Australia's Mining Industry in a Global Context - Sykes - May 2014 - Centre for Exploration Targeting / Curtin University / University of Western Australia

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This document compares Australia's mining industry and individual states to other countries and jurisdictions around the world based on a survey of mining companies. It finds that: - Australian states are viewed as well-run for mining investment similar to countries like Ireland, Chile and Botswana based on their minerals policies. - The geological potential of Australian states varies but is overall viewed as comparable to regions like Chile, the Democratic Republic of the Congo, and Peru. - When considering overall investment attractiveness, Australia's rural states rank amongst the most attractive in the world for mining investment, on par with countries like Finland, Ireland, and Chile.

Government & Nonprofit Technology Business

AUSTRALIA’S MINING
INDUSTRY IN A GLOBAL
CONTEXT
John P. Sykes
johnpaul.sykes@postgrad.curtin.edu.au
Centre for Exploration Targeting, University of Western Australia
Department of Mineral & Energy Economics, Curtin Graduate School of
Business

A novel way of placing Australia’s
mining industry in a global context
• The Fraser Institute Annual Survey of Mining Companies
questions industry participants on their views of the
attractiveness of various jurisdictions for mining and
exploration investment.
• The survey assesses most jurisdictions at a national level,
but the large, mining economies of Australia, Canada, USA
and Argentina state-by-state. This allows individual
Australian states to be compared to sovereign nations (in a
highly subjective manner).
• So which Australian state corresponds to which
European, Asian, African or South American country?
08 June 2014
Australia's Mining Industry in a Global Context
Slide 2 of 6

Minerals policy equivalents…
Australia's Mining Industry in a Global Context
08 June 2014
Source: Fraser Institute Survey, 2013
Ireland
Norway
New Zealand Botswana
Turkey
Namibia
Chile
Slide 3 of 6

Geological potential equivalents…
Australia's Mining Industry in a Global Context
08 June 2014
Source: Fraser Institute Survey, 2013
Chile
D.R. Congo
Zambia Poland
New Zealand
Ireland
Peru
Slide 4 of 6

Overall attractiveness for mining…
Australia's Mining Industry in a Global Context
08 June 2014
Source: Fraser Institute Survey, 2013
Finland
Ireland
Chile
Zambia
France
Peru
Botswana
Slide 5 of 6

Australia: a bit like the Andes a bit like
Scandinavia, and a bit French…?
• The Policy Potential Index suggests most Australian states are well
run – similar to Europe or well-run mining states such as Chile &
Botswana. The rural states outperform the urban states.
• The Best Practice Mineral Potential Index suggests Australia
contains its own Andes and Central African Copperbelt, though the
mineral prospectivity is apparently less in the eastern urban states.
• Overall the Investment Attractiveness Index suggests that for
geology and policy Australia’s rural states rank amongst the best
in the world, along with states such as Finland.
• Cervantes et al., 2014, Survey of Mining Companies 2013, Fraser Institute:
http://www.fraserinstitute.org/research-news/display.aspx?id=20902
08 June 2014
Australia's Mining Industry in a Global Context
Slide 6 of 6

Australia possesses large volumes of valuable mineral and energy commodities. As a nation, we hold some of the world’s largest deposits of commodities like brown coal, zinc, iron ore, gold, silver, copper and lithium. Australia is in the top five producers of most of the world’s key mineral commodities and is the world’s largest exporter of alumina, metallurgical coal, iron ore, and lead2. Australia is also expected to be the world’s largest LNG exporter by 2019, reflecting the large growth in this industry. These volumes translate into a significant contribution to Australia’s economy. In 2011-12, exports by the mining industry accounted for 48.5% of Australia’s total exports, worth $147.4B. In the same period, mining represented 9.6% of Australia’s Gross Domestic Product (GDP), compared to 66.4% for the services sector, 7.4% for manufacturing and 2.4% for the agriculture, forestry and fisheries sector. The mining sector directly employs around 158,000 people and is estimated to indirectly employ a further 505,600 people. Mining has a broad and complex relationship with Australian society. It creates jobs and economic opportunities for many and is an important component of our national economy. Yet, mining also brings challenges for people living alongside the industry and for governments who are charged with managing Australia’s mineral and energy resources on behalf of all its citizens. For example, mining creates job opportunities in communities surrounding mining operations but the use of fly-in/fly-out workforce strategies by many mining companies means that a significant number of people that work in mining live in capital cities. To tease out some of this complexity, we asked participants about the distributive fairness of mining associated benefits, how fairly they felt they were treated in decision making processes regarding the industry, the level of faith they had in our legislative and regulatory frameworks for managing mining, and more broadly, the degree to which they trusted important players in the industry. A key finding was that the Australian public are more accepting of the mining industry in Australia when industry and governments work together to build trust in the industry – holding a social licence to operate is, therefore, the responsibility of governments and industry working together with communities to promote effective, constructive, and mutually beneficial relationships.

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