History and current state of the Australian mining industry

Discuss about the Evaluating the Challenges of the Mining Industry in Australia.

The objective of this literature review is to evaluate previous research conducted on the topic of “Challenges within Australian mining sector”. In reviewing the previous researches focus will be on the political economy within the Australian mining industry long with explaining the state of the mining industry over years (Fleming and Measham 2015). Moreover, the research gap will also be recognized based on critical analysis of existing literature based on which future research implications will also be provided.

According to Adhikary and Guo (2015) the Australian mining industry is deemed to be instrumental that transformed the nation’s economy to the industrial economy. The discovery of diamonds and gold indicated a drastic change in the outlook of the Australian economy. After long years of active mining specifically gold and diamond mining, the industry has observed a drastic decline. The decline of the previous years is characterized by the employment and price crisis that was publically perceived as commencement of terminal decline of mining sector. Bakker and Shepherd (2017) indicated that in Australia gold mining has always been a great contributor employment generation, gross domestic product, expert earnings along with research and development. At the time it is in decline the general perception in the public eyes is that mining industry as a whole is under decline. In contrast, Richert, Rogers and Burton (2015) stated that the mineral and mining legislative framework within the Australian mining sector changed the mining industry’s outlook.

The growth within the mining sector within Australia has been highly contingent on the mining organizations that is recognized as the long term commercial interest are associated with social responsibility and environment accountability. Sivakumar, Kannan and Murugesan (2015) stated that this was supported by the association of a strong legislative framework that considers the impacts of the extractive activities on the surrounding along with the affected rehabilitation, communities along with self-regulation of the industry. The environmental protection along with biodiversity conservation act 1999 is the overarching commonwealth legislation dealing with the concerns of national environmental significance along with having relevance to mining.

The mineral along with petroleum resources development act of 2002 indicated vital changes and intended to deal with several concerns. These researchers also indicated that the political economy of Australia has always focused on the transformation of mining and mineral sector and for maintaining the environmental sustainability of the industry. The political agencies of the nation are also focused on the promotion of equitable access to the nation’s mineral resources along with ensuring the promotion of investment within the exploration, mineral and mining beneficiation. Horberry, Burgess-Limerick and Steiner (2018) stated that the objective of such legislative framework for making sure that all the mineral rights are followed within the state over the next five years. The promulgation of the board based socio economic empowerment charter in consideration to the mining sector provided additional impetus for the transformation program within the industry.

Mining industry’s contribution to the Australian economy

The human capital stock within the Australian mining sector has also resulted in attaining increased competitive advantages. The major drivers behind the same were included evolution of increasingly skilled along with experienced workforce in order to service the resource sector. The performance of the mining sector in Australia has been underpinned not just by knowledge and skills of the labor force but also through access to low grade ore bodies that minimizes the environmental impact of mining operations that can facilitate in enhancing safety and efficiency within the mining industry.

Kusi-Sarpong et al. (2015) revealed that mining has a considerable function within the Australian economy and as its role is to realize the nature of the resources industry within the nation. Mining as an industry is deemed to have exceptional features such as it is being a drastically affected industry for the reason that mineral deposits have lesser life. Kusi-Sarpong, Sarkis and Wang (2016) also added that there is a cyclical price behavior that is within particular economic factors that might consider dollar price of the commodity, rate of exchange along with volatility and levels of the currency. Australia is deemed to be the major mining economy. It is gathered by Pimentel, Gonzalez and Barbosa (2016) in their research that as per the “departments of energy and minerals” the nation’s mining is rated among top five globally within the number of commodities. These researchers also stated that Australia is ranked as number one all over the world based on the following commodities such as chromium, platinum group metals, limonite, vermiculite and gold.

According to Richert, Rogers and Burton (2015), within the Australian mining industry gold contributes to more than 37% of the overall mining remuneration and coal contributed to 18% of the mining sector. These researchers also revealed that the gold production has resulted in great decline over the past few years. It is gathered that the strength of Australian currency, the decreased price of gold despite high dollar price along with decreased volume of sales have resulted in drastic decline in the Australian mining sector. Shen, Muduli and Barve (2015) indicated that the unions within the Australian mining industry had to deal with the difficult situation. Such situation resulted in drastic decline within the mining sector that indicated accelerated decline in the membership for the unions. The growth within the mining industry of Australia generated an opportunity for the unions in order to rebuild their lost memberships within gold. Söderholm and Svahn (2015) stated that the vital milestones within the current years encompassed consolidation of the Australian resources sector that develops itself as a cornerstone of the economy. Moreover, this also includes a significant wealth for the industries servicing the sector.

Environmental sustainability and legislative framework

According to Sun et al. (2016), the legislative changes took place over the past years that gave rise to the “black unionism among the mining employees”. It is vital to consider that the increasing impact of NUM is visible within several areas that resulted in legislative changes focused on transforming the mining industry of Australia. For instance, the mining industry focused on maintaining the closed shop agreements with the white unions. Unger et al. (2015) added that this facilitated to open up their membership to all the nation’s employees. Moreover, the National Unions of the Mineworkers remained restricted to the semi-skilled and unskilled categories. This approach had a great impact on a particular segment of the union for maintaining their survival and positing them to the competition from the segment of the labor unions. In contrast, Yakovleva (2017) evidenced that it deprived the National Union of the Mineworkers to attain the readily available intellectual capacity within the mining sector. Certain legislative challenges were also faced in the Australian mining industry. The members of the legislative bodies were were promoted to the senior position as the union men along with the officials that were facilitated to stand the elections within the union structures.

Zhang and Moffat (2015) explained such unions as formally recognized within the miners along with official bargaining unit. The researchers also evidenced that here are three principles that govern the recognition that considers bargaining must be carried out at the present bargaining levels along with which the concerns can be dealt with at a strategic level that can further be redefined. Fleming and Measham (2015) stated that the beginning of the process of integration two major bargaining criteria are maintained that includes one bargaining forum along with more than two recognition units. The researchers also indicated that the chamber of mines were not supportive regarding the process of breaking down the barriers of bargaining within the Australian sector. They experienced the union divisions within the bargaining units in which all the labor unions in mining companies will be a dominant player. Fuisz-Kehrbach (2015) stated that the resistance of the mining industry of Australia was a position against the explained the purpose of the act that the advancing economic development, labor peace along with democratization of the employees. The promulgation of the two legislation pieces had distinct implications for the three unions that are led to different reactions. Richert, Rogers and Burton (2015) indicated that all the aspects of the legislation are vital in case it is put together within the perspective of the revitalization efforts of mining unions in Australia.

Human capital stock and increased competitive advantages

Horberry, Burgess-Limerick and Steiner (2018) explained that Australia’s mineral and energy resources prosperity, perceptions regarding low sovereign risk, ready access to international capital along with openness to the foreign investment. The challenges that are dealt by the Australian mining sector are explained under:

• Perceptions regarding sovereign risk: In a situation where prosperity has defined as a vital factor supporting the development of the Australia’s mineral resources. The industry has also faces the risk in the sovereign aspect as the resource companies are concerned with the transparency, effective process along with certainty based on policy design. Kusi-Sarpong et al. (2015) indicated that Australia has attained a consistent high ranking across a broad range of global risk indexes that is general and mining specific. These researches also indicated that the Fraser Institute’s Mining Survey which considers the executives of the mining company’s considers the same.
• Social and environmental considerations: The growth within the mining sector within Australia has been highly contingent on the mining organizations that is recognized as the long term commercial interest are associated with social responsibility and environment accountability. Sivakumar, Kannan and Murugesan (2015) stated that this was supported by the association of a strong legislative framework that considers the impacts of the extractive activities on the surrounding along with the affected rehabilitation, communities along with self-regulation of the industry. The environmental protection along with biodiversity conservation act 1999 is the overarching commonwealth legislation dealing with the concerns of national environmental significance along with having relevance to mining.
• Labor, skills along with technology: The human capital stock within the Australian mining sector has also resulted in attaining increased competitive advantages. The major drivers behind the same were included evolution of increasingly skilled along with experienced workforce in order to service the resource sector. The performance of the mining sector in Australia has been underpinned not just by knowledge and skills of the labor force but also through access to low grade ore bodies that minimizes the environmental impact of mining operations that can facilitate in enhancing safety and efficiency within the mining industry.
• Capital access and foreign direct investment: The capital intensive nature of majority of the resource sector activities denotes the capability of obtaining investment funding and capital is critical to the overall success. The organizations operating in Australia could accumulate capital from international as well as domestic borrowings, while listings and placements of shares in the Australian Stock Exchange are included as well. Australia is known to have limited population and geographical diversity. In addition, the importance of capital intensive sector has made Australia heavily reliant on foreign direct investment for ensuring its growth. The openness to participation and foreign direct investment has been a major driver in the globally competitive resources sector of Australia. For instance, the Japanese and the Korean investments played a major role in developing coal and iron ore sector from 1960s. In the recent times, investments are collected from India and China as well, since these countries look for strategies for ensuring stable supply sources to fulfill the rising demand for energy and mineral resources. Thus, Australia has become a popular investment destination, since foreign direct investment in the Australian mining industry has risen by $150 billion between 2000 and 2010. Foreign direct investment is recognized effectively for developing globally competitive mining industry in Australia.

From analyzing the previous littered on the topic of the challenges graced by the mining industry in Australia it has been gathered that the previous researches did not investigate the decline in the Australian mining industry (Govindan, Kannan and Shankar 2014). Research on the areas that the mining unions are turning out to be highly aggressive within their membership recruitment is not present in the existing literature. Considering the same, the future research will focus on addressing the gap through analyzing most of the major issues faced by the Australian mining sector that has resulted in the decline of this sector and has affected the employees of the organizations (Helwege 2015). Moreover, in addressing the gap, future research will also explain the sound policies that can be undertaken by the Australian mining sector. The research will also focus on explaining the policies that can ensure substantial endowments within the minerals and energy that offers a string base for extended term growth.

According to the conceptual framework that is prepared in analyzing the challenges or issues faced by the Australian mining industry explains the relationship among the eco-friendly mining technology, political economy of mining industry, legislative framework challenges along with pre and post operational usage. According to Fuisz-Kehrbach (2015) the conceptual framework in this research subject indicates that the mining sector of Australia is recently experiencing the crest of demand led wave regarding prosperity that much of the associated strong development in output and investment reflects on increased expansion of advancing economies. The conceptual framework also explained that the Australian mining industry deals with a number of growing concerns that can affect its growth in case it is not dealt with. Govindan Kannan and Shankar (2014) identified that the industry experiences increased competition for global capital and for attaining key market access against a backdrop of varying policy settings within Australia.

The objective of this literature review is to evaluate previous research conducted on the topic of “Challenges within Australian mining sector”. In reviewing the previous researches focus will be on the political economy within the Australian mining industry long with explaining the state of the mining industry over years. It was gathered from the paper that that the mining sector of Australia is recently experiencing the crest of demand led wave regarding prosperity that much of the associated strong development in output and investment reflects on increased expansion of advancing economies. The discovery of diamonds and gold indicated a drastic change in the outlook of the Australian economy. After long years after active mining specifically gold and diamond mining the industry has observed a drastic decline. The decline of the previous years is characterized by the employment and price crisis that was publically perceived as commencement of terminal decline of mining sector. The conceptual framework also explained that the Australian mining industry deals with a number of growing concerns that can affect its growth in case it is not dealt with.

Major challenges faced by the Australian mining industry

References

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Bakker, R.M. and Shepherd, D.A., 2017. Pull the plug or take the plunge: Multiple opportunities and the speed of venturing decisions in the Australian mining industry. Academy of Management Journal, 60(1), pp.130-155.

Fleming, D.A. and Measham, T.G., 2015. Local economic impacts of an unconventional energy boom: the coal seam gas industry in Australia. Australian Journal of Agricultural and Resource Economics, 59(1), pp.78-94.

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Helwege, A., 2015. Challenges with resolving mining conflicts in Latin America. The Extractive Industries and Society, 2(1), pp.73-84.

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