Golden Mile Resources Ltd: Economics Analysis Report (Australia)

This report provides an economics analysis of Golden Mile Resources Ltd, a mining company based in Australia. It begins with an introduction to the business, its industry sector (material), and its competitive landscape, including key competitors and market share dynamics. The report then delves into the factors of production, detailing the natural resources, labor, and capital involved, along with the company's cost structure and optimal size. It further explores the macroeconomic environment, focusing on political risks, inflation, unemployment, and exchange rates in Australia, and their impact on the firm's performance. The analysis includes relevant data and figures from recent years. The report concludes with comments on the overall macroeconomic conditions affecting the firm and their potential impacts on the company's operations. The report uses references to support its analysis.

Running head: ECONOMICS 1
Golden mile resources ltd (Industry sector Material)
Name
Affiliation
Date

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Introduction
(1)
a) Name of business - Golden Miles Resources Limited located in Australkia 1B/205-207
Johnson St. Fitzroy, Victoria, 3065 dealing in mining.
b) The business deals in mining and production of nickel and gold exploration.
c) Other companies are majorly the customers for the business since it’s a large scale
exploration company.
d) Main customers are located in Western Australia.
e) Sunrise Dam Gold mine, St Ives Gold mine, South Kalgoorlie gold mine, Sandstone gold
mine are some of the main competitors with golden mile resources limited in Australia.
f) The industries are located in Western Australia.
g) In case Golden Miles Resources shares 10% of the market and the largest producer shares
50% then the remaining mines are likely to take 5% or less since the company is among
the largest producers of gold and nickel (Haron, 2016).
Basing on the percentage shared by each of the mines in the market, the competitive
environment is said to be close to perfect completion. This is simply because the producers
within sector of gold and nickel mining are quite many especially in Australia and China.
The company is located in Western Australia and in this region, several companies dealing in
mining of similar materials are many. For example mines like Brightstar gold mine, Stawell
gold mines and many more are found within the same area and so much competition is
observed on market. Also, the buyers of these minerals are many all over the globe. This is
because many countries do lack such minerals yet they are very important in molding of

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gold-made materials. A perfectly competitive market means the number of sellers is as many
as the number of buyers in the market.
However, Golden mile Resources is among the widely known company within the metal and
mining industry all over the world. This makes it partly a monopolist since its products are
highly demanded compared to other companies in Australia. Though this does not push it to
be in a monopoly market as there exists on the companies producing similar materials in the
country. For a company to be called a monopolist, it should portray some unique features of a
single company taking over the market and also determining the price of commodities.
As per the available statistics there exists limited or few available substitutes for Golden Mile
Resources Ltd. low profit earning companies produce the few substitutes which are present.
when setting prices, Golden mile Resources puts into consideration the costs of production,
the competitor's prices and the consumer income. Therefore the costs Golden mile
Resources products vary basing on the consumer segments and there overall economic
welfare
Therefore the demand curve facing Golden Mile Resources Ltd is relatively inelastic.
meaning that a slight increase in price has less impact on the total quantity demanded mainly
due to its overall larger market share and strong reputation
Given that the overall demand is relatively inelastic, the firms sometimes mark up its price
above marginal costs to achieve specific objectives in the market
(2)Production costs and scale

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Description of the factors of production
The factors of production include; natural resources such as Gold,Nickel and Cobalt. In this
case land is categorized as fixed factor of production
The second is labor. This involves all the human input involved in the company’s production
process. In this case labor is a variable factor of production as it can be increased or
decreased depending on the needs of the company (Kotler, 2011).
The other is capital. These include machines and other equipment used by the company
during its production process. These can also be increased or reduced. Therefore there
variable factors of production
The company incurs in employee remuneration in order to attract or retain skilled labor. The
amount spent on employee salaries, wages and other fringe benefits may vary depending on
whether there has expansion or reduction of the employee. There is fixed remuneration
normally offered on cash basis. Variable remuneration to labor is usually inform of
incentives or bonuses
Generally as per the available information, the overall amount spent by the company on
meeting fixed costs is less than what is spent on the variable costs. There always expenses
incurred to ease the overall operation of the company and the amount varies depending on
the situation at hand, risk involved and the overall profit and loss assessment. Hence fixed
factors usually take the small part of the overall company’s costs structure when compared to
the variable costs.

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Hence forth on can assert that the firm has an medium optimal size. This is based on
assessing the overall costs incurred in the production process visa vi the total output. The
company tries to minimize production costs in order to have efficiency and effectiveness in
the production process.
(3)Macroeconomic environment
Political risks
Golden Mile Resources Ltd, operates internationally. This implies that the lack of political
stability in the country affects its overall levels of operations. None the less, in its branches
in western Australia, there is a favorable political environment. However, Business tasks for
Golden mile resources limited are affected by chaos and other forms of political unrests in
other areas of operations (Witcher & Chau, 2010). The company operates in more than a
dozen nations and hence is subject to political system and political environment risks in
various countries apart from Australia. Additionally, there ever changing policies by the
various Governments in which the company has its overall operations affect the general
performance of the Business. Cases of corruption and Bureaucracy also affect a global
company like Golden mile resources limited as it operates in some nations where
transparency and accountability is not taken serious
Inflation, unemployment, interest rate stability and exchange rate in Australia
Inflation
By june this year the overall level of inflation in Australia stood at 1.6 percent. From the year
1951 to the year 2019, the overall inflation rate in Australia has been on a 4.97 average

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Figure1showing Australia’s inflation rate for the past four years (Trading economics, 2019).
Unemployment
In august this year of 2019, the seasonally adjusted rate of unemployment in
australia stood at 5.3 percent. There as an increase of the unemployed people by 34700. From the
year 1978-2019 the level of un employment has been at an average of 6.82 percent.
Figure 2 showing unemployment rate in Australia for the past two years (Trading economics,
2019).

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Australian exchange rate
From the year 1990-2019, the Australia interest rates have been at at an average of 4.37 percent
Figure 3 showing average interest rate in Australia (Trading economics, 2019)

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An all time high of 1.49 was attained by the Australian exchange rate in 1973 December and in
2001 a record low of 0.48 was attained
Table 1 showing Australia’s foreign exchange rate performance (Trading economics, 2019)
Comments on the overall macroeconomic condition affecting the firm and their impact
Due to the increase in the unemployment levels in Australia, there are high chances there will be
a decline in the demand of the company’s products due to the fall in the people's disposable
income. Meaning that the company’s products are likely to be normal. None the less the lower
levels of inflation suggest that the economy is likely to improve and this may result into increase
in the people's purchasing power which may increase the company’s products demand(Witcher&
Chau, 2010).
The business may not face problems of having access to factors of production, because there is
abundant labor. The high levels of unemployment suggest that there is available and cheap labor
which can be utilized cost effectively to maximize revenues and minimize costs. None the less in
the long run workers may demand for better wages which may increases the costs of operations

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The recent trades in the exchange rates are favorable and thus if the company continues with its
exportation strategies, much revenue will be earned given that the exchange rate is improving
compared to other currencies

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References
Haron, A., (2016). Standardized Versus Localized Strategy: The Role of Cultural Patterns in
Society on Consumption and Market Research. Journal of Accounting and Marketing,
5(1).
Kotler, P., (2011). Reinventing marketing to manage the environmental imperative. Journal of
Marketing, 75(4), pp. 132-135.
Trading economics. (2019).Retrieved from https://tradingeconomics.com/australia/currency
Witcher, B. & Chau, V.,( 2010). Strategic management: Principles and practice. s.l.:Cengage
Learning EMEA.
Witcher, B. J. & Chau, V. S., (2010). Strategic Management: Principles and Practice. Boston:
Cengage Learning EMEA.