Economics and International Trade: Analysis of Mining Industry in Australia

This study analyzes the mining industry in Australia and its impact on the global market. It covers the industry background, market structure, demand and supply factors, elasticity, and impacts of events on the industry.

Running head: Economics and international trade
ECONOMICS AND INTERNATIONAL TRADE
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Economics and international trade
Table of Contents
Introduction......................................................................................................................................2
Industry background........................................................................................................................2
The market structure of the industry................................................................................................3
Factors that influence demand for the industry’s product(s)...........................................................4
Factors that influence supply of the industry’s product(s)..............................................................5
Elasticity..........................................................................................................................................6
Impacts of an event on the industry.................................................................................................7
Conclusion.......................................................................................................................................9
Reference list.................................................................................................................................10

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Economics and international trade
Introduction
The topic will mainly highlight the situations and current conditions of mining industry
of Australia. Through the analysis of mining industry of Australia, the study will be aiming to
reach for the various factors that are actually affecting the demand and supply of the mining
products into global market. The importance of these factors will be dealing with the elasticity in
the global perspective and will be affecting the international trade. Through the development of
mining industry, Australian economy will be flourished and will be key player in mining
industry in world. Through the detailed industry background, the study will identify the economy
of Australia in a better way. Structure of the market is important in the sense that it will be
improving the technological spill over and their impact on world economy. Moreover, the
concept of elasticity is significant because of the fact that elasticity is heavily affecting terms of
trade.
Industry background
Currently the mining industry in Australia is one of the booming industries contributing
to about 50-60% of the total national income. On the other hand, Australia is among the top five
regarding the production of gold, iron ore, lead, zinc and nickel. Not only this, but Australia is
home of largest production in Uranium and also fourth largest producer of black coal. In all over
industry there are more 370 mines of minerals. Among the 370 mines, 1/5th mines are located in
NSW, 1/2nd in Queensland and 1/3rd in Western Australia. Among the volumes, two important
minerals are iron ore and coals (export.gov, 2019).
In 2017, the total revenue earned by the mining industry including the exports of
minerals, metals and petroleum is about $207 billion or about 53%. Steel making material is

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contributing to more than $63 billion in the last year mainly due to increased level of price and
volume (Australia, 2018). Coming to the point of employment, the Australian mining industry
employed nearly about 251,700 persons accounting for about 2% of total workforce though it has
decreased by 5.4% in past five years (Lmip.gov.au, 2019).
The mining industry is contributing about 15% to the Australian national income. In
2015-2016, the Australian mining industry has contributed to $236.8 billion to the Australian
economy (Creagh, 2017). The Gross value that has been added to the national economy by the
mining industry increased to about 8.8% in the last financial year compared to only 4.7% in
1994-95. The total valuation of the coal production in the year 2017-2018 was about $65.8
billion and this year the value of the coal production surpassed the valuation that has been
created by iron ore industry (Creagh, 2017). Even the Australian economy is also the largest
producer of LPG and the amount is about $48 billion.
The market structure of the industry
The Australian mining industry is highly competitive in nature and is vastly in production
of the minerals like Bauxite, aluminium and other minerals. In 1996-97, the Australian economy
has produced about 43 million tonnes of bauxite that was a part of world contribution of 56% of
deposit of Bauxite (Applied.org.au, 2019). Taking into the factor of global competition, Australia
can compete heavily in terms of production of Bauxite. Australia is also having the record of
high productivity within the economy. Some of the main reason that has been found out that is
benefiting the mineral environment within the economy. Taking the advantage of increased level
of world price in metals the Australian economy is helping in the development of the mining
industry. The second factor that is helping the growth of the economy in terms of mining

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industry is the low and cost effective powers that are being generated within the Australian
economy due to the presence of low cost coalmines.
Companies like Glencore, Rio Tinto, BHP and many other companies are performing
better in the world international trade. The Glencore Company received revenue of about
$207.47 billon and among the revenue earned the contribution of mineral and materials is around
$80.46 billion and the main components of the trade was copper, zinc, lead and aluminium. The
total revenue that has been earned by the company Glencore is around $15,377,573,000 and the
amount of labour that has been employed by the company is about 15142 in Australia (Glencore
Operations Australia Pty Limited, 2019). The performance of another company BHP is also
notable and the company has earned revenue of about $59,714,816,000 including sales and
revenues and employed more than 27161 employees in all over Australia (BHP Group Limited,
2019).
Factors that influence demand for the industry’s product(s)
The Australian economy is not only the only driver of mining industry into global world
but also it is influencing the production level of the world trade through their production. Making
a deep analysis on the potential market of the mining industry is going to highlight the factors
that are acting as the driver of this superb growth within the mining industry. The factors are
quality of the coal including the power plant design dependency and the end user mine equity.
From the perspective of Australian economy, these two factors are highly important for the
development of the mining industry and taking into account, these two policies will be mainly
looking to increase the development of the economic position (Minerals.org.au, 2019). The coals
from the Australia are high in quality compared to the competitive nations like South Africa and
Indonesia. The coal is of high quality and is having less number of impurities. Through the

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export of high efficiency, low emission coals are helping in the development of terms of trade
that is helping in the improvement in the export of coals to the global economy. On the other
hand, the Australian thermal power has highly reliable markets and trust the Asian markets
mainly the region of Japan, Korea and Taiwan (Minerals.org.au, 2019).
The second factor is end user mine equality. It is important to utilise the resource
development among the stakeholders to participate equally regarding the mining of the industry.
This will automatically help the development of the mining production and associated
infrastructures. Through the improvisation of the equality in participation, it will help the
economy to get better access to high level of the production that will definitely increase the rate
of the GDP of mining industry (Minerals.org.au, 2019).
Factors that influence supply of the industry’s product(s)
One of the major problem that has been seen in the global economy, is the Chinese
economy has faced deep crisis in world economy regarding supply of minerals. On the other
hand, through the improvisation of improved supply of minerals, the Australian economy will be
aiming to identify the opportunity of future growth. This will allow the economy to bring more
improvements in the development of resource utilisation that will automatically improve the
economy. Two important factors that are affecting the supply within the Australian mining
industry are the huge generation gap & lack of investment in training along with price in the
global aspect. Generation gap is one of the important aspects in the sense that through the
improvement in the training level will allow use of resources that are more skilled. Using modern
techniques will be mainly willing to identify the development of the resources so that the supply
of the mining industry is going to help the economy. Using IOT, the mining industry is going to
improve the production of the mining industry. The supply of the coal industry in the NSW fell

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to about 245.7 million tons in the year 2017. Raw production of coal in the Hunter coalfield has
increased by 13.6 million tons (Coal Services, 2019).
In spite of having high potentiality in the mining industry, the government is not showing
that much level of the cooperation within the private and public companies. Another important
issue that has popped up is that the public entities are having less interest to invest in the
economy. This is because of the fact that if the government does invest heavily then private
entities will not get the energy to invest fearing of strong competition from government.
Elasticity
Elasticity is mainly one of the measures that identify the degree of responsiveness of any
product demand due to one unit change in price or income of customers. It can be seen that
mining industry is highly price elastic in nature. Due to increase in the global price of minerals,
the Australian economy has increased the supply of the minerals to the Asian countries like
Japan, Taiwan and Malaysia. Moreover, the Australian market is more or less monopolistic in
nature and they are responding well to the price increase in the global market, the Australian
economy is going to vary their production. The Australian mining industry is improving the
performance of the economy through the development of price elasticity. On the other hand,
through the improvement in the elasticity there is chance of increasing the production ability.

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Figure 1: Mining commodity price index
(Source: Espace.curtin.edu.au, 2019)
The price elasticity of the Australian mining industry is going to be highly price elastic in
nature. Through the utilisation of the resource in an efficient way will increase the supply of
economy. Through the development of advanced technologies, the mining industries of Australia
are going to increase the potentiality of the economy. Through the incorporation of policies and
depending on the global elasticity on the mining industry, the Australian economy is going to
increase the quantity supplied of the products related with mines (Espace.curtin.edu.au, 2019).
Currently the market of Australia is looking to expand them in the Asian and other countries.
Even they are also aiming to increase their business in the country like South Africa.
Impacts of an event on the industry
Industrial conglomerate GFG claimed that AS$100 million in the Australian copper
industry. Due to this reason, Havilah Resources has claimed that they will be investing heavily
on the steel industry that is going to increase the production ability of the Australian economy.

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51% equity stock is going to increase the development of resource utilization through the
improvisation of better tools and technology (MINING.com, 2019). This is important for the
whole economy to increase the development of the Australian position in the mining industry in
the global business. On the other hand, through the improvisation of better technology and
investment opportunity the economy will be mainly willing to take the boom in the mining
industry. Through the improvement in the investment, the economy will be highlighting the
development of industry. The Australian mining industry will increase their ability and the
production that will definitely allow the economy to increase the global supply. The development
of the mining industry is going to bring the economy into stable position. This is highlighting the
importance of policies and how the economy is improving will be key consideration.

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Conclusion
The Australian economy is showing huge growth in their export of the minerals and
metals and they are taking the level of business into next level. It has been seen that Australian
mining industry is highly price elastic in nature. This is important mainly for the setting of price
of metals and minerals in the world market. The mining industry is contributing more than 15%
to the economies national economy. They are also taking the employment pressure as they are
helping the economy of Australia, to increase the employment scenario in Australia. Identifying
the demand and supply factors is going to increase the production ability of the economy.

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Reference list
(2019). Applied.org.au. Retrieved 2 May (2019), from
https://www.applied.org.au/wp-content/uploads/(2019)/01/competitiveness-australian-
industry-minerals.pdf
(2019). Espace.curtin.edu.au. Retrieved 3 May 2019, from
https://espace.curtin.edu.au/bitstream/handle/20.500.11937/41561/199178_199178.pdf?
sequence=2
Australia - Mining | export.gov. (2019). Export.gov. Retrieved 2 May (2019), from
https://www.export.gov/article?id=Australia-Mining
Australia, M. (2018). Mining boom delivers record resource export revenues for Australia
MINING.com. MINING.com. Retrieved 2 May (2019), from
http://www.mining.com/web/mining-boom-delivers-record-resource-export-revenues-
australia/
BHP Group Limited . (2019). Ibisworld.com.au. Retrieved 2 May (2019), from
https://www.ibisworld.com.au/australian-company-research-reports/mining/bhp-group-
limited-company.html
Creagh, B. (2017). Mining sector accounts for 15 per cent of Australia’s economy: Deloitte -
Australian Mining. Australian Mining. Retrieved 2 May (2019), from
https://www.australianmining.com.au/news/mining-sector-accounts-15-per-cent-
australias-economy-deloitte/
GFG to spend up to A$100m on Australian copper, iron ore developer | MINING.com.
(2019). MINING.com. Retrieved 3 May 2019, from http://www.mining.com/web/gfg-
spend-a100m-australian-copper-iron-ore-developer/

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Glencore Operations Australia Pty Limited . (2019). Ibisworld.com.au. Retrieved 2 May (2019),
from:https://www.ibisworld.com.au/australian-company-research-reports/mining/
glencore-operations-australia-pty-limited-company.html
Jammula, A., & Jammula, A. (2018). The world's biggest mining companies in (2018). Mining
Technology | Mining News and Views Updated Daily. Retrieved 2 May (2019), from
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emerging mining technologies in Australia. Resources Policy, 62, 125-135.
May 2018 - NSW coal industry statistics | Coal Services. (2019). Coal Services. Retrieved 3 May
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McLennan, C. L. J., Becken, S., & Moyle, B. D. (2017). Framing in a contested space: media
reporting on tourism and mining in Australia. Current Issues in Tourism, 20(9), 960-980.
Minerals.org.au. (2019). [online] Available at:
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Surging growth in mining value added supports 27 years of national economic growth | Ministers
for the Department of Industry, Innovation and Science. (2019). Minister.industry.gov.au.
Retrieved 2 May (2019), from
https://www.minister.industry.gov.au/ministers/canavan/media-releases/surging-growth-
mining-value-added-supports-27-years-national

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Welcome to the Labour Market Information Portal.. (2019). Lmip.gov.au. Retrieved 2 May
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Mining
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