The success of Australia’s mining sector – now the world’s leading mining exporter – is the result of decades of industry investment to scale the country’s production of key commodities to meet global demand, especially in iron ore and coal. This has occurred in constructive partnership with state and federal governments and has delivered enormous benefits to Australians and the Australian economy.
When the mining industry performs well, Australians benefit economically.
Australia’s mining sector in 2021-221:
generated A$218 billion in annual export revenue (equal to 37% of Australia’s total goods and services export revenues):
supported over 1.1 million full-time equivalent Australian jobs;
paid the highest average wages of any Australian sector;
had the highest rate of Aboriginal and Torres Strait Islander employment in Australia; and
contributed an estimated A$63 billion in company taxes and royalties, supporting the delivery of vital public services initiatives and payments.
The mining sector has helped give Australia one of the highest gross domestic products (GDPs) per capita of any major country2. It also underpinned the country’s standout economic performance through the global financial crisis3 and other recent downturns.
More than 17 million individual Australians own a part of the Australian mining sector directly or via their superannuation holdings and the sector has a strong forward pipeline of [~A$200 billion] in proposed investments to further grow the sector and the benefits it brings to the country.
Globally, the global mining sector is at a crossroads.
Achieving the temperature aims of the Paris Agreement will require the rapid and widespread deployment of clean energy technologies like renewable energy, nuclear power, battery storage and electric vehicles. This transformation will only be possible through the scaling up of mineral production – with estimates suggesting up to 140 new copper mines, 60 new nickel mines, 50 new lithium mines and 17 new cobalt mines will be needed by 2030 alone4.
The capital investment required to unlock this production will be significant – estimated at an additional US$100 billion per year. The global competition to ensure competing and partnering jurisdictions have the right policy settings and industry actions in place to capture these opportunities is intense and growing.
Seizing an outsized share of critical mineral investment flows will be crucial to Australia’s future economic prosperity – particularly given that the contribution of the country’s existing powerhouses of iron ore, coal and LNG will decline significantly over the next few decades. But Australia’s past success does not mean it can take future success for granted. Australia can only succeed if it is once again willing and able to compete.
The competitiveness of Australia’s mining sector is under threat
The competitiveness of Australia’s mining sector depends on:
the characteristics of its resources;
its access to world-leading talent and Mining Equipment, Technology and Services (METS);
its ability to leverage common infrastructure investments in transport, energy, and water in key basins; and
the stability of its regulatory and policy regime. .
Australia has historically performed well against these criteria – but the future looks increasingly less certain.
On Australia’s resource quality – there are lots of mineral resources scattered across the world. They are not created equal. Some have higher quality ores that are more valuable because they require less processing. Some are nearer the surface, making it easier to extract them. While Australia is well endowed with resource deposits, the fact is there are other competing nations with superior deposits. This is true for foundational commodities such as iron ore where, for example, Brazilian and West African deposits under development have higher grades and lower impurities than ores from Australia’s Pilbara region. It is also true for future-facing commodities like copper, where countries like Chile and the Democratic Republic of the Congo have significantly greater reserve depth, ore quality, and accessibility.
Access to talent is also becoming an increasing challenge in Australia. While wages have almost doubled over the past 20 years, labour productivity has remained flat. And despite offering the highest pay of all Australian sectors, the sector is facing record vacancy levels, reflecting declining enrolments in mining-related educational programs, and bottlenecks in accessing international employees in areas unable to be filled by Australians.
On infrastructure, while existing regions including Western Australia’s Pilbara region, Queensland’s Bowen Basin and New South Wales’s Hunter Valley are well developed, major additional investments in transport, energy and water will be required to unlock the more remote regions where climate critical commodities like copper and nickel are typically found. This includes South Australia’s Gawler Craton in and inland parts of Western Australia.
Australia’s stable and pro-investment regulatory and policy environment has historically been a strength and will be essential for future growth. But recent examples of sudden and unilateral changes in tax and royalty regimes in some Australian jurisdictions have put future Australian investment at risk. The increasing complexity of regulation at State and Federal level is also leading to longer wait-times for permitting and approvals and industrial relations changes risk creating additional cost pressures while restricting the ability of industry to improve productivity.
These investment headwinds are in stark contrast to the many areas where industry and government have worked cooperatively and collaboratively together to deliver better outcomes for Australia’s competitiveness on issues like access to markets and integration, stabilisation of key trade relationships, digital and cyber, industry research, skills development, workforce diversity, and infrastructure.
Unlocking the future potential of Australia’s mining sector
Minerals like copper, nickel, lithium and cobalt will be critical to enabling the energy transition. Their extraction and processing also have the potential to be a driver of future economic prosperity. For Australia to seize this opportunity, a constructive partnership between industry and government will be needed.
The first step is to align on clear and ambitious goals for the sector spanning both economic and social outcomes – and with a clear understanding of collective responsibility and shared commitment.
If Australia were to increase its production on the commodities central to the energy transition (critical minerals plus copper and nickel), this could deliver up to A$20 billion in annual investment for years to come – supporting high-paying jobs in regional and remote areas, and new opportunities for Indigenous participation.
Four key pillars will be required to deliver on this ambitious agenda for Australia and the growth of its mining sector:
Stable and globally competitive fiscal settings
Robust, transparent and streamlined permitting
Best-in-class enabling infrastructure
A world class METS sector and workforce of the future
To secure our future prosperity, both industry and government must urgently and actively contribute to improving Australia’s mining sector competitiveness.
Policy stability and consistency across all levels of government are paramount to attract the potentially multi-billion-dollar investments in mining and downstream processing projects the world is looking to deploy. To attract capital and technology, it is crucial to review and align domestic policies and regulations, enhance fiscal stability, and improve infrastructure efficiency. This involves addressing high business costs, such as energy, transport, skilled labour, and regulatory processes.
Collaboration between industry and government is essential for a coordinated approach to infrastructure planning and investment, harnessing economies of scale and scope in energy, transport, and other input industries to reduce the cost differential for critical minerals needed in the net-zero transition.
Australia’s mining sector is central to enabling the energy transition and positioning Australia as the global destination for resources investment requires collaboration between industry and government. By working together, we can improve the global competitiveness of Australia’s mining sector, position Australia as a critical minerals leader, and make an even greater contribution to Australia’s future prosperity.
Read the full report – Recapturing Australia’s Competitiveness.
1 Excludes indigenous employment which is based on 2016 census data
2 According to the International Monetary Fund, Australia had a GDP per capita of US$63.5k in 2023. This is the tenth highest globally, behind Luxemburg, Ireland, Switzerland, Norway, Singapore, Qatar, United States, Iceland and Denmark. IMF (2023), GDP per capita, current prices.
3 According to a research paper published by the Reserve Bank of Australia, by 2013, the mining boom is ‘estimated to have raised real per capita household disposable income by 13 per cent, raised real wages by 6 per cent and lowered the unemployment rate by about 1¼ percentage points’. Peter Tulip (2014), The Effect of the Mining Boom on the Australian Economy.
4 Minerals Council of Australia (2023), Future Critical: Meeting the minerals investment challenge.