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8415.0 - Mining Operations, Australia, 2006-07 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 22/07/2008  Final
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EXPLANATORY NOTES


INTRODUCTION

1 This publication, Mining Operations, Australia, 2006-07 (cat. no. 8415.0), presents estimates of the economic and financial performance of the mining industry.

2 Mining, as specified in Division B of the 2006 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC) (cat. no. 1292.0), relates to the extraction of minerals occurring naturally as solids such as coal and ores, liquids such as crude petroleum, or gases such as natural gas, by such processes as underground or open-cut mining, quarrying, operation of wells or evaporation pans, and recovery from ore dumps or tailings. Beneficiation activities (ie. preparing, including crushing, screening, washing, and flotation) are included, because they are generally carried out at or near mine sites as an integral part of mining operations. The division also includes mining sites under development, as well as mineral and petroleum exploration and other mining support services.

3 This publication represents the first release of these estimates using the 2006 edition of ANZSIC. Because of the combined effect of this new classification and methodological changes, a new series has commenced with the 2006-07 data. See Technical Note 1 for further details.


STATISTICAL UNITS USED

4 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. All businesses are recorded on the ABS Business Register (ABSBR).

5 The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large and diverse business groups, the units model is used also to define reporting units that can provide data to the ABS at suitable levels of detail.

6 This units model allocates businesses to one of two sub-populations:

  • Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). The vast majority of these businesses are simple in structure and are allocated to the population which is maintained by the ATO. These are termed (by the ABS) ABN units.
  • The remaining businesses are in the ABS maintained population, and are termed type of activity units, or TAUs.

7 Together, these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which the Economic Activity Survey (EAS) samples are taken.

8 For details about the ABSBR and how ABN units and TAUs contribute to the industry statistics in this publication, see Technical Note 1.


SCOPE

9 The mining industry collection is conducted annually as a component of the ABS's Economic Activity Survey (EAS). The scope of the 2006-07 mining collection comprises all businesses (including non-employing businesses) on the ABS Business Register (ABSBR) at time of selection, whose industry is classified to ANZSIC Division B Mining. However, some categories of business are excluded. The ABSBR includes information supplied from the Australian Taxation Office (ATO) which assists in determining the scope of ABS collections. Using this, businesses in the following two categories have been excluded from the scope of this collection with effect from 2006-07 (although they were included in previous years):
  • businesses which have an Income Tax Instalment Provision (ITIP) taxation 'role' but no other taxation role;
  • long term non-remitters of Business Activity Statement (BAS) data.

10 Division B comprises the following subdivisions and their component groups and classes:
      06 Coal mining
      060 Coal mining
      0600 Coal mining
      07 Oil and gas extraction
      070 Oil and gas extraction
      0700 Oil and gas extraction
      08 Metal ore mining
      080 Metal ore mining
      0801 Iron ore mining
      0802 Bauxite mining
      0803 Copper ore mining
      0804 Gold ore mining
      0805 Mineral sand mining
      0806 Nickel ore mining
      0807 Silver-lead-zinc ore mining
      0809 Other metal ore mining
      09 Non-metallic mineral mining and quarrying
      091 Construction material mining
      0911 Gravel and sand quarrying
      0919 Other construction material mining
      099 Other non-metallic mineral mining and quarrying
      0990 Other non-metallic mineral mining and quarrying
      10 Exploration and other mining support services
      101 Exploration
      1011 Petroleum exploration
      1012 Mineral exploration
      109 Other mining support services
      1090 Other mining support services

11 Industry statistics in Chapters 1 and 2 of this publication are presented at subdivision level. ANZSIC Subdivision 08 Metal Ore Mining is also presented at the ANZSIC class level in Chapter 2.


COVERAGE

12 The frame used for the survey of the mining industry, like most ABS economic surveys, was taken from the ABSBR. The ABSBR is updated monthly to take account of new businesses and businesses which have ceased operating.

13 The ANZSIC-based industry statistics presented in this publication are compiled differently from activity statistics. Each ABN unit or TAU on the ABSBR has been classified (by the ATO and the ABS respectively) to a single industry irrespective of any diversity of activities undertaken. The industry class allocated is the one which relates to those activities that provide the main source of income. A mining business is one predominantly engaged in mining activities, but the data collected for it cover all activities of the business (including any non-mining activities). Conversely, there are some businesses predominantly engaged in non-mining activities which also undertake limited mining activities; these are excluded from the collection.

14 Businesses mainly engaged in refining or smelting minerals or ores (other than preliminary smelting of gold), or in manufacturing such products of mineral origin as coke or cement, are excluded, as they are engaged in activities classified to ANZSIC Division C Manufacturing.

15 Businesses engaged in providing contract mining services are not always within the scope of the annual mining collection. Under ANZSIC principles, only those contract mining organisations responsible for all facets of a mining operation are classified to Mining. Businesses which contract to provide selected services are classified to the (predominant) activity they are performing, rather than to the industry they are serving. For example, businesses contracted to perform tasks such as mine site preparation (and/or construction), and removal of overburden, are classified to ANZSIC Division E Construction and are, therefore, outside the scope of the mining collection.

16 Some mining businesses engage, to a significant extent, in activities which are normally carried out by different industries. For example, a predominantly mining business may also undertake significant amounts of manufacturing. Similarly, a mining business may produce significant volumes of goods which are normally produced in different mining industries. Where a business makes a significant economic contribution to industries classified to different ANZSIC subdivisions, the ABS includes the business in the ABS maintained population and 'splits' the TAU's reported data between the industries involved. Significance is determined using total income.

17 A TAU's reported data will be split if the inclusion of data relating to the secondary activity in the statistics for the industry of the primary activity distorts (by overstating or understating) either the primary or secondary industry statistics at the ANZSIC subdivision level by:
  • 3% or more, where the industries of the primary and secondary activities are in the same ANZSIC division
  • 2% or more, where the industries of the primary and secondary activities are in different ANZSIC divisions.

18 Unincorporated joint ventures (UJVs) within the mining industry are arrangements which allow the sharing of expertise, resources and risk associated with the development of mineral deposits. This occurs through the participation of a number of organisations (by investment) in a mining operation. Some of these organisations may not otherwise be involved in the mining industry.

19 The mining collection includes mining businesses which are operators and/or participants in UJVs. Generally, each participant supplies data of its share of income, while the operator reports all expenses and employment.

20 The ABS attempts to maintain a current understanding of the structure of the large, complex and diverse business groups that form the ABS maintained population on the ABSBR, through direct contact with those businesses. Resultant changes in their structures on the ABSBR can affect:
  • the availability of such businesses (or units within them) for inclusion in the annual economic collections,
  • the delineation of the units, within those groups, for which data are to be reported.

21 The ABS attempts to obtain data for those businesses which ceased operation during the year, but it is not possible to obtain data for all of them.


IMPROVEMENTS TO COVERAGE

22 Data in this publication have been adjusted to allow for lags in processing new businesses to the ABSBR. The effect of these adjustments is an increase of 0.3% on the Australian estimate of sales and service income for total Mining.


ANZSIC93 AND ANZSIC06

23 The estimates in this publication are based on ANZSIC06. Data in previous issues were based on the 1993 version of the ANZSIC (ANZSIC93). ANZSIC06 was adopted to provide a more contemporary industrial classification system, taking into account issues such as changes in the structure and composition of the economy, changing user demands and compatibility with international classification standards.

24 All businesses formerly coded to ANZSIC93 Division B Mining are classified to ANZSIC06 Division B Mining. Essentially there has been a lateral transfer of Mining subdivisions between ANZSIC93 and ANZSIC06. There have, however, been some changes to classification names. There has also been amalgamation of classes within some subdivisions. For details, see Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (cat. no. 1292.0).


HISTORICAL COMPARISONS

25 To provide comparability with the 2006-07 estimates, the historical estimates presented in Table 1.1 take into account the various changes in collection design, estimation methodology and scope, as well as the introduction of ANZSIC06. Data collected for 2004-05 and 2005-06 (under ANZSIC93) have been updated to take account of any revisions to the data since they were published in the previous issue of this publication. The data so revised have then been mapped to ANZSIC06, and further adjusted to incorporate the scope changes outlined in paragraph 4 above and the methodological changes described in Technical Note 1 (paragraphs 8-19). This process is known as 'bridging'.


SURVEY SAMPLE DESIGN

26 The mining collection is conducted annually as a component of the ABS's Economic Activity Survey:
  • A sample of 852 mining businesses were asked by the ABS to provide employment details and data obtained from their financial statements, mainly via mail out questionnaires. Businesses were also asked to supply key details of their operations by state and territory, enabling the production of the state/territory estimates contained in table 3.1.
  • Auxiliary information about wages and salaries and turnover for 7,334 mining industry businesses, sourced from Australian Tax Office (ATO) Business Activity Statement (BAS) data, were used to improve the estimates produced from the survey data. These businesses included all those selected in the survey. Section 16(4)(ga) of the Income Tax Assessment Act 1936 provides for the ATO to pass information to the Australian Statistician for the purposes of the Census and Statistics Act 1905.


REFERENCE PERIOD

27 The period covered by the collection is intended to be the 12 months ended 30 June. Where businesses are unable to supply information on this basis, an accounting period for which data can be provided is used for data other than that relating to employment. Such businesses make a substantial contribution to some of the estimates presented in this publication. As a result, the estimates can reflect trading conditions that prevailed in periods outside the twelve months ended June in the relevant year.

28 The following graph illustrates the contribution of businesses which reported for the year ended 31 December 2006 to estimates of key aggregates for Total Mining in 2006-07. The contribution is much greater in Coal Mining, Oil and Extraction and Metal Ore Mining than in the remaining mining industry subdivisions.

December year-end businesses, Contribution to total mining
Graph: December year-end businesses, Contribution to total mining


29 Although financial data estimates relate to the full twelve months, employment estimates relate to the last pay period ending in June of the given year. As such, estimates of wages and salaries per person employed can be affected by any fluctuations in employment during the reference period.

30 Financial data presented incorporate all units in scope of the mining collection that were at the production stage at any time during the year. They also include any temporarily inactive units, i.e. those units which were in the development stage or which were not in production, but which still existed and held assets and liabilities and/or incurred some non-operating expenses (e.g. depreciation, administration costs).


RELIABILITY OF ESTIMATES

31 Two types of error are possible in an estimate based on a sample survey: sampling error and non-sampling error.

32 Sampling error occurs because a sample, rather than the entire population, is surveyed. One measure of the likely difference resulting from not including all businesses in the survey is given by the standard error. There are about two chances in three that a sample estimate will differ by less than one standard error from the figure that would have been obtained if all businesses had been included in the survey, and about nineteen chances in twenty that the difference will be less than two standard errors. Standard errors for the current estimates of key variables are shown in Technical Note 2.

33 Non-sampling error arises from inaccuracies in collecting, recording and processing the data. The most significant of these errors are: misreporting of data items; deficiencies in coverage; non-response; and processing errors. Every effort is made to minimise reporting error by the careful design of questionnaires and efficient data processing procedures.

34 For more detailed information about this subject, see Technical Note 2.


QUALITY INDICATORS

35 In the 2006-07 survey of the mining industry, there was a 93.5% response rate from all businesses that were surveyed and found to be operating during the reference period. Data were imputed for the remaining 6.5% of operating businesses. This imputation contributed 0.3% to the estimate of sales and service income for the mining industry.


INDUSTRY PERFORMANCE MEASURES

36 Differences in accounting policy and practices across businesses and industries can lead to some inconsistencies in the data input to the statistics. Although much of the accounting process is subject to standards, there is still a great deal of flexibility left to managers and accountants in the accounting policy and practices that they adopt. For example, the way profit is measured is affected by management policy about such issues as depreciation rates, bad debt provisions and write off, and goodwill write off. The varying degree to which businesses consolidate their accounts may also affect any industry performance measures calculated.

37 A range of performance measures, usually expressed as ratios, can be produced from the data available from businesses' financial statements. Others, relating to labour inputs, can be derived by expressing financial or economic variables on a per person employed basis. The performance measures presented in this publication comprise:
  • profitability ratios, which measure the rate of profit on sales
  • debt ratios, which indicate the ability of businesses to meet the cost of debt financing
  • labour measures, which relate output, labour costs and employment
  • capital expenditure ratios, which indicate the extent of business investment in capital assets.

38 A further explanation of each ratio can be found in the Glossary. Those ratios compiled from a combination of flow (whole period) and level (beginning or end of period) items need to be treated with additional caution. Ratios which include both level and flow items in their derivation may be volatile due to the timing differences involved. In particular, this should be taken into account when considering those measures expressed as values per person employed. It may, therefore, be preferable to base any analysis on a range of data presented rather than focusing on one variable.

39 Similarly, the extent of change in inventories is a component of several of the measures of industry output and earnings. Although the closing inventories held by businesses in an industry in one period should, in concept, equate to its opening inventories in the next period, differences will be observed in many cases. These differences can arise from re-selection of the sample between years and/or changes in the structure of businesses selected, as well as revaluations of inventories in businesses' accounts.

40 The above limitations are not meant to imply that analysis based on these data should be avoided, only that they should be borne in mind when interpreting the data presented in this publication.


INTERNATIONAL FINANCIAL REPORTING STANDARDS

41 The new Australian equivalents to International Financial Reporting Standards (AIFRS) began to be progressively implemented in Australia from 1 January 2005. As a result, a number of items in the financial accounts of Australian businesses have been affected by changed definitions, which have in turn affected both Income Statements and Balance Sheets. A range of ABS economic collections source data from financial accounts of businesses, and use those data to derive economic statistics. There have been no changes in the associated economic definitions.

42 After monitoring data items since March quarter 2005 it has been concluded that most affected published data series have been affected by data breaks, but that the magnitude of such breaks cannot be determined without imposing disproportionate load upon data providers to ABS surveys and other administratively collected data.


STATE AND TERRITORY ESTIMATES

43 State and territory summary estimates for selected mining (i.e. Total Mining excluding ANZSIC Subdivision 10 Exploration and Other Mining Support Services) are presented in table 3.1. To enable the production of these estimates, businesses included in the mail out survey were asked to report data for employment, wages and salaries, and sales of goods and services, for each state and/or territory in which they operated, if more than one. The relevant data for all other businesses, including those whose contribution was sourced from BAS data, were allocated to their state/territory of operations as recorded on the ABSBR.

44 The Joint Petroleum Development Area (JPDA) is an area in the Timor Sea, about 500 km north west of Darwin. A Treaty between Australia and East Timor, which entered into force on 2 April 2003, provides the necessary framework arrangements for companies to exploit resources in the JPDA. Data relating to activity in the JPDA is included in estimates for the Northern Territory. Further, as a reflection of the joint Australia/East Timor administration of exploration and production activity in the JPDA, 50% of income and expenditure relating to the JPDA is excluded from the estimates.


ACKNOWLEDGMENT

45 ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.


RELATED PUBLICATIONS

46 The ABS produces industry estimates for a range of selected industries (including mining) and these results are to be available in Australian Industry, 2006-07 (cat. no. 8155.0), expected to be released in September 2008. National estimates of income, output, expenditure and associated ratios will be available at the ANZSIC division level (with a greater range of data available via the ABS web site in spreadsheet form).

47 For a list of publications and electronic releases that present data about the mining industry using ANZSIC93, please refer to the 2005-06 edition of this publication.

48 Current publications and other products released by the ABS are available from the Statistics View on the ABS web site. The ABS also issues a daily Release Advice on the web site which details products to be released in the week ahead.


Non-ABS data

49 The following organisations also publish mining and related statistics for Australia:

ABARE, web site <http://www.abareconomics.com>
Australian Commodities (forecasts and issues)
Australian Commodity Statistics Australian Mineral Statistics
Geoscience Australia, web site <http://www.ga.gov.au>
Australia's Identified Mineral Resources Oil and Gas Resources of Australia
Minerals Council of Australia, web site <http://www.minerals.org.au>
Minerals Industry Survey Report
United States Department of the Interior, US Geological Survey,
web site <http://www.minerals.usgs.gov>
Mineral Commodity Summaries
The Mineral Industry of Australia


ABS DATA AVAILABLE ON REQUEST

50 As well as the statistics included in this and related publications, the ABS may have other relevant data available on request and for a charge. Inquiries should be made to the National Information and Referral Service on 1300 135 070.


ROUNDING

51 Where figures have been rounded, discrepancies may occur between totals and the sums of the component items. Due to data being adjusted for lags in processing new businesses to the ABS Business Register (see paragraph 22), this 'rounding rule' also applies to employment estimates.

52 Proportions, ratios and other calculated figures shown in this publication have been calculated using unrounded estimates and may be different from, but are more accurate than, calculations based on the rounded estimates.


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