Mining is the key driver of Australian economy

 

 

As the world struggles through the latest financial crisis, Australia's mining and resources sector has proven itself to be a stable foundation of the economy during the uncertain times of the COVID-19 pandemic.

Mining has been the country's leading sector in gross value added (GVA) terms since overtaking financial and insurance services in 2018. With iron ore and other resource exports being highly in demand, mining is also the leading sector for foreign direct investment (FDI), accounting for more than a third (35.1%) of total FDI.

Mining companies are facing their own challenges in these difficult times, but there are plenty of reasons to feel positive about the sector's continuing support for economic growth, employment and investment opportunities.


 

Top FDI sector

 

Foreign direct investment in Australia declined during 2019-20, according to data from the Department of Foreign Affairs and Trade, but continuing interest in resources from overseas meant this decline was minimal compared to many other countries, amounting to just 1.6%.

Mining and quarrying have been the leading FDI sector since 2018, increasing from $374.6bn in 2018 to $375.8bn in 2019. FDI declined by $360.4m during 2020 overall, though investment in iron ore and popular safe-haven investment gold reached new heights during the pandemic.

FDI is expected to rise again in 2021 as the global economy begins to recover and infrastructure projects in China, the US and other major economies maintain high demand for raw materials, although trade disputes with China may curb this growth.


Top GVA sector

 

Australia's mining sector has grown every year since 2016, even growing by 12.1 per cent in the year to March 2021 in spite of the global economic downturn, according to the Australian Bureau of Statistics (ABS).

Mining's rise to dominance is relatively recent. ABS figures for 2003 show that mining only ranked 10th for GVA in that year, with manufacturing leading the economy at 11.9% of total GVA. Today, mining holds the top spot with around 11.7% of total GVA.

stone-crusher-in-a-quarry-mining-industry-panorama-images_t20_a8KnJ6


Western Australia

 

Mining's impact on the economy is even more noticeable on the regional level in WA, Australia's mining and resources heartland. Mining in Western Australia contributed more than $83 billion to the national economy last year, of which around $52 billion contributed directly to the local economy.

This included more than $10 billion in wages alone, along with support for community organisations and government departments. A survey by the Chamber of Minerals and Energy Western Australia (CME) also credits mining for the creation of more than 94,000 full-time jobs in the state, demonstrating the broader benefits of mining for economies and communities.


Resources & Energy Group (ASX: REZ)

Barclay Pearce Capital client Resources & Energy Group (ASX: REZ) is a gold explorer, developer and producer, with projects in Western Australia and Queensland. ​REZ is focused on developing highly prospective and low-risk Australian mining regions.

REZ

Resources & Energy was formed in 2005, and has operated as a gold exploration and development company since 2015.

 

To keep up to date with their news and progress, and for more information about gold investment as a whole, subscribe to the Resources & Energy Group Chairman's List.