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1301.0 - Year Book Australia, 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 27/02/2004   
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Contents >> Mining >> Economic contribution of the mining industry

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.

Total production of the mining industry (measured by industry GVA in chain volume terms i.e. 'real' output unaffected by price change) increased by more than two and half times between 1982-83 and 2001-02 (graph 16.1).

Over the 20-year period, the largest annual decrease (5.6%) in production was in 1986-87 while the largest annual increase (18%) was in 1987-88. By comparison, total economic production in Australia, as measured by gross domestic product (GDP) was relatively steady with annual change varying from a decrease of 3.4% in 1982-83 to an increase of 6.4% in 1987-88. Overall, the mining industry production more than kept pace with the growth in other industries, resulting in an increase in its contribution to GDP from 3.9% in 1982-83 to 5.3% in 2001-02 (table 16.2). The industry performed better than the manufacturing industry, whose contribution to GDP fell from 16% in 1982-83 to 12% in 2001-02.

Graph - 16.1 Mining production


Production in the services to mining industry accounts for a small proportion (less than 5%) 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.

16.2 GROSS VALUE ADDED AND CONTRIBUTION TO GDP, Chain volume measures(a)

Units
1997-98
1998-99
1999-2000
2000-01
2001-02
Percentage change from 1997-98 to 2001-02

Industry gross value added
Mining (excl. services to mining)
$m
28,223
28,407
30,521
32,486
32,492
15.1
Services to mining
$m
1,483
1,322
1,150
1,489
1,373
-7.4
Total
$m
29,810
29,686
31,383
33,975
33,865
13.6
Contribution to GDP
%
5.5
5.2
5.2
5.6
5.3
. .

(a) Reference year for chain volume measures is 2000-01.
Source: Australian System of National Accounts, 2001-02 (5204.0).

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 2001-02 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 seventh or lower in terms of production.

Graph - 16.3 Mining's contribution to state production, Selected states


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 40% larger than the contribution of the next largest industry. In 2001-02, the mining industry accounted for 24% 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 48% ($1,518m) of the value of production in the territory in 2001-02 (see the Department of Business Industry and Resource Development, Northern Territory, <http://www.dme.nt.gov.au>, table 'Northern Territory Mining Production 2001-02' last viewed 31 October 2003).

In Western Australia, the contribution of the mining industry had steadily increased from 14% in 1989-90 to 23% in 2000-01, before falling to 21% in 2001-02 (graph 16.3). In this period, it 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 major contributor to mining production. In 2001-02, the combined value of production for oil and gas accounted for 36% ($9,532m) of the total value of production ($26,272m) in the state including some manufactured and semi-manufactured products like aluminium (see the Western Australia Department of Industry and Resources <http://www.doir.wa.gov.au/statistics>, publication Western Australia Mineral and Petroleum Statistics Digest, 2001-02 last viewed 31 October 2003). 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, Western Australia contributed 55% of the crude oil and condensate and 100% of LNG in terms of quantity produced in Australia. The state also produced 97% of the iron ore and 70% of the diamonds produced in Australia.

Over the period 1989-90 to 2001-02, the mining industry's share of total state production was 5% to 8% for Queensland (graph 16.3). This was two to six percentage points lower than manufacturing industry's share of total state production. The mining industry had the third largest share (8%) of production in Queensland in 2001-02, after manufacturing (12%) 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 $6,859m in 2001-02 with black coal accounting for 91% ($6,234m) of this value (see <http://www.nrm.qld.gov.au/mines>, table 'Queensland Production Statistics' last viewed 31 October 2003). The state is the largest producer of black coal in the country. The production of copper, lead and zinc valued at $2,951m accounted for 27% of the total value of production of metallic, fuel and industrial minerals ($10,913m).

Exports

An indication of the proportion of exports contributed by the mining industry is presented in table 16.4. This is based on exports by industry of origin.

Between 1992-93 and 2002-03, the value of exports from the mining industry has grown by 102%, or 27 percentage points more than the growth for the manufacturing industry and 11 percentage points more than for all industries. As a consequence, mining's contribution to total goods exported from Australia increased from 26% in 1992-93 to 27% in 2002-03, while manufacturing's share fell from 62% to 57%.

16.4 VALUE OF EXPORTS(a), By industry of origin

Share of total exports

Mining
Manufacturing
All industries
Mining
Manufacturing
$m
$m
$m
%
%

1992-93
15,456
37,551
60,702
25.5
61.9
1993-94
14,554
41,478
64,548
22.5
64.3
1994-95
14,922
43,795
67,052
22.3
65.3
1995-96
16,476
48,787
76,005
21.7
64.2
1996-97
17,937
48,494
78,932
22.7
61.4
1997-98
21,458
53,301
87,768
24.4
60.7
1998-99
20,171
52,073
85,991
23.5
60.6
1999-2000
23,578
57,982
97,286
24.2
59.6
2000-01
31,912
69,128
112,539
26.7
57.8
2001-02
32,507
69,111
121,108
26.8
57.1
2002-03
31,267
65,668
115,445
27.1
56.9

(a) On a 'free-on-board' basis.
Source: ABS data available on request, International Trade.

Mineral royalties

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 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 1991-92 to 2000-01. Royalties paid by businesses in other mining industries are relatively insignificant. Between 1991-92 and 2000-01, businesses engaged in oil and gas extraction consistently accounted for most of these expenses with proportions varying from 51% in 1998-99 to 74% in 1993-94. Royalty payments by businesses engaged in oil and gas extraction increased by 70% over the 10-year period and payments by businesses in the coal mining industry doubled.

16.5 ROYALTY EXPENSES, By selected industries

Units
Coal mining
Oil and gas extraction
Metal ore mining
Total

1991-92
$m
270.3
1,626.5
374.4
2,271.2
1992-93
$m
246.6
1,787.8
325.8
2,360.1
1993-94
$m
236.1
1,508.0
302.8
2,046.9
1994-95
$m
262.5
1,277.1
410.8
1,950.4
1995-96
$m
314.0
1,264.2
422.8
2,001.0
1996-97
$m
358.1
1,504.1
406.1
2,268.3
1997-98
$m
461.7
1,514.4
452.6
2,428.7
1998-99
$m
529.3
1,049.5
479.8
2,058.6
1999-2000
$m
542.6
1,760.6
485.2
2,788.4
2000-01
$m
551.2
2,760.7
654.8
3,966.7
Change from 1991-92 to 2000-01
%
103.9
69.7
74.9
74.7

Source: Australian Mining Industry (8414.0); Mining Operations, Australia (8415.0).

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. Over the period 1991-92 to 2000-01, businesses in the oil and gas extraction industry paid a considerably higher proportion of royalties compared to those in coal or metal ore mining industries, although the difference had reduced from 19 percentage points in 1991-92 to around 10 percentage points in 2000-01.

Graph - 16.6 Proportion of royalties expenses to sales of goods and services


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