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Production can be measured on a net basis, that is the value of goods and services produced less the value of inputs (e.g. labour, capital) used in production. In national accounting terms, the contribution of an industry to the overall production of goods and services in an economy is measured by industry gross value added (GVA). Industry GVA sums the gross value added by each producer in the industry.
Production in the services to mining industry accounts for a small proportion (less than 9%) of total mining production (table 16.2). 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.
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 2002-03 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, and mining was ranked 14th or lower in terms of production.
During the period 1990-91 to 2002-03, 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 16.3). In all years except 1998-99, the mining industry's share of total state production was at least 60% larger than the contribution of the next largest industry. In 2002-03 the mining industry accounted for 23% of total production in the Northern Territory with increasing mining activity in the offshore areas in the Timor Sea. The main mining industry is crude oil production which contributed 46% ($1,272m) of the value of production in the territory in 2002-03 (see the Department of Business Industry and Resource Development, Northern Territory, <http://www.dbird.nt.gov.au>, table 'Northern Territory Mining Production 2002-03' last viewed 20 July 2004).
In Western Australia the contribution of the mining industry increased from 18% in 1990-91 to 23% in 2000-01, before falling to 21% in 2001-02 and 20% in 2002-03 (graph 16.3). In the period 1990-91 to 2002-03 the contribution of the mining industry to total state production was significantly higher than the production shares of manufacturing, or property and business services industries, the next largest industries. The oil and gas industry was the main contributor to mining production. In 2002-03 the combined value of production for oil and gas accounted for 38% ($10,542m) of the total value of production ($27,861m) in the state including some manufactured and semi-manufactured products like alumina (see the Western Australia Department of Industry and Resources <http://www.doir.wa.gov.au/statistics>, publication Western Australia Mineral and Petroleum Statistics Digest, 2002-03, last viewed 20 July 2004). Most crude oil and condensate and liquefied natural gas (LNG) are produced in the Carnarvon basin where the North West Shelf Project is located. In 2002-03 Western Australia contributed 63% of the crude oil and condensate and 100% of LNG in terms of quantity produced in Australia. The state also produced 95% of the iron ore and almost all of the diamonds produced in Australia.
The mining industry's share of Queensland total production varied between 5% to 8% in the period from 1990-91 to 2002-03 (graph 16.3). This was two to six percentage points lower than manufacturing industry's share of state production. The mining industry had the third largest share (8%) of production in Queensland in 2002-03, after manufacturing (10%) and property and business services (9%). Figures released by the Queensland Department of Natural Resources and Mines indicate the value of production of fuel minerals was estimated to be $8,044m in 2002-03 with black coal accounting for 93% ($7,452m) of this value (see <http://www.nrm.qld.gov.au/mines>, table 'Quantity and Value of Minerals Produced in Queensland 2002-03', last viewed 20 July 2004), making it the largest producer of black coal in the country. In the same year, it also produced copper, lead and zinc valued at $2,964m.
Table 16.4 presents the proportion of exports contributed by the mining industry based on exports by industry of origin.
Between 1993-94 and 2003-04 the value of exports from the mining industry has grown by 95%, or 45 percentage points more than the growth for the manufacturing industry and 26 percentage points more than for all industries. As a consequence, mining's contribution to total goods exported from Australia increased from 22.5% in 1993-94 to 26.1% in 2003-04, while manufacturing's share fell from 64.3% to 57.0%.
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.
Table 16.5 shows royalties expenses incurred by businesses in the coal, oil and gas extraction, and metal ore mining industries during the period 1990-91 to 2000-01. Royalties paid by businesses in other mining industries are relatively insignificant. Between 1990-91 and 2000-01 businesses engaged in oil and gas extraction consistently accounted for most of these expenses with proportions varying from 51.0% in 1998-99 to 77.0% in 1990-91. Their expenses increased by 39.2% over the ten-year period. In comparison, royalty expenses by businesses in the coal mining industry more than doubled.
Graph 16.6 shows the amount paid in royalties by mining industries as a proportion of the income received from sales of goods and services. During the period 1990-91 to 2000-01, businesses in the oil and gas extraction industry paid a considerably higher proportion of royalties to sales income compared with those in coal or metal ore mining industries although the difference has been reducing over the years. In 2000-01 the percentage of royalties expenses to sales income paid by the oil and gas extraction industry was 14.6% compared with 4.7% paid by the coal mining industry and 3.5% by the metal ore mining industry.