Australia consistently ranks as one of the richest countries over the last 150 years along with nations like the United States and Britain. The IMF ranks Australia fifth in the world based on Per Capita GDP and even Australia's sovereign credit rating is higher than the United States at “AAA”.

 

So how did Australia get so wealthy?

 

In order to discover the roots of Australia’s current economic prosperity, we have to look at its past.

 

The country has no doubt benefited from British Imperialism which provided access to strong institutions, foreign capital markets and special trading privileges.

 

But what has given rise to Australia becoming one of the world’s wealthiest nations has been its natural-resource base - particularly minerals.

 

Australian Gold Rush

 

In its early history, the resource sector provided much of Australia’s economic output, beginning with gold discovery in Ophir, NSW in 1851. 

 

Soon after, large gold deposits were found across Australia, particularly in the eastern states. These discoveries helped save fledgling state economies. In October 1867, for example, James Nash announced his discovery of gold in Gympie. His goldfield discovery is credited to saving the state of Queensland, which was spending beyond its means and teetering on economic collapse. Had it not been for gold, the state would have continued to struggle with trying to raise revenues to pay for development. The state owes much to the discoveries of gold -  the industry attracted thousands of people to its cause, increasing the revenue base as well as helping to create demand for new townships, railways and other infrastructure projects.

 

The discovery of gold delivered unprecedented prosperity at a time when Australia was largely a frontier society with a pastoral economy. The discoveries ensured Australia’s prominence in international markets, which made the country akin to today’s American tech giants. At the time, Australia produced one third of the world’s gold.

 

Gold continued to be Australia’s most important export for a further two decades after its discovery. However, by the early 1900’s gold production began to slow down, signalling the end of the “gold rush.”

 

It might have been the end of the gold rush, but the Australian mining industry was only just getting started.

 

Australia’s abundance of natural resources

 

Australia is fortunate that it is resource abundant. Gold production may have slowed at the beginning of the 20th century, but there were other natural resources Australia could export.

 

The country has a large share of the world’s known (and economically viable) mineral reserves, namely:

 

  • it has the largest reserves of uranium, nickel, lead, zinc, and brown coal; 
  • it has the second largest reserves of bauxite, copper, and silver; 
  • and it has the third or fourth largest of iron ore, industrial diamonds, and manganese ore.

 

Resources are to be found in Queensland, which accounts for much of the additional coal and bauxite production. Western Australia is home to large iron-ore deposits, particularly in the Pilbara region. New South Wales has coal seam gas mining and South Australia holds the second-largest uranium producing mine in the world.

 

There is no doubt that Australia’s enviable record of prosperity is due to its abundance of natural resources.

 

The Resources Boom

 

The resources boom (sometimes called mining boom), which analysts typically describe as the period of the last two decades, was responsible for much of the growth in commodity export earnings. This was largely due to the increased demand for raw materials by China and India.

And while analysts now talk of a supposed mining downturn with commodity prices steadily falling, iron ore, coal and gas continue to be Australia’s first, second and fourth-largest exports, adding $100bn to national income in 2015.

 

Australia’s economy is not all bleak either. The resources sector still contributes about 8.5% to Australia’s GDP and directly sustains almost 200,000 jobs (2% of the workforce). Resources also accounts for 47% of Australia’s total exports, compared with services (22%), manufacturing (16%) and agriculture (15%).

 

21st Century outlook

 

While Chinese demand for natural resources slows down, worldwide demand will continue and is expected to increase. At Dynamics G-Ex we are keen to play a part in securing Australia’s mining future.

 

So if you’re a mining company looking to partner with a passionate and growth-minded Australian-based mining supplier, please contact our team on 1800 105 584 or Gympie +61 7 5482 6649, Perth +61 8 9302 5700.