The Outlook For Australia's Resource Industry And Its Funding Needs

BACKGROUND Before addressing the above topic in any detail, it is pertinent to provide some background on Australia for those people who have not been there or who have a limited knowledge of our continent. Australia is approximately the size of the continental U.S.A. (excluding Alaska) covering an area of approximately 7 million square kilometres. It has a very dry climate which has led to a concentration of people in major cities scattered around the continents perimeter. Australia's population is currently approximately 15 million. Of the work force of 6.3 million, 72% work in tertiary industries, 20.2% in manufacture, 6.5% in agriculture and 1.3% in mining. Agriculture accounts for 46% of exports, mining for 31% and manufacturing for 23,. Economic activity is based on:- Agriculture This is capital intensive and covers extensive areas and is reliant on low cost farming. A.range of foods and fibres are produced with over 70% of production being exported. Such products are of course subject to the usual vagaries of world market demand and market access, particularly in regard to the operation of trade blocks such as the E.E.C. Mineral Resources A wide range of minerals and an abundance of iron ore, coal, gas and uranium resources provide an increasing volume of exports. However, Autralia's oil resources at present only supply approximately 70% of local requirements. Industry This is diverse and encompasses the processing of agricultural products and mineral ores as well as helping to supply the consumer and capital goods needs of the whole community. However, the small scale of local markets, the geographic isolation of Australia and relatively high wage costs have limited the scale of Australia's industry. Advanced technology has overcome some of these difficulties and high tariff and import quotas protect local producers from the full force of international competition. In 1980/81 Australia's Gross Domestic Product amounted to $130 billion with approximately 24% of this being devoted to investment. In the past decade Australia has experienced inflation rates ranging from 5% to 17% and only modest real growth rates ranging from 0.4% to 5% per annum. We have also experienced, as have many other industrialised nations, continuing wage and price increases. Unemployment presently stands at 6%. MINERAL DEVELOPMENT As the above figures indicate, Australia's continuing prosperity is very dependent on the mineral and agricultrual sectors of our economy. The dependence on these sectors is highlighted by the table below which indicates our position in a global context. [Australian Production of Minerals in a World Context Western World % Total Western World Position Mineral Production 1980 1st Rutile 75 Ilmenite 31 Zircon 70 Bauxite 36 Iron Ore 11 Tungsten 14 2nd Lead (Conc.) 15 3rd Manganese Ore 14 Brown Coal 11 (1979) Zinc (Conc.) 10 4thSilver (Conc.) 10 Nickel 6 5th Tin (Conc.) 5 6th Black Coal 5 Gold 2 Source: Mining Annual Review 1981] The total value of all mineral and fuel exports in 1980/81 is estimated at $5.9 billion. This prominence in the world mineral production has largely been achieved in the last 15 - 20 years. In fact, in the early 1960's, Australia had only 2 major mining export centres, Broken Hill in New South Wales and Mt. Isa in Queensland. This growth is highlighted by the fact that in 1963, for example, we exported only 9 tonnes of iron ore and less than 4 million tonnes of coal. In 1980/81 we exported 75m. tonnes ',of iron ore (valued at $1,117m.) and 47m. tonnes of coal valued at $1,965m.). The growth in our mineral industry has come about because of a number of factors. Abundance of Mineral Resources We are particularly well endowed with mineral resources, as indicated below.