Environmental Engineering Reference
In-Depth Information
2 The Australian Minerals Economy
2.1 Exports
From less than half of Australia's exports (in value terms) in 1990, minerals
exports had risen to almost two-thirds in 2012,
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driven mostly by exuberant
economic growth in Asia, especially mainland China, a bit-player among
importers in 1997 but dominant by 2010. In the same period the proportion
of energy minerals in the total mix increased only a little - while energy
exports get a lot of press, iron ore exports also have experienced vigorous
expansion. The composition of the energy component continues to change:
thus far it has been dominated by coal, but LNG exports are substantial now
and expected to grow exuberantly. Australia remains a net importer of oil.
Among the states, Western Australia still leads in total value of mineral
production, with well-established iron ore exports and significant LNG
projects on the horizon, but Queensland is gaining fast due to rapid ex-
pansion in the energy sector. Note that these are large states with population
concentrated in a few urban centres, while minerals operations are mostly in
remote locations.
2.2 Benefits to Australia
One can imagine a minerals boom benefitting the country in several ways -
employment and wages, macroeconomic benefits and capital accumulation -
but previous minerals booms have been followed by busts, and minerals
extraction tends to be environmentally messy.
2.2.1 Employment and Wages. The technology of mining has changed
dramatically in the last century and the industry is now much more cap-
ital-intensive. Despite the on-going export boom, mining-related employ-
ment remained stuck at little above 2% in 2012.
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Wages are relatively
high, reflecting the high skill levels demanded and the need to attract
workers to remote locations and challenging environments.
2.2.2 Macroeconomic Benefits. Obviously, a major export boom helps a
county's balance of trade and payments. The traditional Australian way of
sharing the benefits of export booms among the broad population is to
allow exchange rates to rise which, as well as moderating potential infla-
tion, serves to make imported consumer goods and international vacations
more affordable for the broad mass of consumers. Nevertheless, there are
persistent complaints that while the minerals sector is booming the rest
of the economy just plods along, a phenomenon often described as the
'two-speed' economy. If we introduce the 'Dutch disease' argument - that
the high-exchange-rate solution disadvantages other exporting and import-
substitution sectors - a case can be made that it is really a 'three-speed'
economy: the thriving minerals sector, the rest of the tradables sector
which is depressed to varying degrees, and the plodding non-tradable
