs well, Australians benefit economically.
Australia's mining sector in 2021-221:
- generated 218 billion Australian dollars in annual export revenue (equivalent to 37% of Australia's total export revenue from goods and services):
- supported more than 1.1 million full-time equivalent Australian jobs;
- paid the highest average wages of any Australian sector;
- had the highest rate of Aboriginal and Torres Strait Islander employment in Australia; and
- contributed an estimated $63 billion in corporate taxes and royalties, supporting the delivery of vital public service initiatives and payments.
The mining sector has contributed to Australia having one of the highest gross domestic products (GDP) per capita of any major country.2. He also underpinned the country's outstanding economic performance during the global financial crisis.3 and other recent crises.
More than 17 million individual Australians own a share of the Australian mining sector directly or through their superannuation holdings and the sector has a strong portfolio of mining futures. [~A$200 billion] in the proposed investments to continue growing the sector and the benefits it brings to the country.
Globally, the global mining sector is at a crossroads.
Achieving the temperature goals of the Paris Agreement will require the rapid and widespread deployment of clean energy technologies such as renewable energy, nuclear power, battery storage and electric vehicles. This transformation will only be possible by increasing mineral production: estimates suggest that up to 140 new copper mines, 60 new nickel mines, 50 new lithium mines and 17 new cobalt mines will be needed by 2030 alone.4.
The capital investment required to unlock this production will be significant: estimated at an additional $100 billion per year. The global competition to ensure that competing and partner jurisdictions have the appropriate industrial policies and actions to take advantage of these opportunities is intense and growing.
Capturing a huge proportion of critical minerals investment flows will be crucial to Australia's future economic prosperity, especially given that the contribution of the country's current iron ore, coal and LNG powerhouses will decline significantly in the coming decades. But Australia's past success doesn't mean it can take future success for granted. Australia can only succeed if it is once again willing and able to compete.
The competitiveness of Australia's mining sector is under threat
The competitiveness of Australia's mining sector depends on:
- the characteristics of its resources;
- its access to world-leading talent and Mining Equipment, Technology and Services (METS);
- its ability to leverage common infrastructure investments in transportation, energy and water in key basins; and
- the stability of its regulatory and political regime. .
Historically, Australia has performed well by these criteria, but the future looks increasingly less certain.
Regarding the quality of Australia's resources: there are many mineral resources spread around the world. They are not created equal. Some have higher quality minerals that are more valuable because they require less processing. Some are closer to the surface, making them easier to remove. While Australia is well endowed with resource deposits, the fact is that there are other competing nations with superior deposits. This is true for critical raw materials such as iron ore, where, for example, developing Brazilian and West African deposits have higher grades and lower impurities than minerals from the Australian Pilbara region. It is also valid for future raw materials such as copper, where countries such as Chile and the Democratic Republic of the Congo have significantly greater reserves, mineral quality and accessibility.
Access to talent is also becoming a growing challenge in Australia. While wages have nearly doubled over the past 20 years, labor productivity has remained stable. And despite offering the highest pay of any Australian sector, the sector is facing record levels of vacancies, reflecting declining enrollments in mining-related education programs and barriers to accessing international employees in areas that Australians they cannot cover.
In terms of infrastructure, while existing regions, including the Pilbara region of Western Australia, the Bowen Basin of Queensland and the Hunter Valley of New South Wales, are well developed, significant additional investments will be needed in transport, energy and water. to unlock the most remote regions where critical climate commodities such as copper and nickel are typically found. This includes the Gawler Craton of South Australia and parts of inland Western Australia.
Australia's stable, investment-friendly policy and regulatory environment has historically been a strength and will be essential for future growth. But recent examples of sudden and unilateral changes to tax and royalty regimes in some Australian jurisdictions have put future Australian investments at risk. The increasing complexity of regulation at the state and federal level is also leading to longer wait times for permits and approvals, and changes to labor relations risk creating additional cost pressures while constraining industry capacity. to improve productivity.
These barriers to investment stand in stark contrast to the many areas in which industry and government have worked cooperatively and collaboratively to achieve better outcomes for Australia's competitiveness on issues such as market access and integration, stabilization of key business relationships, digital and cyber, industrial research, skills development, workforce diversity and infrastructure.
Unlocking the future potential of Australia's mining sector
Minerals such as copper, nickel, lithium and cobalt will be essential to enable the energy transition. Their extraction and processing also have the potential to be a driver of future economic prosperity. For Australia to seize this opportunity, a constructive partnership between industry and government will be needed.
The first step is to align with clear and ambitious objectives for the sector that encompass economic and social outcomes, and with a clear understanding of collective responsibility and shared commitment.
If Australia were to increase its production of raw materials critical to the energy transition (critical minerals plus copper and nickel), this could generate up to A$20 billion in annual investment in the coming years, supporting well-paid jobs in regional and remote areas. and new opportunities for indigenous participation.
Four key pillars will be needed to deliver this ambitious agenda for Australia and the growth of its mining sector:
- Stable and globally competitive tax environments
- Robust, transparent and simplified permissions
- Best-in-class enabling infrastructure
- A world-class METS sector and a workforce of the future
To ensure our future prosperity, both industry and government must urgently and actively contribute to improving the competitiveness of Australia's mining sector.
Stability and policy coherence at all levels of government are critical to attracting the potentially multibillion-dollar investments in mining and downstream processing projects that the world is seeking to implement. To attract capital and technology, it is essential to review and align national policies and regulations, improve fiscal stability, and improve infrastructure efficiency. This involves addressing high business costs, such as energy, transportation, skilled labor, and regulatory processes.
Industry-government collaboration is essential for a coordinated approach to infrastructure planning and investment, leveraging economies of scale and scope in the energy, transportation and other input industries to reduce the cost differential for critical minerals needed in the net zero transition.
Australia's mining sector is critical to enabling the energy transition and positioning Australia as the global destination for resource investment requires collaboration between industry and government. Working together, we can improve the global competitiveness of Australia's mining sector, position Australia as a leader in critical minerals and make an even greater contribution to Australia's future prosperity.
Read the full report – Regaining Australia's competitiveness.
Footnotes
1 Excludes Indigenous employment which is based on 2016 census data.
2 According to the International Monetary Fund, Australia had a GDP per capita of 63.5 thousand US dollars in 2023. This is the tenth highest globally, behind Luxembourg, Ireland, Switzerland, Norway, Singapore, Qatar, United States, Iceland and Denmark. IMF (2023), GDP per capita, current prices.
3 According to a research paper published by the Reserve Bank of Australia, in 2013, the mining boom is estimated to have "increased real per capita disposable income of households by 13 per cent, increased real wages by 6 per cent and reduced the unemployment rate by approximately 1¼ percentage points.” Peter Tulip (2014), The effect of the mining boom on the Australian economy.
4 Minerals Council of Australia (2023), Critical Future: Meeting the Challenge of Mineral Investment.
