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Table 16.9 shows the industry GVA of the Mining Division as defined in the Australian and New Zealand Standard Industrial Classification (ANZSIC), 1993 edition (1292.0). The table also shows the contribution of the Mining industry to Australia's GDP in the period 2000-01 to 2004-05.
Production in the Services to mining industry accounts for a small proportion (10-12%) of total Mining production (table 16.9). 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.
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 total 2004-05 production in Western Australia and the Northern Territory. It was the third largest in Queensland. In other states, Manufacturing, and Property and business services industries were much larger than Mining, which was ranked 15th or lower in terms of production.
During the period 1994-95 to 2004-05, 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 16.10). In 2004-05 the Mining industry accounted for 20% of total production in the Northern Territory.
In Western Australia, the contribution of the Mining industry increased from 18% in 1994-95 to 21% in 2004-05 (graph 16.10). 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 Manufacturing industries, the next largest industries. The Oil and gas industry was the main contributor to mining production. In 2004-05, the combined value of production for Oil and gas accounted for 37% ($12,247m) of the total value of production ($33,220m) 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 2006). 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 5-8% in the period 1994-95 to 2004-05 (graph 16.10). This was two to seven percentage points lower than the Manufacturing industry's share of state production. In 2004-05, the Mining industry's contribution to state production was 8%. Industries with a greater share of state production than Mining in this year were Manufacturing (11%) and Property and business services (10%). Figures released by the Queensland Department of Natural Resources and Mines indicate that the value of production of fuel minerals was $11,124m in 2004-05 with black coal accounting for 93% ($10,347m) of this value (see <http://www.nrm.qld.gov.au/mines>, table 'Quantity and Value of Minerals Produced in Queensland 2004-05', last viewed September 2006). Queensland is the largest producer of black coal in the country. In 2004-05, it also produced copper, lead and zinc valued at $3,966m.
Table 16.11 shows the proportion of exports contributed by the Mining industry based on exports by industry of origin.
In the period 1995-96 to 2005-06 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 54%. As a consequence, Mining's contribution to total goods exported from Australia increased from 22% in 1995-96 to 38% in 2004-05, while Manufacturing's share fell from 64% to 49%.
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 2003-04 businesses in the Oil and gas extraction industry paid a considerably higher proportion of natural resource royalties to sales and service income (14%) 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 $2,231m, and for the Coal mining and the Metal ore mining industry were $798m and $729m 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). Businesses in this collection are classified on the basis of their predominant activity, using the ANZSIC, 1993 edition. The industry subdivision Other mining refers to Construction material mining and Mining n.e.c., as described in ANZSIC.
In 2003-04 mining businesses paid $6,955m in wages and salaries and generated $60,140m in sales and service income and $33,861m industry value added (table 16.12).
Industry value added (IVA) represents the value added by an industry to the intermediate inputs used by the industry. It measures production 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 cannot be collected in the EAS. The advantage of IVA, however, is the availability of more detailed industry and state estimates.
Table 16.12 shows that in 2003-04, the Oil and gas extraction industry contributed the largest proportion (41%) of total mining production measured in terms of IVA, followed by Metal ore mining (27%) and Coal mining (18%). The Oil and gas extraction industry also generated the most profit (56%, $8,771m) in 2003-04.
In terms of wages and salaries, the largest contributors were the Metal ore (28%) and Coal (28%) mining industries. The wages and salaries paid were $1,932m from the Metal ore mining industries and $1,922m from the Coal mining industry.
Within the Metal ore mining industry, the Gold mining industry contributed the largest share of wages and salaries (34%) and the Iron ore mining industry the largest share of sales of goods and services (30%).
Table 16.13 shows that capital expenditure in 2003-04 was the largest in the Metal ore mining industry (38%) followed by the Oil and gas extraction industry (32%). Most of the capital expenditure on acquisitions was spent on plant, machinery and equipment (43%). A significant proportion (30%) was also spent on dwellings, other buildings and structures. The Metal ore mining industry accounted for the largest share of the expenditure in plant, machinery and equipment, while the Oil and gas extraction mining industry accounted for the largest share of the expenditure in dwellings, other buildings and structures.
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 76% of total net capital expenditure made in 2003-04.
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 2002-03 to 2003-04, OPBT for the mining industry decreased by $1,015m or 6%. The Coal mining industry was the main contributor to this fall (down $1,491m or 47%). After a loss of $52m in 2002-03 the Services to mining industry recorded a profit of $462m in 2003-04 (up $514m).
RESEARCH AND DEVELOPMENT (R&D) EXPENDITURE
R&D activity, in the business context, is defined as systematic investigation or experimentation involving innovation or technical risk, the outcome of which is new knowledge, with or without a specific practical application or new or improved products, processes, materials, devices or services. R&D activity also extends to modifications to existing products and processes. The ABS survey of R&D is based on a complete enumeration of businesses identified as likely R&D performers. Businesses mainly engaged in agriculture, forestry and fishing are excluded.
During the period 1994-95 to 2004-05, R&D expenditure by the Mining industry increased from $303m in 1994-95 to $1,205m in 2004-05. As a result, the Mining industry's contribution to total (all industries) R&D expenditure rose from 9% in 1994-95 to 14% in 2004-05. The Manufacturing industry's share of total R&D expenditure continued to be the highest, accounting for 41% in 2004-05.
Graph 16.15 shows the type of R&D expenditure by the Mining industry. For the period 1994-95 to 2004-05 current expenditure other than labour costs is the major component of R&D expenditure for the Mining industry, accounting for 80% of total mining R&D expenditure in 2004-05. 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 $787m (456%) from $173m in 1994-95 to $959m in 2004-05. The amounts spent on capital expenditure and labour costs increased by $10m (15%) and $105m (161%) respectively. As a result, labour costs and capital expenditure as a proportion of total mining R&D expenditure fell to 14% and 6% respectively in 2004-05. These proportions were significantly lower than the 22% for labour costs and 21% for capital expenditure recorded in 1994-95.
In 2004-05 the Mining industry funded most of its R&D expenditure with $1,145m (95%) sourced from money owned by the mining business (own funds).