How mining dominates the economy (in seven charts)

Article courtesy of the Financial Review.

Australia’s big miners including BHP, Rio Tinto, Fortescue and companies controlled by Gina Rinehart paid more than $28.5 billion in tax in 2020-21, accounting for nearly a third of total corporate tax revenue.

Here are seven charts that show how the mining sector, which includes oil and liquified natural gas, dominates the Australian economy.

Charts 1 and 2: Iron ore spot price peaked at a record $US237.50 a tonne in FY2021, and although the price has eased recently, Russia’s invasion of Ukraine caused coal and liquified natural gas prices to spike.

Chart 3: The Reserve Bank’s bulk commodity price index shows the extraordinary rise in value of the resources hidden underground.

Chart 4: With iron ore, coal and liquified natural gas prices each hitting record highs over the past two years, profits in the mining sector have surged and surpassed those of all other non-financial corporations.

Chart 5: Record profits have resulted in record tax takes. About one-third of all company tax paid in 2020-21, even before Russia’s invasion of Ukraine sparked the current global energy crisis, came from Australia’s large miners.

Chart 6: As a share of economic output, mining has surged over the past five years, almost doubling from 6 per cent to almost 12 per cent of output, overtaking the nation’s other major industries.

Chart 7: Mining profits have been so significant, they have skewed the national debate over wages. After hovering largely between 50 per cent and 60 per cent for the past half century, wages as a share of national income dipped below the halfway mark for the first time in the past two years.

The fall sparked an outcry from unions that workers were not getting their fair share of profits and productivity, and ACTU secretary Sally McManus used the data to demand “serious reform” of the wage-setting system.

But according to the Australian Bureau of Statistics, when you exclude mining – it only employs about 2 per cent of workers but accounts for a ridiculous portion of profits – wages as a share of national income increased slightly over the past decade at the same time profits decreased slightly.