Economic Factors Driving the Mining Industry in Australia: Report

This report analyzes a news article regarding a potential mining boom in Australia driven by tech metals, using a supply and demand framework and a human resource perspective. It discusses the issues faced by stakeholders, including unemployment and labor exploitation during previous dow...Read More

Running head: ECONOMICS FOR BUSINESS
Economics for business
Name of the student:
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Table of Contents
Introduction:....................................................................................................................................2
Review of the article:.......................................................................................................................2
Issues of the affected stakeholders:.................................................................................................3
Economic interpretation of the selected article:..............................................................................3
Recommendations to gauge the situation:.......................................................................................5
Conclusion:......................................................................................................................................5
Reference:........................................................................................................................................6

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Introduction:
Mining industry of Australia is an essential contributor to the national income of the
country. It produces large amount of jobs in the Australian economy for all the skilled, semi-
skilled and high skilled workers as well as provides boost to the country’s trade balance too
(Mason et al. 2014). According to the latest newspaper report by ABC news, mining industry is
going to face another mining boom in coming years due to the availability of tech metals in the
mines of the country. According to the news report “Next mining boom in Australia will be
driven by tech metals for renewable energy and technologies” changing mining industry scenario
of the nation is going to pose various economic advantage as well as disadvantage to the
Australian economy (McHugh 2018). This report is aimed to analyze the selected newspaper
article with the supply and demand framework and from the human resource perspective. In
addition to this, the report will provide recommendations to gauge the mining industry situation
for sustainability of the labor force and enhancement of the trade balance of the country.
Review of the article:
It is a well-known fact that Australia is one of the mineral rich country in the world that is
accounted for 2.2% mineral trading out of total mineral trade in the world (Rees 2017).
According to the selected article by the end of 2006, mining boom of in the Australia economy
has been over due to fall in demand of the iron ore in the international market and in addition to
this rise of presence of competitor nation like china and Indian turned the situation against
Australia (McHugh 2018). Global economic crisis in 2008 made the mining industry poor further
however, since 2010, there has been substantial rise in the mining output of the country (Nelson
and Katzenstein 2014). According to the selected newspaper article one of the major reason for

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the change in the mining industry outlook of Australia is the rise in production of tech-metals
that are being highly demanded by various developed and developing nations around the globe.
Issues of the affected stakeholders:
The article highlights that since 2006 there were huge boom in the mining industry,
however, next to this the boom was over as well as there was reduction in productivity in
Australian mining industry too. Australian mining industry is accounted for jobs for all types of
human capital, however due to lack of demand it caused rise in unemployment for the unskilled
and semi-skilled labors (Azevedo and Leshno 2016). In addition to this, in certain case it has also
been seen that skilled labors are exploited with the low salary in absence of demand in world
market of the Australian mining resources. However, presently there is another boom is coming
for the Australian mining industry, which is aimed to provide desired job to the skilled labors.
Although situation may remain same for the unskilled labors (McLennan, Becken and Moyle
2017).
Economic interpretation of the selected article:
During 2008, when whole western economy has been suffering from Global Financial
Crisis, then Australian mining industry has been aiding the country’s economy by generating
54% of GDP. Currently the country is accounted for exporting $139 billion mineral annually and
since 2003 to until 2006, there were huge demand of the Australian minerals. It aided the mining
industry to develop infrastructure and higher more labor.

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Q3
P4
P3
P1
P2
E
4
D2
Q1 Q4Q2
E
3
E
2
S1
D1
E
1
S0
D0
Figure 1: Supply and demand framework of the mining industry of Australia
Source: (Created by Author)
In cyclical way rise in productivity due to presence of human capital enhanced the labor
wage as from P1 to P3 as shown in figure 1 (Mankiw 2014). Though it enhanced the consumer
surplus for quite some time, however, with fall in demand and rigid wage rate, mining industry
faced higher price of their produce that further reduced the demand of the mineral ores from D0
to D1 as depicted in the diagram. Reduced demand further shifted the supply curve upward due to
lack of skilled labor (Downes, Hanslow and Tulip 2014). Thus presently government is aimed to
modernize its infrastructure so that it can reach to E4, equilibrium situation, where the quantity
demanded is higher (Q4) and the price too (P4), in order to provide better profit and sustainability
to the economy.

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Recommendations to gauge the situation:
One of the major issue with the Australian mining industry is lack of exposure to world
market. In absence of competitors like china and India, market demand of the Australian
minerals were good, however once the developing nations steps in the world market with their
mineral resources at lower cost, world demand shifted from the Australian mineral ores
(Schwager and Etzkorn 2017). Thus, it is highly important for the government to bring in export
promotion package for the mining industry of the country. In addition to this lack of skilled labor
may hamper the country’s interest to become one of the best mineral exporter in the world. So, it
would be beneficial for the government to bring in the vocational training program as well as
minimum wage policies depending upon the regions in order to mitigate the labor exploitation
problem. Through proper education, government can transform their semi-skilled or unskilled
labor into human capital, which will effectively reduce the production cost and aid the mining
industry of the country to have boom again.
Conclusion:
The report was aimed to analyze the selected newspaper with the supply and demand
framework and it has found that various factors influence the Australian mining industry. For
instance, availability of skilled labor resource isn’t the only factor that drive the mining industry,
in addition to this exogenous factors like labor skill, demand pull and technological up gradation
also influence the mining industry of the country. to conclude it can be said that, the selected
article has highlighted two important thing; first, Australia is all set to face higher demand of
their mineral resources from world market and secondly next mining boom is about to start for
the country. With higher number of skilled labor who can act as human capital and higher

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exposure, Australian mining industry again can become one of the major contributor of the
nation’s economy.
Reference:
Azevedo, E.M. and Leshno, J.D., 2016. A supply and demand framework for two-sided
matching markets. Journal of Political Economy, 124(5), pp.1235-1268.
Downes, P.M., Hanslow, K. and Tulip, P., 2014. The effect of the mining boom on the
Australian economy.
Mankiw, N.G., 2014. Principles of macroeconomics. Cengage Learning.
Mason, C.M., Paxton, G., Parsons, R., Parr, J.M. and Moffat, K., 2014. “For the benefit of
Australians”: Exploring national expectations of the mining industry. Resources Policy, 41, pp.1-
8.
McHugh, B. (2018). Why the next mining boom will be driven by tech metals. [online] ABC
Rural. Available at: http://www.abc.net.au/news/rural/2017-04-17/next-mining-boom-in-
australia-is-tech-metals/8443172 [Accessed 6 Apr. 2018].
McLennan, C.L.J., Becken, S. and Moyle, B.D., 2017. Framing in a contested space: Media
reporting on tourism and mining in Australia. Current Issues in Tourism, 20(9), pp.960-980.
Nelson, S.C. and Katzenstein, P.J., 2014. Uncertainty, risk, and the financial crisis of
2008. International Organization, 68(2), pp.361-392.
Rees, J., 2017. Natural resources: allocation, economics and policy. Routledge.
Schwager, J.D. and Etzkorn, M., 2017. Supply‐Demand Analysis: Basic Economic Theory. A
Complete Guide to the Futures Market: Technical Analysis and Trading Systems, Fundamental
Analysis, Options, Spreads, and Trading Principles, pp.359-371.

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