InTRODUCTION 3 MAIN BODY3 1. An overview of a mining company BHP Billiton 3 2. Market structure and dynamics

This report will also discuss about market structure in which mining industry is operated along with some statistics of market leaders in Australia mining industry. An overview of a mining company BHP Billiton BHP Billiton is the world's largest resource and mining company which is operated in almost 25 countries with 100,000 employees [2]. Employment – According to statistics of 2017, the number of employees hired by BHP Billiton was almost 15,906 employees from Australia, 6,361 employees from South America and 2,786 from North America

ECONOMICS

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
1. An overview of a mining company BHP Billiton..............................................................3
2. An analysis of market structure..........................................................................................4
3. Determinants of demand and supply of products and services..........................................6
4. Demand elasticity for products and services......................................................................8
5. An Analysis of recent event which has impact mining industry........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Economics is the study which assist in understanding the way society uses its limited
resources 1 . It deals with production, consumption, trade and distributions of goods and services.
In this Assignment, BHP Billiton a mining industry will be chosen for better understanding of
this report. The report will lay emphasis on statistics of Revenue, employment, industry's
contribution to GDP of Australia and growth rate. This report will also discuss about market
structure in which mining industry is operated along with some statistics of market leaders in
Australia mining industry. The supply and demand determinants will also explain in this report.
This report also focuses on factors of demand elasticity which affects demand of minerals of
BHP Billiton. The report will cover an issue which impact mining industry along with their
impact on demand and supply.
MAIN BODY
1. An overview of a mining company BHP Billiton
BHP Billiton is the world's largest resource and mining company which is operated in almost 25
countries with 100,000 employees 2. The BHP Billiton is their headquarter in Melbourne. This
company was begun in 2001 by merger of Broken Hill Proprietary (BHP) with Billiton. The
company is one of the largest producer of the world in aluminium, manganese, uranium,
titanium, copper, iron ore, nickel, silver and other minerals. Revenue – The revenue of BHP Billiton in 2017 was $ 36,135 millions and in 2018 it
was $ 4,363.8 million . Employment – According to statistics of 2017, the number of employees hired by BHP
Billiton was almost 15,906 employees from Australia, 6,361 employees from South
America and 2,786 from North America. Also from Europe and Asia the company BHP
Billiton hired employees 74 and 1,019 respectively . In 2018, the company BHP Billiton
hired employees from Australia which increases from previous year that is 16,504
employees. Also, number of employees from South America increases with 6,729
1 Cronin, P., and et.al., 2017. Long‐term health care costs for patients with prostate cancer: a
population‐wide longitudinal study in New South Wales, Australia. Asia‐Pacific Journal of
Clinical Oncology. 13(3). pp.160-171.
2 Xu, S., How, J. and Verhoeven, P., 2017. Corporate governance and private placement
issuance in Australia. Accounting & Finance. 57(3). pp.907-933.

employees and from Asia the company hires 1,368 employees. But the company hires
from North America is 2,490 employees and Europe is 70 employees. Industry's contribution to national GDP – The mining industry's are currently contribute
8.5% to GDP of Australia and employs to almost 2% of the total workforce. Also, this
sector has contributed 50% of total export earnings in Australia.
 Industry growth rate – The industry of mining has grown a lot from past years. As GDP
growth rate of march 2018 was 2.4% which has increased up to 3.1% afterwards 3. The
growth in Australian economy is on continuous basis as in first quarter of march
Australian economy grew by 1% while at December improvement in growth has been
0.54% measured.
2. An analysis of market structure
Characteristics of mining industry Innovation of business model – The business model focuses on value of both
organisation as well as customers. The model will convey a relationship of long standing
and profitable with their suppliers, customers and partners 4. Asset management – The industry of mining optimizes priorities of asset utilization and
care for short term opportunities and long tern sustainability. The company engages in
mining industry view entire life cycle of asset management which enables them to access
them a wider view of asset class. Governance and workforce collaboration – Earlier mining companies as compared to
other industries doesn't care about assessment with corporate governance standards 5.
Now Companies adopt various new strategies by which they access collaboration with
departments, supply chain, geographies, customers, suppliers and partners.
 Environment and energy – The companies of mining industries prefer to go green and
attempt various environment friendly practises which enables them to perform their
3 Divisekera, S. and Nguyen, V. K., 2018. Determinants of innovation in tourism evidence
from Australia. Tourism Management. 67. pp.157-167.
4 Brown, S. and Gray, D., 2016. Household finances and well-being in Australia: An
empirical analysis of comparison effects. Journal of Economic Psychology. 53. pp.17-36.
5 Devine, P. J., and et.al., 2018. An introduction to industrial economics. Routledge.

corporate social responsibility (CSR). Also, the company uses various analytical and
information tools in order to manage resources of energy.
On the basis of these characteristics, mining industry has oligopoly market in Australia. As there
as fewer companies in this industry and they are garbing huge share in market of Australia. The
mining company are dealing in homogeneous products which are generally copper, zinc,
aluminium and iron .
The market leaders of mining industries are Ausdrill limited, Rio Tinto and BHP Billiton. Ausdrill limited is a market leader in underground contract and diversified mining. The
Ausdrill is a blast, exploration and drill company which is leading their way with the best
peoples in business. The company is operating by Equipment Supplies and Services,
Drilling Services of Australia, Contract Mining Services of Africa and other segments.
The company is also engaging in diamond drilling and air core drilling activities etc. Rio Tinto is a multi-national Anglo Australian company which is one of the world's
largest mining and metal cooperation. The company is dealing in Aluminium, energy &
minerals , Iron ore, copper and diamonds. Their headquarters are in London, UK.
 BHP Billiton is a global business of mining which is a producer of metallurgical coal,
uranium and iron ore. Also the company is operating in other segments like Copper,
Coal, Petroleum, etc.
Statistics of market
leaders of mining
industries in Australia
Ausdrill limited Rio Tinto BHP Billiton
Revenue
The company earns
a revenue of $ 890.3
million in 2018 6.
The company gains
revenue of $ 4,052.2
million in the year of
2018.
The company manages
to earn revenue of $
4,363.8 million 7.
Employment Employs 5280 Company employs The company hires
6 McDonald, P., 2015. International migration and employment in Australia. Population
Review. 54(2).
7 Seo, S. N., 2015. Adapting to extreme climates: raising animals in hot and arid ecosystems
in Australia. International journal of biometeorology. 59(5). pp.541-550.

people in Australia,
United Kingdom
and Africa.
47,458 peoples in their
mining industry.
16,504 employees
during 2018.
3. Determinants of demand and supply of products and services.
Determinants of Demand Government policy – The government of Australia formulated various laws regarding to
taxation and tariffs which affects operations and functionality of the mining company
BHP Billiton 8. Like the company need to follow the mining law of Australia in order to
conduct smooth functioning and operating activities 9. Also, the company need to follow
laws of health and safety regarding safety of mining labours who does impact a lot by
working in mines. In order to follow this health and safety law the company provides
medical services to these workers. Whenever the company start a new project they need
to get approve from different levels of government like local, country and state which
affect their time and efficiency which can be used by them in their mining activities.
These regulations of Australian government delays the work of BHP Billiton 10. Also, by
delay in extracting mining minerals the company also get delay in supplying those to
consumers. Therefore, the customers tends to shift towards other companies who are
available with those minerals. This tends to decrease in demand of minerals of BHP
Billiton.
 Climatic conditions – Mining companies such as BHP Billiton affects a lot by climatic
conditions which prevails in the country Australia. Heavy rainfalls in Australia damages
their mining work and in season of heavy rainfall company does not able to operate their
8 Bodirsky, B. L. and Popp, A., 2015. Sustainability: Australia at the
crossroads. Nature. 527(7576). p.40.
9 Harris, J. M. and Roach, B., 2017. Environmental and natural resource economics: A
contemporary approach. Routledge.Kirk, N., 2017. Labour and the politics of empire:
Britain and Australia 1900 to the present.
10 Lines, L., 2016. Ghostwriters guaranteeing grades? The quality of online ghostwriting
services available to tertiary students in Australia. Teaching in Higher Education. 21(8).
pp.889-914.

functions 11. Also, earthquakes are common in Australia which destroys BHP Billiton's
mines. The company by these contingencies not only loss their mines but also they loss
their manpower. The company BHP Billiton by such drastic change in climatic
conditions tend to loose their resource such as workers, machineries etc. Also the
company faces financial loss and delay in supply of minerals to consumers. The climatic
conditions affects negatively the performance of the company BHP Billiton. Therefore,
the demand graph tend to move downwards when there is climatic changes in Australia.
Determinants of Supply Number of sellers – BHP Billiton is operating in oligopoly market. This means the
company has few companies and the buyers of such minerals are huge 12. The company
has created a brand image by performing and supplying their best quality minerals to
consumers by operating in different channels in market. The company engages with
numerous sellers which enables the company to increase their supply and create a strong
consumer base by wider availability in the market. The more number of sellers BHP
Billiton in the market more customers the company able to create. Therefore, the
company is able to supply in different geographical boundaries by the help of sellers and
able to meet supply with demand of customers.
 Technology – The company like BHP Billiton uses machine in order to adopt advance
technologies for activities like digging and extracting minerals 13. By adapting towards
more technologies the company in able to gain loss of human and financial capital in
their mines. The BHP Billiton is able to use machines and equipments which completed
their tasks in cost and time efficient manner. Therefore, the company BHP Billiton is able
to supply their minerals in correspondence with demand arisen in market they trade. The
BHP Billiton is using advance technology to not only in operations of mining also they
11 Gregory, R. G. and Smith, R. E., 2016. 15 Unemployment, Inflation and Job Creation
Policies in Australia. Inflation and Unemployment: Theory, Experience and Policy Making,
p.325.
12 Dobes, L., Argyrous, G. and Leung, J., 2016. Social cost-benefit analysis in Australia and
New Zealand: the state of current practice and what needs to be done. ANU Press.
13 Froeb, L. M., McCann, B. T. and Ward, M. R., 2015. Managerial economics. Cengage
learning.

are using it in controlling the activities of mining. This enables the company in attaining
increase in demand and the company has proved themselves capable enough to satisfy
these demand by supplying relevant and appropriate quantity of minerals.
4. Demand elasticity for products and services.
The demand elasticity refers to sensitiveness of demand of a good which changes other
variables of economy like price of products and income of consumers 14. Whereas the inelastic
demand refers to the demand of product does not change with change in any other factors.
Therefore, the demand of minerals of BHP Billiton are highly elastic because of their
fluctuations in price of their products. The price of such minerals are generally high but slight
decrease or increase in prices affects demand a lot.
Their are various factors which affect elasticity of demand of BHP Billiton. Two of them will be
discussed below as : Taxation policies laid by government – The company BHP Billiton affects their
operations as well as functionality by the actions taken by government which majorly
focuses on taxes levied by Australian government 15. Taxes like mining tax, The minerals
resource rent tax (MRRT), etc. are levied of government of Australia. By these taxes, the
company BHP Billiton generally increase their expenses. Therefore, expenses directly
affects revenue of BHP Billiton. The company faces difficulty to manage their expenses
through which prices of minerals increases with taxation policy levied by government.
Resultant demand of the minerals decreases with increase in taxation policies.
 Geographical changes – The mining industries faces difficulty in areas where they are
unable to find any minerals. As the company like BHP Billiton need to find geographies
which is abundant with mineral resource. Therefore, the mining on that area execute after
proper research. The company BHP Billiton is changing their geographies according to
the availability of minerals. This increases their cost of investment, manpower and
14 Uddin, G. A., Alam, K. and Gow, J., 2016. Population age structure and savings rate
impacts on economic growth: Evidence from Australia. Economic Analysis and Policy, 52,
pp.23-33.
15 Craig, L., Powell, A. and Brown, J. E., 2016. Gender patterns in domestic labour among
young adults in different living arrangements in Australia. Journal of Sociology. 52(4).
pp.772-788.

research with machineries also charges cost. Thus, the demand of minerals changes with
change in geographical areas of mining industries.
Therefore, the industry as a whole gets affected by demand elasticity of minerals extracted from
mines. The change in demand of minerals of BHP Billiton is due to changes of these factors.
5. An Analysis of recent event which has impact mining industry
Inflation in Australia
The inflation in market of Australia are likely to have in coming years. This issue of
inflation is a great concern for industry of mining because the rise in interest rates disables the
companies involve in mining industry for executing loaning in banks 16. Also, the demand of
consumers for minerals of mining industry decreases with crises of inflation. The companies
increases their price of minerals in order to satisfy their financial need and resultant it directly
impacts on demand of minerals among consumers.
Inflation affects demand
The inflation in country like Australia directly affects demand of minerals. In times of Inflation,
purchasing power of people rises and they tend to spend more on products they need to consume.
Also, they try to consume those goods more which are expensive. Therefore, the demand of
minerals increases with increase in purchasing power of consumers. The industry in this time of
inflation increase their price of minerals in order to gain more revenue and also to earn financial
stability. As the companies in mining industry will be unable to get financial help from bank loan
in Australia then to address their investment and expenses they try to grab consumers by
charging prices more than earlier. This impacts decrease in demand of such products of mining
industries because people will need to spend more than what they expected.
Inflation affects supply of minerals
Effect of supply is drastic in times of inflation because industries of mining are unable to make
investment. The companies generally lacks by strong financial support 17. Banks charges more
interest rates in times of Inflation which affects the revenue of such companies. Therefore, the
companies engages in mining industry tend to increase prices of their minerals so that the
16 Economics, D. A., 2015. The importance of universities to Australia’s
prosperity. Canberra: Universities Australia.
17 McDonald, P., 2015. International migration and employment in Australia. Population
Review. 54(2).

revenue generated from sale of these minerals can be found profitable and the company can able
to bear interest rates of bank loans 18. The mining industry decreases their supply in market in
order to increase the demand of minerals among customers.
CONCLUSION
This report was all about economics and for better understanding of this topic BHP
Billiton was chosen in the report. The report begun with overview of the chosen mining company
which was BHP Billiton. After that market structure was defined for this company which was
identifies as oligopoly market. Then comes determinants of demand which includes climatic
changes and government policy. In addition to this supply determinants were also explained in
this report which consists of technology and number of sellers. After this elasticity of demand for
minerals of BHP Billiton was discussed. Factors like geographical changes and taxation policies
are explained as factors affecting BHP Billiton. At last the report was describing about issue of
inflation on industry of mining. Also their impact on demand and supply were discussed in the
report. The issue affects increase in interest of bank. Also, the purchasing power of consumer
increases with inflation.
18 Brown, S. and Gray, D., 2016. Household finances and well-being in Australia: An
empirical analysis of comparison effects. Journal of Economic Psychology. 53. pp.17-36.

REFERENCES
Books and Journals
Bodirsky, B. L. and Popp, A., 2015. Sustainability: Australia at the
crossroads. Nature. 527(7576). p.40.
Brown, S. and Gray, D., 2016. Household finances and well-being in Australia: An empirical
analysis of comparison effects. Journal of Economic Psychology. 53. pp.17-36.
Craig, L., Powell, A. and Brown, J. E., 2016. Gender patterns in domestic labour among young
adults in different living arrangements in Australia. Journal of Sociology. 52(4). pp.772-
788.
Cronin, P., and et.al., 2017. Long‐term health care costs for patients with prostate cancer: a
population‐wide longitudinal study in New South Wales, Australia. Asia‐Pacific Journal of
Clinical Oncology. 13(3). pp.160-171.
Devine, P. J., and et.al., 2018. An introduction to industrial economics. Routledge.
Divisekera, S. and Nguyen, V. K., 2018. Determinants of innovation in tourism evidence from
Australia. Tourism Management. 67. pp.157-167.
Dobes, L., Argyrous, G. and Leung, J., 2016. Social cost-benefit analysis in Australia and New
Zealand: the state of current practice and what needs to be done. ANU Press.
Economics, D. A., 2015. The importance of universities to Australia’s prosperity. Canberra:
Universities Australia.
Gregory, R. G. and Smith, R. E., 2016. 15 Unemployment, Inflation and Job Creation Policies in
Australia. Inflation and Unemployment: Theory, Experience and Policy Making, p.325.
Harris, J. M. and Roach, B., 2017. Environmental and natural resource economics: A
contemporary approach. Routledge.Kirk, N., 2017. Labour and the politics of empire:
Britain and Australia 1900 to the present.
Lines, L., 2016. Ghostwriters guaranteeing grades? The quality of online ghostwriting services
available to tertiary students in Australia. Teaching in Higher Education. 21(8). pp.889-
914.
McDonald, P., 2015. International migration and employment in Australia. Population
Review. 54(2).
Seo, S. N., 2015. Adapting to extreme climates: raising animals in hot and arid ecosystems in
Australia. International journal of biometeorology. 59(5). pp.541-550.

Uddin, G. A., Alam, K. and Gow, J., 2016. Population age structure and savings rate impacts on
economic growth: Evidence from Australia. Economic Analysis and Policy, 52, pp.23-33.
Xu, S., How, J. and Verhoeven, P., 2017. Corporate governance and private placement issuance
in Australia. Accounting & Finance. 57(3). pp.907-933.
Online
Factors Influencing Elasticity of Demand. 2019. [Online]. Available through :
<https://accountlearning.com/factors-influencing-elasticity-demand/>.
BHP. 2019. [Online]. Available through : <https://www.bhp.com/>.
Supply and demand in Australia mining. 2018. [Online]. Available through :
<https://www.mining-technology.com/features/featuremining-australia-recruitment-
employment-mineral/>.