Impact of Technological Innovations on Australia's Metals and Mining Industry

Economics for Business 1
<University>
Economics for Business
By
<Your Name>
<Date>
<Lecturer’s Name and Course Number>

Economics for Business 2
Part 1
Overview of the company
Fortescue Metals Group Ltd (FGM) is a public iron ore entity that is based in Australia. It was
founded in 2003 with its headquarters found in Perth, Western Australia. FGM is the most
prominent tenement firm in the Pilbara region, whereby its holdings cover a total area of about
87,000 km² (Mining industry report, 2017).
In comparison to other worldwide Iron ore producers, FGM is ranked fourth after Vale, Rio
Tinto, and BHP Billiton. Copper, Gold, Steel, Lithium, and Iron ore are the major products that
are produced and distributed by FGM across the world. Also, FGM has more than 5455
employees with A$8.888 Billion as its total revenue. Solomon Hub and Chichester Hub are the
two major operation areas found in Australia's Pilbara region (AFR, 2018).
Overview of the industry
FGM is categorized under the sector of Metals and Mining in Australia. Mining is a primary
activity which takes place in all territories and states of Australia, which directs impacts about
0.02% of the land surface in this nation (Asx.com.au, 2019). Currently, the most significant areas
for mining include; Pilbara region, Peel, Goldfields, Bowen basin, Hunter region as well as
Latrobe region. Some of the mineral resources that are mined in Australia include; iron ore,
copper, gold, nickel, uranium, opal, zinc, natural gas, silver, and aluminum, among others. BHP,
OneSteel, Lihir Gold, Newcrest Mining, Fortescue Metals Group, Rio Tinto, Alumina Ltd, and
Vale are the major players in the metals and mining industry of Australia (Christopher 2016, p.
90). Such a factor shows that both home-based and multinational companies are engaging in
Australia’s metals and mining industry, thus effective exploitation of the various mineral

Economics for Business 3
resources. Presence of multiple home-based and foreign companies that are participating in the
metals and mining industry has made Australia be the biggest exporter of alumina, gold, coal,
iron ore, and other resources in the world. Statistics indicated that Australia is set to reap about
$250 billion from the exports due to its effective and competitive metals and mining industry
(Australian Industry Report, 2016). Metals and mining industry contributes about 8.5% to the
Gross Domestic Product of Australia. Also, the sector employs about 2% of the total labor force
in Australia, that is approximately 220,000 persons ((Tradingeconomics.com, 2019). The total
revenue of the metals and mining industry is about A$1.54 million. The current growth rate of
Australia's metals and mining industry is approximately 6.5%, which is a significant rise from
6.1% that was realized in 2018 (Statista.com, 2019). From the above statistics and discussion, it
can be seen that Australia's metals and mining industry are greatly contributing to its economic
growth due to the significantly huge revenues that are gained from its mineral exports.
Part 4
Demand elasticity for Fortescue Metals Group Ltd’s products
The elasticity of demand is an element that measures that degree of responsiveness to changes in
prices of a product or a service. The elasticity of demand may either be elastic, inelastic, or
unitary demanding on the value of Price Elasticity of Demand (PED). For example, if PED is
equal to one, then, the elasticity of demand is said to be unitary. Also, PED is higher than one
then, the elasticity of demand is said to be elastic, and in case PED is less than one, the elasticity
of demand is said to be inelastic (Serapio, 2018). Fortescue Metals Group Ltd's products are
consumed across the globe, and they include; iron ore, copper, steel, gold as well as lithium. As
such, the demand elasticity for the above products is elastic because of the several firms that are