Red tape and funding gaps threaten Australia’s mining future

A new report has found that despite its many natural advantages, Australia may end up falling behind its rivals in the global critical minerals development race.

Minerals Council of Australia (MCA) chief executive officer, Tania Constable, said that due to red tape and funding gaps the nation is at considerable risk of ceding its advantage to global competitors as the world’s economies jockey for prime position in the emerging clean energy mining boom.

According to the MCA’s latest future critical report “Meeting the minerals investment challenge”, deepening investment uncertainty, exhaustive delays in environmental approvals and the proposed introduction of rigid and costly industrial relations laws are hampering Australia’s ability to fully capitalise on this once in multiple generation mining boom.

“As our global competitors ramp up their investment and development, time is running out for Australia to catch the wave of mining investment needed to achieve our collective global pursuit of net zero emissions,” Ms Constable said.

Economic costs of delays and missed opportunities

The MCA has identified compounding investment risks associated with the construction and development of a new mine site, and the cost to the economy of any delays.

“It puts the cost to the economy from a 12-month delay in environmental approvals at $51 billion cumulative GDP loss, based on the 16 years it takes to bring a new mine from discovery to production,” Ms Constable said.

“Capital investment has traditionally been central in Australia’s productivity growth, including the flow of foreign capital, but remains under siege due to increased competition from global competitors.”

“Of great concern, the report shows that the mining industry’s net capital stock is plateauing at a time when it should be accelerating to take advantage of the boom in critical mineral production, a further dent to the nation’s lagging productivity.”

Potential benefits of a mining boom

According to the MCA study, households would be $11,700 better off, real wages would be 9.4% higher and the economy $290 billion larger by 2030 if a major expansion of mining, similar to the previous mining boom earlier this century, were to occur.

From 2012-13 to 2021-22, mining companies have paid $252 billion in wages to hard-working Australians, on top of $295 billion in taxes and royalties that fund hospitals, schools, aged care, childcare and infrastructure.

“The sector is a prolific job creator and wage booster, with the minerals industry supporting over 1.1 million jobs and paying the highest average wages at $151,500. Importantly, the report shows that for every one new job created in mining, 6.14 new jobs are created across all industries,” Ms Constable said.

“While Australia has the attributes, the workforce, the expertise, and the array of deposits required to be a leading global supplier of the critical minerals, governments have a critical role to play.”

“The push to unlock this opportunity must be supported with enabling government policy that improves Australia’s competitiveness in attracting investment, clears regulatory impediments, and boosts productivity.”

The report has made 14 recommendations on five key themes including a reduction of the regulatory burden to attract investment, and the development of policies that support competitive project returns.