Mining Industry Report

   

Added on  2023-03-31

11 Pages2994 Words261 Views
Running head: ECONOMICS FOR BUSINESS
Mining Industry Report
Name of the Student
Name of the University
Course ID
Mining Industry Report_1
1ECONOMICS FOR BUSINESS
Table of Contents
Introduction...................................................................................................................2
BHP Billiton – Australian Mining Giant.........................................................................2
Background of mining industry in Australia..................................................................3
Market structure of iron ore industry.............................................................................6
Demand and supply determinants................................................................................8
Price elasticity of demand.............................................................................................9
Recent event affecting iron ore industry.....................................................................10
Conclusion..................................................................................................................11
References.................................................................................................................13
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2ECONOMICS FOR BUSINESS
Introduction
The key industries in Australia are financial, business consulting, mining,
energy and healthcare. In this report discussion on mining industries are made.
Mining industry being one of the key industries in Australia, make substantial impact
on the economy. Almost all the areas in Australia in are involved in activities related
to mining. It is evident from the data that nearly 0.1 percent area in Australia are
temporarily being distributed for mining activities and 0.7 percent of land mass in
Australia is under mining lease (Minerals.org.au 2019). Moreover, mining industry
directly influences 0.02 percent of Australian lands. Australia is rich in different types
of minerals. The minerals those are available in Australia in abundant are copper,
gold, nickel, aluminium, diamond, zinc, silver, natural gas, petroleum, uranium and
coal. The objective of the report to discuss the market of and present scenario of
mining industry in Australia with special reference to BHP Billiton a company
engaged in mining of different minerals namely copper, nickel, petroleum, uranium,
natural gas, nickel, coal and iron ore. In this report, focus is given to iron ore industry
with discussion on its supply and demand analysis. Further, the market structure of
iron ore, its determinant of demand and supply and demand elasticity is discussed in
the report along with analysis of an event that has impacted the industry significantly.
The report therefore provides the impression of iron ore market in Australian mining
industry.
BHP Billiton – Australian Mining Giant
BHP Billiton is a mining company in Australia founded in 1885. During
foundation years it was knows as Broken Hill Proprietary Limited and it acquired its
current name after its merger with Billiton plc in 1860. The company is engaged in
mining of coal, petroleum, copper, nickel, natural gas, iron ore and Uranium. The iron
ore is the key mining product of the company and is one of the largest producer of
iron ore in Australia. On ASX BHP Billiton is the second largest company in Australia
after Common Wealth Bank of Australia in terms of market capitalization (IG 2019). It
employs over 62000 workers. In 2017, it produced 238 million tonnes of iron ore
(BHP 2018). It generated a total revenue of $43.638 billion in 2018 as compared to
$36.135 billion dollar in 2017.
Background of mining industry in Australia
As a key industry in Australia, mining industry supports the economy
significantly and functions as a base of the Australian economy. It is evident from the
data provided Australian Bureau of Statistics that in the past ten years the mining
industry has grown at an average rate of 6.5 percent annually. In 2017, the gross
value added in mining industry is equivalent to 7.4 percent of the gross value added
in the economy in Australia, is just after the financial and construction industry
(www.statista.com 2019). About 9 percent of Australian economy is contributed by
the mining industry. Products of mining industry in Australia have large demand in
the global market. As a result, the, the mining industry exports huge amount of
products that made it the largest earner for Australia in the export sector. In the
export market of commodities, mining industry contributes around 64 percent of the
total commodity exports and contributes around 50 percent of the total exports of
Australia. In 2018, the amount of iron ore that Australia exported was valued at US
$46.7 billion, which is 49.9 percent of the total iron ore exports in the world (World's
Top Exports 2019). This made Australia the leading iron ore exporter of the world.
Mining Industry Report_3
3ECONOMICS FOR BUSINESS
Figure 1: Contribution of mining industry to export and employment
(Source: Static.treasury.gov.au 2018)
Apart from the contribution to the economy in Australia, the mining is
considered significant to the country because of its contribution in employment of the
nation. Mining industry employs over 200,000 workers in Australia and this made the
industry one of the largest t employer of the country (Mining Technology 2019). The
employment in mining is wide spread, almost in every region people in Australia
some people are engaged in mining works. More the investment in resource sector
more will be the benefits for the employees. Thus, an increase in investment and
growths in capital stock have generated an induced effect on the earning of the
employees. As a result, the weekly average wage of the workers grew by 66 percent.
Figure 2: Monthly growth percentage of mining and ASX 200
(Source: Pwc.com.au 2018)
Mining Industry Report_4

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