Protection and the Mining Industry

In planning and operating mining projects, managers must take into account economic conditions in foreign markets in addition to Australian conditions. As the manager has little influence over the price or the demand for the product, it is particularly important that close attention is paid to the control of costs to ensure that the mining operation remains competitive with foreign producers. This is not necessarily true for some sectors of the domestic manufacturing industry where foreign competition is restricted and costs can be passed on to consumers because of the protection afforded by tariffs. The effects of protection on the cost structure of Australian industry are more pervasive than is commonly understood. The issue of protection is particularly important to the Australian mining industry management because the cost burdens imposed by local protection must be absorbed within profit margins. Furthermore, because protected industries are effectively subsidised to use scarce resources such as skilled labour, the development of more efficient industries such as mining is inhibited. The mining industry has much to gain from any relaxation in protection policy, and hence the issue is of considerable importance to all managers in the mining industry concerned with costs.