Economics and International Trade: Mining Sector Analysis Report

This report examines the Australian mining sector's significant role in the Australian economy, particularly its contributions to exports and GDP, while also analyzing its environmental impact. The report discusses the fuel tax credits received by mining companies, which, while boosting profits, are linked to environmental degradation. It highlights the reduction in government spending on environmental programs and the subsequent criticism from environmental groups. The analysis covers the government's policy decisions, including the proposed discontinuation of fuel tax credit schemes and the allocation of funds to address environmental costs. The conclusion underscores the resistance to climate action by mining companies and the resulting environmental challenges. The report uses multiple sources to analyze the economic and environmental implications of the mining sector.

Running head: ECONOMICS AND INTERNATIONAL TRADE
ECONOMICS AND INTERANTIONAL TRADE
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1ECONOMICS AND INTERNATIONAL TRADE
Introduction
(The mining sector is one of the most important sectors in Australia because it is the
largest exporter of lead, coal, rutile, zinc, zirconium, diamonds and iron ore and third largest in
aluminum in the world. Australia has huge resources that makes it enables it produce more
quantity at low prices (Taylor and Chan 2014). The sector contributes over 60 percent of overall
Australia’s export that gives 8 percent of Australia’s GDP. The paper provides an analysis of the
mining sector and its impact on the environment.) Slide2
Discussion
(The mining companies received a considerable amount of fuel tax credit from the
government which enables the company to generate more profits (Van der Merwe et al. 2019).
Tax is used as a restriction to lower the production of goods that generates harmful substances as
by product, which in turn lowers the profit. In order to lower the emission of such substances,
taxes are imposed, which lowers the profit.) Slide 3
(Imposition of tax raises the overall cost of production and firms have to keep a high
price to mitigate the tax amount (Morton 2018). Higher price lowers consumer demand and firms
lose as they have to bear the cost and get lower profits. This tax rate is lowered in order extract
the profits without regulating environmental controls that hampers the productivity of the
businesses.) Slide 4
(Investment in biodiversity and environment programs has gone down from 6.95 billion
to 6.32 billion in the past three years starting from period 2016-2017. However, the aggregate
government expenditure increased by 10 percent. According to environmentalists, the
government has lowered its support for environment policies because the sector generates huge

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income from international export. Australia generates huge amounts of profit from the export
market which serves 8 percent of aggregate GDP. As a result, the budget of federal environment
department went down by 30 percent in the past years according to ACF analysis.) Slide5
(The budget of federal environment department reduced to 950 million dollars. However,
commonwealth bank was expected to award the mining companies with a sum of 2.5 billion
dollars such that these firms can bear the environment costs and use renewable technologies.)
Slide 6
(The policy has been rejected by Greens and environmental groups saying that the big
companies will use this money to generate greater profit margins that will not lower the carbon
footprint.) Slide7 (Henceforth, most of the biggest mining companies like Rio Tinto, Glencore
and BHP Billiton paid no fuel taxes which negatively affected the environmental departments
who had to endure deep costs. Reports found that Australia’s natural estate resources has been
deteriorating and government support was insufficient to undergo resource management and
restoration programs.)Slide 8
Conclusion
(Australian government had a credit scheme where fuel tax rates were lowered for
farmers, agricultural businesses and miners whose business were worth greater than 3 billion
dollars. This scheme further concentrated the environmental problems (Knaus 2019).)Slide9
(Government has been planning to stop the scheme although various institutions are not
supporting the cause. Billion dollars are spent in Landcare which pays famers to lower the rate of
carbon emission by proper measures that can solve several problems.) Slide 10 Thus, it can be

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concluded that climate actions has received several resistance and companies are trying to kill off
climate actions by continuing day-to-day wielding activities.)Slide 11
Reference List
Knaus, C. (2019). Mining firms worked to kill off climate action in Australia, says ex-PM.
[online] the Guardian. Available at:
https://www.theguardian.com/environment/2019/oct/10/mining-firms-worked-kill-off-climate-
action-australia-ex-pm-kevin-rudd [Accessed 23 Jan. 2020].
Morton, A. (2018). Miners receive twice as much in tax credits as Australia spends on
environment. [online] the Guardian. Available at:
https://www.theguardian.com/environment/2018/feb/02/miners-receive-twice-as-much-in-tax-
credits-as-australia-spends-on-environment [Accessed 23 Jan. 2020].
Taylor, L. and Chan, G. (2014). Fuel tax credit 'firmly in sights' of Coalition's budget razor
gang. [online] the Guardian. Available at: https://www.theguardian.com/world/2014/apr/30/fuel-
tax-credit-firmly-in-sights-of-coalitions-budget-razor-gang [Accessed 23 Jan. 2020].
Van der Merwe, M., Cockerell, L., Chambers, M. and Jääskelä, J., 2019. Private Non-mining
Investment in Australia. RBA Bulletin, June, viewed, 6.