Governments urged to maximise benefits of mining sector contributions amid economic uncertainty
The mining sector has called on governments not to waste the benefits mining brings, with Australia’s second consecutive budget surplus a result of the ongoing strength and reliance on the sector.
The latest Department of Industry, Science and Resources’ Resources and Energy Quarterly (REQ) found that Australia’s major mining commodities continued to make significant contributions to the country’s export earnings.
Despite the impact of lower prices on export earnings, iron ore contributed $138 billion to the 2023-24 budget, metallurgical coal $54b, thermal coal $37.2b and gold $33b.
Sustaining the economy
Most notably, the start-up of production at Boss Energy’s (ASX: BOE) Honeymoon mine in South Australia has been impactful, with uranium exports continuing to increase.
These exports earned Australia more than $1b in 2023–24 and are forecast to grow to $1.4b in 2024–25 and $1.7b by 2025–26.
Minerals Council of Australia (MCA) chief executive officer Tania Constable said the federal government’s final budget outcome has again highlighted mining’s importance in sustaining the nation’s economic and fiscal health.
“The budget delivered a $15.8b surplus, a significant increase from the forecast $9.3b in May, highlighting the large forecasting variability experienced in recent years,” Ms Constable said.
“Reduced demand for government programs and services, along with deferred spending, also contributed to this outcome.”
“While it is clear mining remains the cornerstone of the economy, there are distinct challenges emerging, with concerns about economic activity in China and continued global economic and geopolitical uncertainty impacting growth in demand for Australia’s bulk commodities and, subsequently, future budget outcomes.”
Australia vulnerable
The MCA chief said the 2023–24 budget outcome and REQ forecasts reveal the vulnerability of Australia’s economy to fluctuations in commodity prices, highlighting the pressing need for governments to prioritise mining investment to secure the nation’s long-term economic growth and the budget’s fiscal strength.
“With these challenges confronting Australia head-on, it is critically important that governments pursue productivity-enhancing policies that attract investment in mining, create more jobs and increase the nation’s economic resilience to withstand future economic downturns,” Ms Constable said.
“There is no question that the confluence of restrictive policies is placing a mighty burden on the shoulders of Australian businesses at a time when Australia needs more jobs, more opportunity and more economic growth.”
Minister agrees
Federal Minister for Resources and Northern Australia Madeleine King also highlighted the mining sector’s importance. She said the latest forecasts in the latest REQ reflect this.
“Despite reductions in some bulk commodity prices, there have been record gold prices and ongoing gains in iron ore export volumes,” Minister King said.
“The resources and energy sector continues to underpin Australia’s economy and support more than a quarter of a million direct jobs.”
Ms King added that, although lower world prices are factored into export forecasts, Australian iron ore and LNG continue to support the economies and energy security of Australia’s trading partners.
Demand increasing
The new data has forecast higher demand for resources essential for low-emissions technologies such as copper, aluminium and lithium.
“Lower prices underline the need for government support for our critical minerals sector through policies such as the Critical Minerals Production Tax Incentive,” Minister King said.
“Measures such as the Production Tax Incentive and the newly-established Minerals Security Partnership Finance Network signed with partners such as the United States, India, the Republic of Korea, Japan and the United Kingdom will help create jobs and prosperity for future generations.”