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Growing Australia’s mining services exports

Brendan Pearson, Chief Executive, Minerals Council of Australia

When people think of Australian mining exports, the images which come to mind are mountains of iron ore or conveyor belts of coal being loaded onto ships bound for Australia's export markets in Asia.

The sheer physical bulk of Australia's main minerals exports is matched by their enormous economic value. Iron ore and coal are Australia's two largest exports, forecast to be worth $71.7 billion and $55.5 billion respectively in 2016-17.1

Exports of other resources commodities like gold, oil and gas, and other minerals and metals are forecast to be worth an extra $87.9 billion, with the total value of Australia's resources and energy export earnings forecast to be worth $215 billion2.

All up, minerals and energy resources account for around two-thirds of Australia's total merchandise exports.

Mining equipment and red sand

Beyond the export earnings, Australian resources are helping to build infrastructure, provide power to households, and grow economies in important partner countries.

So the growth in our mining exports has been a win-win for Australia and our partners.

But we now have an opportunity to build on this trade in goods success story by carving out a strong role for mining services exports.

Australia has a proud mining history that goes back to the first gold rushes of the 1850s.

While early prospectors may have been lucky enough to find gold nuggets on the ground, Australian mining operations today are high-tech operations utilising sophisticated exploration and geological techniques and highly efficient and cost-effective mining and extraction methods.

They follow world's best practice environmentally-sustainable mining practices, engage with local communities, and build advanced infrastructure and logistics.

This is only possible with a highly skilled labour force, investment in technology and equipment and partnerships with specialist mining services firms.

Australian mining companies are now world leaders in the mining equipment, technology and services (METS) sector. For example, Rio Tinto was recently awarded the 2017 Austmine Miners Innovation Award for its use of Mine Automation System and RTVis™ technologies. Rio Tinto now uses these data technologies at more than 95 per cent of its open cut mines, which has boosted productivity and helped to save costs.3

Earlier this year, the Minerals Council of Australia released a report by Deloitte Access Economics that analysed the significance of mining and METS to Australia's economy and future prosperity.

This report, Mining and MET: engines of economic growth and prosperity for Australians, found that the economic contribution of Australia's mining and METS sector in 2015-16 was $236.8 billion, representing around 15 per cent of the Australian economy. The mining and METS sector supported 1.14 million jobs across Australia, representing around one in every ten Australian jobs.

According to the report, Australia's future success in mining will not simply be a matter of natural endowments but will require improving comparative advantage through continuing innovation.

Innovation is an iterative process; the report notes that innovation is about unlocking individual ideas and improving what workers do every day. Australia's mining industry is increasingly focused on integrating new technology and ideas into its operations.

A highly-skilled mining services industry is integral to the continuance of Australia's mining industry export success and trade performance.

There are strong synergies and linkages between Australian extractive mining, mining services and mining investment in our domestic market. These synergies can also be the source of export opportunities for our mining services firms – and they can help drive Australian outward-bound investment in mining projects in other countries.

Recently concluded free trade agreements are helping to give Australia's METS sector access to new export markets. For example, the China-Australia Free Trade Agreement provides that mining-related services can be delivered through commercial presence in China. ChAFTA further improves access to the Chinese market for technical consulting and field services linked to local coal bed methane and shale gas extraction.4

Free trade agreements currently being negotiated have further potential to open up opportunities for Australian mining service exports. For example, Australia's largest exports to Peru currently include metals products, minerals additives and specialised mining equipment and machinery, including vehicles and technical instruments. Australia's mining services sector would likely benefit further from further market opening under the proposed Peru-Australia Free Trade Agreement.5

Similarly, the METS sector stands to benefit from the Regional Comprehensive Economic Partnership currently being negotiated between Australia, New Zealand and several Asian economies. RCEP aims to remove restrictions and discriminatory measures related to trade in services, and Australia is seeking outcomes for the mining engineering services sector.6

In negotiating new bilateral, regional and multilateral free trade arrangements, the challenge for government will be to open up opportunities for Australia's METS sectors.

Service barriers to trade are not always as straightforward to identify as traditional barriers to goods trade, especially where they relate to recognition of professional skills and qualifications. There is especially true of the METS sector, where skillsets and innovative practices are multidisciplinary and do not always neatly fit into a single category.

That is why the MCA is working with the METS sector to identify market access barriers and other issues for the mining services trade negotiation agenda. Tackling these barriers will help our mining services sector to open up new provinces for Australian exports – and this, in turn, will build on the minerals commodity exports that form the bedrock of Australia's international economic success.

  • 1 Department of Industry, Innovation and Science, Office of the Chief Economist, Resources and Energy Quarterly, March 2017
  • 2 Ibid
  • 3 Rio Tinto, Rio Tinto wins 'gold medal' at awards for innovative mine technologies, 29 May 2017
  • 4 Minerals Council of Australia, China, minerals and energy and the China-Australia Free Trade Agreement, June 2015, pages 26 - 27
  • 5 Minerals Council of Australia, Mining Stands to Benefit from FTA with Peru, 24 May 2017
  • 6 DFAT, Regional Comprehensive Economic Partnership
Last Updated: 7 August 2017
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