Contribution of BHP Billiton in the Growth of Australian Mining Industry

Running head: Economics for business
ECONOMICS FOR BUSINESS
Name of student
Course name
Course ID

Economics for business
1
Table of Contents
Introduction................................................................................................................................3
Introduction to the company......................................................................................................3
Industry background...................................................................................................................4
The market structure of the industry..........................................................................................5
Factors that influence demand for the company’s product(s)....................................................6
Factors that influence supply of the company’s product(s).......................................................7
Elasticity.....................................................................................................................................8
Impacts of an event on the industry/company............................................................................9
Conclusion................................................................................................................................10
Reference list............................................................................................................................11

Economics for business
2
Introduction
Australian mining industry is having huge growth and potentiality in the near future.
The mining industry of Australia is one of the most expensive sectors that has contributed
about 7% to the GDP of Australia. The main characteristic of the mining industry of Australia
is, it is export oriented and during the year of 2007-2008, the mining industry contributed to
more than 50-60% of total national exports (Export.gov, 2019). The study will highlight the
contribution of BHP BILLITON behind the growth of the mining industry. The study will
also draw inference on the performances of the mining industry and will highlight the factors
that are mainly influencing the demand and supply of the products that are being
manufactured by BHP BILLITON within the Australian economy. The significance of the
study is that it will reflect the overall production ability of the mining industry in Australia
and it will also highlight the performances of big companies that are doing business in the
mining industry. Moreover, the concept of the elasticity regarding the mining industry will
also be highlighted by the study.
Introduction to the company
BHP BILLITON is having market capital of around $138.3 billion. Currently the
company is employing around 60,644 employees and the company is selling products around
$42.6 billion (Forbes, 2019). The company is mainly dealing with diversified mining
industries and the main function of the company is lying within the category of exploration,
development, production and processing of minerals, gas and oils. The company is operating
in the segments of minerals like Petroleum, Potash, Copper, Iron-ore and Coal. In 2019, the
profit of BHP BILLITON has faced down fall in the level of the profit in the year 2019,
compared to level of profitability that was in 2018. In the first half of 2019, the level of profit
for the company fell to around $5.66 billion and in the year 2018, the level of profit was

Economics for business
3
around $4.4 billion. The profit fell down to 8%. The total revenue of the company was flat
and the company made a loss of $300 million loss after it sold the oil and gas business to
mining giant BP for $10.4 billion (ABC News, 2019) The company witnessed loss in their
cost of production of US$835 million in December due to unplanned production outrage that
took place in Olympic Dam facility in South Australia. The Iron ore was the biggest revenue
earner for the company and the amount of revenue that was earned through iron ore is around
AUD 8.2 billion. The net debt of the company fell to about US$9.9 billion and the selling of
oil and gas products in US helped lot (ABC News, 2019).
Industry background
The period of 2005 to early 2013 was the booming period for the Australian mining
industry. During this phase of time, many new projects and heavy investments took place in
the Australian mining industry. During this point of time the focus of the industry was mainly
on the development of the construction industry and many heavy projects on construction
was done within the economy. Moreover, since 2013, the focus of the government shifted
towards production and export of the mining products. The government invested to around
USD 370 million in order to develop several lithium mines in WA in the last few years. In
Australia, the cost of labour are very high and this is the main reason the demand for
automation machineries in the field of drilling, excavation is increasing. The mining industry
of Australia having huge potentiality in future as the discovery of the nickel mines will
increase the development of battery industry. Due to increased amount of decarbonisation
and electrification of transports are increasing the demand for nickel and other associated
minerals. In the year 2017, the employment in the mining industry is around 216.5 and the
total level of employment is 12,420.6 number of people were employed (Hosie, 2018). The
contribution of Australian mining is around AUD 36287.00 million. The Australian economy
has achieved growth of 2.8% and the valuation of the Australian economy was around $1.8