Sustainable or Transitory? Assessing the Economic Future of the Australian Mineral Industry

The Resources Boom of the 1960s in Australia provided a strong foundation for AustraliaÆs economic prosperity for the remainder of the twentieth century. In combination with sound economic management, our world-class minerals and energy sector has played a key role in the nationÆs competitiveness, and it has been the major source of our exports since the early 1970s. Even with the emergence since 1990 of major mineral provinces in Latin America and elsewhere, Australia has increased its percentage of world production of several minerals. Between 1990 and 2002, our share of iron ore production rose from 13 per cent to 20 per cent, nickel mine production from eight per cent to 17 per cent, copper mine production from four per cent to seven per cent and zinc mine production from 13 per cent to 17 per cent. Whether this situation will continue during the coming decades motivates the discussion of this reflective paper. The approach is to consider fundamental supply-side and demand-side issues in arriving at a view about the state of the world, the world minerals sector and the Australian resources sector in the coming decades. The argument draws from the experiences of other mature mineral producing countries such as Canada and the United States. In such nations, efficient producers have often sustained competitiveness for extended periods, despite falling grades and other challenging operating conditions. Yet several forces are changing the economic geography of the minerals industry in significant ways. These include the re-emergence of major global mining corporations, the revision of mineral policy in over 100 nations since 1985, the mobility of technology and more efficient transport both for mineral productions and mining professionals. Given these trends the paper argues that the Australian mining industry must continue to change and evolve significantly in the foreseeable future. Its leaders will need to be even more internationally focused if it is to maintain its strong competitive position.