The Positive Effects of Mining on the Economy
15 July 2021
The Positive Effects of Mining on the Economy
Australia is indeed a lucky country. It has abundant natural resources that have provided the foundation for Australians’ high living standards through the development mining and resources industry. The positive effects of mining on the economy have been significant and long-lasting.
In Australia, the resources sector generated $271 billion in export revenue in 2020, which was more than $3 for every $5 raised, according to a Minerals Council of Australia analysis of ABS figures. Mining accounted for more than 10 per cent of the whole economy, the gross domestic product, making it the biggest sector of the national economy.
The benefits of mining to the community are substantial.
Through tax revenues including $15.2bn in state royalties alone, high wages and significant purchases of high-value plant and materials, mining-related money is one of the positive impacts of mining that flow through to people in our cities, small communities in regional areas, with services to assist everyone across the country.
Other good things about mining’s impact on the economy are the technological and productivity gains that help not only the mining industry, but are also transforming other sectors. And we consider one of the biggest and most positive impacts of mining are the boosts in jobs, wages and community funding that mining companies make to local towns and regions. These are commonly in places outside urban centres, where locals strive for opportunities – and mining can provide that. About 60 per cent of mining projects are located near Aboriginal and Torres Strait Islander communities, bringing greater employment prospects and economic activity to remote populations.
Find out more about the positive effects of mining on the economy.
Are there Positive Effects of Mining on the Economy?
The high-value jobs and services provided in Australia’s sustainable resources-extraction industry mean there are significant benefits of mining to the community. Over the last decade the mining industry has been the driver of the nation’s economic growth. It contributed strongly to Australia recording its first current account surplus in a generation in 2019.
When the COVID-19 pandemic reached Australia in 2020, mining was deemed an essential industry and work allowed to continue. This provided essential economic activity at a time when other export industries such as education and tourism were restricted severely.
Mining and resources extraction is a critical employer in Australia. In 2020, more than 240,000 people were employed directly in the resources industry, including more than 100,000 in the metal ore sector, more than 52,000 in coal and more than 25,000 in oil and gas.
Mining in Australia has also spurred the development of a world-leading mining equipment, technology and services sector. This industry subset is expected to continue to transform the sector through digitally-enabled technology, AI and automation and add $50 billion to the Australian economy by 2030. And the transformation to high-tech mining is also forecast to create an additional 80,000 jobs in the sector.
What does the impact of mining on communities look like?
The positive effects of mining on the economy are significant, but there are also other benefits from the impact of mining. Some remote locales would have few facilities without the benefits of mining to the community. Towns including Mount Isa, Kalgoorlie, Broken Hill, Gympie, Ballarat and others were established due to their mining opportunities.
Even today, local infrastructure such as road maintenance, sewerage systems, airports, and even childcare is operated day-to-day by mining companies in some regional towns. One of the good things about mining is the global companies operating in small communities provide access to well-paid jobs for local workers, with opportunities for staff to advance nationally and internationally. The opportunities also bring innovations and technological developments to these regional areas.
More broadly, the benefits of mining to the community are the boost in royalties, taxes and charges paid by companies to governments. These revenues are then returned to local people in the form of services such as schools and hospitals, infrastructure, and policing.
Benefits of Mining to the Community
Jobs and opportunities
Major projects bring increased population – vital in Australia’s regional areas – younger demographics and higher wages. Residents have an awareness for and access to diverse work opportunities, with jobs ranging from technical trades jobs in the mine to environmental workers overseeing the sites. And they are well-paid. In 2020, according to a Minerals Council of Australia analysis of ABS figures, workers in resources were paid 55 per cent above the national average at $143,022.
Mining companies often contribute significantly to social and community groups and not-for-profits. Resources companies are highly aware of their responsibility to regional communities and many have local purchasing and procurement strategies in place to boost their local economic benefits. At Bravus, we choose to support community groups in central and north Queensland including support for Rockhampton Basketball, Rockhampton River Festival, Townsville’s IndiaFest and the Central Queensland Capras Women’s Rugby League team.
Local services and infrastructure
In Australia, mining companies support communities through partnerships and engagement. The sector is aware of its social responsibilities to regional communities where mining activities occur, with many companies having targets for local purchasing and expenditure.
Bravus has spent more than $20 million so far developing local roads in central Queensland and expects to spend another $100m during the construction of the Carmichael Mine.
Social impact management
Mining companies developing major projects are also highly aware of historical impacts, such as boom and bust cycles and insufficient housing. When developing projects in Queensland, mining companies undertake a Social Impact Assessment to scope the potential impacts. During this process potential benefits are appraised and attempts made to increase them, while negative consequences are mitigated and minimised.
Royalties and taxes
Mining activities generate multibillion-dollar revenues for governments. In 2019-2020 mining industry contributions to the Australian Government included $24.1 billion in company taxes and $15.2bn to states in royalties. Over the last ten years the industry has paid $239 billion in taxes and royalties.
Sustainable mining practices
Resources companies have a responsibility and desire to operate safely, sustainably and responsibly. At Bravus, for example, our focus on economic, social and environmental sustainability guides our actions. We are complying with more than 100 requirements under environmental approvals and will conduct monitoring of groundwater and endangered species on site. Ahead of mining operations commencing, we are already planning for land rehabilitation using best-practice methods.
What Are the Social Benefits of Mining?
The positive effects of mining on the economy extend to social benefits. The mining and resources sectors play an important role in the economic and social development of many communities, especially in regional and remote areas.
Local businesses can develop and thrive with the additional flow-on effects of greater employment and money in a town, while mining company sponsorships of community groups are common.
The business and job growth due to mining boosts community development and local skills, knowledge, innovations and opportunities. As responsible corporates, mining companies are aware to maintain the sustainability of regional communities through community partnerships and engagement, as well as local purchasing and spending programs.
At Bravus, for example, we developed a local procurement strategy to maximise the benefits to regional communities in Queensland.
Since the construction of the Carmichael Project began, we have signed contracts totalling $1.5 billion with more than 90 per cent of that investment going to Queensland companies.
Many mining companies also set targets for gender and Aboriginal and Torres Strait Islander employment, and seek to develop diverse businesses opportunities where possible.
An Australian National University study found the number of First Nations Australians employed in mining had more than doubled between 2006 and 2011 when there were more than 7000 people employed. This figure had grown from “in the hundreds” in the early 1990s.
As part of our environmental program we have engaged a Wangan and Jagalingou business, Woongal Environmental Services, to monitor and report on potential impacts of the Carmichael Project. The Wangan and Jagalingou People are one of the native title holding nations that have signed an Indigenous Land Use Agreement with Bravus. Their important work includes surveying the habitat area of the endangered black-throated finch across the large conservation area and non-mining regions. They will also conduct weed and fire management and install fire trails.
Learn More About the Positive Effects of Mining on the Economy with Bravus
Australia’s responsible mining industry brings great benefits to Australia. It facilitates highly skilled employment, multibillion-dollar investment, the nation’s highest-value exports and contributes strongly to the development of high-tech, innovation that leads other industries. Almost one-quarter of a million people have jobs in mining, and there are a total of 1.1 million direct and indirect roles across the METS sectors. Everyone in Australia benefits from mining – directly or directly.
The positive effects of mining on the economy will also continue to spread, through its technology-driven practices and increased productivity measures. Innovations such as precise positioning technologies to allow exact drilling and extraction, slope monitoring and vehicle tracking for safety, and the use of autonomous vehicles will continue to increase productivity.
Mining also contributes to the steady and sustainable supply of energy to meet ongoing demand, and minerals that are used in every facet of modern life. Electricity is fuelled by coal and renewable energy cells use minerals including lithium and cobalt. Mining is essential for contemporary lifestyles.