While mining had us thinking it had run its course, it turns out it hasn’t run out of steam yet. It’s still paying major dividends for Victoria…
A recent study commissioned by the Minerals Council of Australia proves mining is still making a major contribution to the economy, providing the focus is on the industry as a whole.
Written by Ian Harper, one of Australia’s best known economists and a board member with the Reserve Bank of Australia, the report—Mining and METS: engines of economic growth and prosperity for Australians—looks at the wider mining sector, rather than just the extraction sector. It includes the mining equipment, technology and services (METS) industry but, importantly, excludes the oil and gas industry.
In an interview with David Taylor from the ABC’s PM program after launching his report in late March, Professor Harper said there are three phases to a resources boom, and the current “export phase” has another 30 years to run. Victoria, he says, is one region reaping the benefits of this.
“Most people would consider Victoria to be a non-mining state. If you take mining pure and simple, as extraction, you’re talking about 0.5 per cent of Victoria’s gross state product,” Professor Harper says.
“If you include mining, and the mining equipment, technology and services, the METS industry as well, then that raises to about 3.7 per cent. That’s when you take into account direct and indirect contributions from the MET sector, as well as mining.”
METS means jobs
“In a state like Victoria it’s a big gig, producing something like about the order of say 121,000 jobs in Victoria,” says Professor Harper.
In its coverage of the launch of the Deloitte Access Economics study, the Australian Financial Review reported the research shows the total contribution of the mining and METS sectors to the total national economy in 2015-2016 was around A$237 billion, or around 15 per cent.
The study also shows that using the broader definition of ‘mining’ to include METS, the entire industry is responsible for providing more than 1.14 million jobs around Australia, or 10 per cent of full-time positions.
According to Professor Harper, in his comments to the media, resources booms have three phases: the prices phase – in this case, where prices surged from around 2003 – the investment phase for new mines and capacity, which ended around 2014-15 in Australia and the export or production phase which is where the country is now.
The next phase of Victoria’s growth goes beyond mines
Importantly, a lot of the activity in this next phase is more evenly distributed than the earlier phases, which involved minerals extraction in remote areas. That activity—including jobs and output—is especially found in major cities such as Melbourne, because it is in cities where the vast majority of companies and headquarters of the world’s largest mining companies are based and therefore the supply chains for their business including finance, METS, R&D, health and safety and education.
According to VicMETS, Victoria’s share of the METS sector is significant. It provides revenues of approximately A$17billion and the state leads every other Australian state in hosting the highest number of METS companies that are exporting. Delete as its dated – add
The METS sector is one of five industry growth sectors highlighted under the Federal Government’s ‘Industry Growth Centres’ initiative.
Melbourne is home to resources companies worth 62% of the ASX 100 market capitalisation for mining stock (averaging $128 billion in 2015) and 80% of the ASX 100 mining revenue (approximately $136 billion in 2015).The head offices of resources companies in Melbourne provide Victoria with an unparalleled reputation as a global leader for mining businesses and businesses that supply them. Victoria is a hub for mining that exports its knowledge and services to the world. Melbourne is also a key financial and business centre and capital resources market in the Asia Pacific region that complements its competitive advantage in mining.
Australia’s mining and mining services credentials, coupled with Melbourne’s reputation for holding large scale events provides the perfect setting for the International Mining and Resources Conference (IMARC). IMARC is now a natural focal point for businesses in the Asia Pacific region and will present what this important sector has to offer. IMARC 2017 will be held from 30 October to 3 November prior to Spring Racing Carnival.
That means the mining industry’s contribution to Victoria, and the rest of Australia, is set to be more long lasting than many of us would have believed, in the so-called ‘post-boom’ era.