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1301.0 - Year Book Australia, 2008  
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Contents >> Mining >> Mining industry

MINING INDUSTRY

Economic contribution

The contribution of an industry to the overall production of goods and services in an economy, gross domestic product (GDP) is measured by gross value added (GVA). Information on the relationship between industry GVA and GDP is provided in the Industry structure and performance chapter.

Total production of the Mining industry as measured by industry GVA (in volume terms), decreased by 2% between 2004-05 and 2005-06, but almost doubled between 1985-86 and 2005-06 (graph 18.7).

During the period 1985-86 to 2005-06, the largest annual decrease (6%) in production was in 1986-87 while the largest annual increase (18%) was in 1987-88.

18.7 Mining production(a)(b)
Graph: 18.7 Mining production(a)(b)

Table 18.8 shows the industry GVA of the Mining Division as defined in the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 (1292.0).

Production in the Services to mining industry accounts for a small proportion (8-9%) of total Mining production (table 18.8). However, the total value of services to mining may be larger than these figures indicate as some services may have been provided by businesses classified to other industries such as construction or business services.
18.8 MINING INDUSTRY(a), Gross value added(b)

2001-02
2002-03
2003-04
2004-05
2005-06
Percentage change from 2001-02 to 2005-06
Industry
$m
$m
$m
$m
$m
$m

Mining (excl. services to mining)
42 303
41 861
40 460
41 784
40 861
-3.4
Services to mining
3 702
3 948
3 715
4 368
4 139
11.8
Total mining(c)
45 734
45 596
43 948
46 152
45 000
-1.6

(a) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition.
(b) Volume measures. Reference year is 2004-05.
(c) Volume measures for years other than 2004-05 and 2005-06 are not additive.
Source: Australian System of National Accounts (5204.0).


Contribution to state production

The importance of the Mining industry in terms of production as measured by total factor income varies across the states and territories. Total factor income is a measure of state production. It is the total payments received by labour and owners of capital used in the production of the goods and services.

Mining production was the largest component of 2005-06 total production in Western Australia, the Northern Territory and Queensland. In other states, Manufacturing, and Property and business services industries were much larger than Mining, which was ranked 13th or lower in terms of production.

18.9 Mining industry contribution to state production(a), selected states
Graph: 18.9 Mining industry contribution to state production(a), ^selected states
During the period 1995-96 to 2005-06, the Northern Territory experienced significant changes in the contribution of the Mining industry to total state production, varying from 13% in 1998-99 to 32% in 2000-01 (graph 18.9). In 2005-06 the Mining industry accounted for 26% of total production in the Northern Territory.

In Western Australia, the contribution of the Mining industry increased from 20% in 1995-96 to 27% in 2005-06 (graph 18.9). Over this period the contribution of the Mining industry to total state production was significantly higher than the production shares of Property and business services or Construction industries, the next largest industries. The Oil and gas industry was the main contributor to mining production. In 2005-06, the combined value of production for Oil and gas accounted for 34% ($14,709m) of the total value of production ($42,841m) in the state including some manufactured and semi-manufactured products like alumina (see the Resources Data Files on the Western Australia Department of Industry and Resources website <http://www.doir.wa.gov.au>, last viewed September 2007). Most crude oil and condensate and liquefied natural gas (LNG) are produced in the Carnarvon basin where the North West Shelf Project is located.

The Mining industry's share of Queensland total production varied between 6-12% in the period 1995-96 to 2005-06 (graph 18.9). In 2005-06, the Mining industry's contribution to state production was 12%, the highest of any industry in the state. Figures released by the Queensland Department of Natural Resources and Mines indicate that the value of production of fuel minerals was $18,483m in 2005-06 with black coal accounting for 95% ($17,643m) of this value (see <http://www.nrm.qld.gov.au/mines/>, table 'Quantity and Value of Minerals Produced in Queensland 2005-06', last viewed September 2007). Queensland is the largest producer of black coal in the country. In 2005-06, it also produced copper, lead and zinc valued at $4,564m.

Exports

Table 18.10 shows the proportion of exports contributed by the Mining industry based on exports by industry of origin.

In the period 1996-97 to 2006-07 the value of exports from the Mining industry has more than tripled. By comparison, the value of exports from the Manufacturing industry has grown by 76%. As a consequence, the Mining industry's contribution to total goods exported from Australia increased from 23% in 1996-97 to 37% in 2006-07, while that for the Manufacturing industry fell from 61% to 51%.
18.10 VALUE OF EXPORTS(a), By industry of origin

Share of total exports
Mining
Manufacturing
All industries
Mining
Manufacturing
$m
$m
$m
%
%

2002-03
31 261
65 810
115 479
27.1
57.0
2003-04
28 565
62 442
109 049
26.2
57.3
2004-05
41 123
67 496
126 823
32.4
53.2
2005-06
57 690
75 102
152 492
37.8
49.2
2006-07
62 744
85 343
168 188
37.3
50.7

(a) On a 'free-on-board' basis.
Source: ABS data available on request, International trade.


Natural resource royalties

Natural resource royalties paid by mining businesses are collected by state and Northern Territory governments for mining onshore and up to three nautical miles offshore, and by the Australian Government outside that area. The basis of the mineral royalties varies between states. Some royalties are based on the value of production at mine site, others on sales value, gross proceeds or profit. The rates imposed also vary between commodities.

Onshore and within coastal waters, royalties are levied on mineral and petroleum production. State petroleum royalties and Commonwealth crude oil excise apply onshore and in coastal waters. Petroleum produced in offshore areas of Australia (but not including the North West Shelf) is generally subject to an offshore Petroleum Resource Rent Tax levied by the Australian Government. Petroleum royalties and crude oil excise apply to production from the North West Shelf project.

Natural resource royalties expenses include payments under mineral lease arrangements, and resource rent taxes and royalties. In 2004-05 businesses in the Oil and gas extraction industry paid a higher proportion of natural resource royalties to sales and service income (9%) compared with those in the Coal mining (5%) or Metal ore mining (4%) industries. Natural resource royalties expenses for the Oil and gas extraction industry were $1,657m, and for the Coal mining and the Metal ore mining industry were $1,016m and $924m respectively.
Structure and performance

The source for the statistics in this section is the annual Economic Activity Survey (EAS) of businesses, conducted by the Australian Bureau of Statistics (ABS).

Production of an industry can be measured in terms of industry value added (IVA), in much the same way as industry GVA. However, unlike industry GVA (the national accounts concept of production), IVA is not adjusted for a number of national accounting conventions, as the information to make these adjustments can not be collected in the EAS. The advantage of IVA, however, is the availability of more detailed (component) industry statistics.

In 2004-05 mining businesses paid a total of $7,497m in wages and salaries and generated $71,509m in sales and service income and $39,892m IVA (table 18.11).

In 2004-05, the Oil and gas extraction industry contributed the largest proportion (36%) of total mining production measured in terms of IVA, followed by Metal ore mining (29%) and Coal mining (26%) (table 18.11). The Oil and gas extraction industry also generated the most profit (44%, $9,205m) in 2004-05.

In terms of wages and salaries, the largest contributors were the Metal ore (30%) and Coal (27%) mining industries. The wages and salaries paid were $2,252m from the Metal ore mining industries and $2,020m from the Coal mining industry.

Within the Metal ore mining industry, the Gold mining industry contributed the largest share of wages and salaries (31%) and the Iron ore mining industry the largest share of sales of goods and services (34%).

18.11 MINING INDUSTRY(a), Summary of operations - 2004-05

Inventories
Wages and salaries(b)
Sales and service income(c)
Operating profit before tax
Opening
Closing
Purchases and selected expenses
Industry value added
ANZSIC subdivision
$m
$m
$m
$m
$m
$m
$m

Coal mining
2 020.2
20 471.0
4 987.1
914.6
1 252.1
14 566.7
10 189.0
Oil and gas extraction
900.6
17 820.4
9 204.9
479.8
525.4
9 487.0
14 281.3
Metal ore mining
Iron ore mining
585.2
8 013.4
3 726.9
467.6
521.9
4 563.2
4 940.6
Copper ore mining
296.4
2 439.9
435.1
402.3
420.4
1 839.2
1 247.5
Gold ore mining
693.6
5 384.7
-522.0
410.7
502.6
5 858.1
1 345.4
Mineral sand mining
153.0
1 055.1
173.7
177.3
218.2
826.1
489.2
Silver-lead-zinc ore mining
209.6
2 291.7
533.7
114.6
122.4
1 573.3
1 135.2
Bauxite mining, nickel ore mining and metal ore mining n.e.c.
313.9
4 185.5
1 622.5
466.8
561.9
2 769.4
2 293.6
Total
2 251.7
23 370.3
5 969.8
2 039.3
2 347.4
17 429.4
11 451.5
Other mining
544.1
3 706.4
408.7
407.4
416.5
3 005.7
1 392.7
Services to mining
1 780.1
6 141.4
175.4
267.1
230.7
4 394.7
2 577.2
Total mining
7 496.7
71 509.5
20 745.9
4 108.1
4 772.1
48 883.4
39 891.8

(a) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition.
(b) Excludes the drawings of working proprietors. Includes capitalised wages.
(c) Includes rent, leasing and hiring income.
Source: Australian Industry (8155.0).

Capital expenditure in 2004-05 was the largest in the Metal ore mining industry (33%) followed by the Oil and gas extraction industry (32%) (table 18.12). Most of the capital expenditure on acquisitions was spent on plant, machinery and equipment (45%). A significant proportion (31%) was also spent on other, including land and intangibles. The Coal mining industry accounted for the largest share of the expenditure in plant, machinery and equipment, while the Metal ore mining industry accounted for the largest share of the expenditure in dwellings, other buildings and structures and other, including land and intangibles.

The Metal ore mining and Oil and gas extraction industries contributed most of the net capital expenditure i.e. capital expenditure after deducting disposals of assets. Combined, these industries accounted for 64% of total net capital expenditure made in 2004-05.

18.12 MINING INDUSTRY(a), Fixed capital expenditure and disposals - 2004-05

Capital expenditure on
Plant, machinery and equipment
Dwelling, other buildings and structures
Other, including land and intangibles
Total acquisitions
Disposal of assets
Net capital expenditure
ANZSIC subdivision
$m
$m
$m
$m
$m
$m

Coal mining
2 362.8
704.5
389.1
3 456.5
187.1
3 269.3
Oil and gas extraction
2 114.6
1 344.0
1 697.1
5 155.7
823.5
4 332.3
Metal ore mining
Iron ore mining
638.1
990.4
134.5
1 763.0
50.4
1 712.5
Copper ore mining
169.0
219.2
20.2
408.5
27.0
381.5
Gold ore mining
329.2
243.1
1 397.8
1 970.2
183.1
1 787.1
Mineral sand mining
67.2
26.7
62.2
156.1
8.4
147.7
Silver-lead-zinc ore mining
164.2
43.3
37.7
245.4
3.7
241.7
Other(b)
415.2
116.5
112.7
644.5
46.5
597.9
Total
1 783.2
1 639.2
1 765.3
5 187.6
319.2
4 868.4
Other mining
355.6
52.7
91.1
499.3
48.3
450.9
Services to mining
577.9
88.2
917.4
1 583.5
205.9
1 377.6
Total mining
7 194.1
3 828.5
4 860.0
15 882.6
1 584.0
14 298.6

(a) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition.
(b) Comprises bauxite mining, nickel ore mining and metal ore mining n.e.c.
Source: Australian Industry (8155.0).

Operating profit before tax (OPBT) is a measure of profit before extraordinary items are brought to account and prior to the deduction of income tax and appropriations to owners (e.g. dividends paid).

From 2003-04 to 2004-05, OPBT for the Mining industry increased by $4,736m or 30% (table 18.13). The Coal mining industry was the main contributor to this rise ($3,002m or 151%). Metal ore mining also recorded an increase ($1,741m or 41%). Losses were recorded for both the Services to mining ($234m or 57%) and Other mining ($188m or 32%) industries.

18.13 MINING INDUSTRY(a), Operating profit before tax

2003-04
2004-05
ANZSIC subdivision
$m
$m

Coal mining
1 985.5
4 987.1
Oil and gas extraction
8 789.0
9 204.9
Metal ore mining
4 229.1
5 969.8
Other mining
596.9
408.7
Services to mining
409.6
175.4
Total mining
16 010.2
20 745.9

(a) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition.
Source: Australian Industry (8155.0).



Research and development (R&D)

The Organisation for Economic Co-operation and Development defines R&D as comprising 'creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications'. R&D activity is characterised by originality. It has investigation as a primary objective, the outcome of which is new knowledge, with or without a specific practical application, or new or improved materials, products, devices, processes or services. R&D ends when work is no longer primarily investigative.

Graph 18.14 shows the type of R&D expenditure by the Mining industry. For the period 1995-96 to 2005-06 current expenditure other than labour costs is the major component of R&D expenditure for the Mining industry, accounting for 78% of total mining R&D expenditure in 2005-06. This category includes: expenses on materials, fuels and other inputs; rent, leasing and hiring; repairs and maintenance; payments to outside organisations for use of specialised testing facilities or for analytical work, engineering or other specialised services in support of R&D projects carried out by the business; commission and consultant expenses for research projects carried out by the business (except direct labour costs); software for own account produced as part of R&D; and the proportion of expenditure on general services and overheads attributable to R&D activity. In the Mining industry, these expenses increased by $947m (258%) from $367m in 1995-96 to $1,314m in 2005-06. The amounts spent on capital expenditure and labour costs increased by $21m (27%) and $195m (260%) respectively. As a result, capital expenditure as a proportion of total mining R&D expenditure fell to 6% in 2005-06, significantly lower than the 15% recorded in 1995-96. Labour costs increased from 14% to 16% over this period.

18.14 Mining industry, Type of expenditure on R&D
Graph: 18.14 Mining industry, Type of expenditure on R&D

During the period 1995-96 to 2005-06, the Mining industry's contribution to total (all industries) R&D expenditure rose from 12% to 17%. The Manufacturing industry's share of total R&D expenditure continued to be the highest, accounting for 39% in 2005-06.




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