In looking to develop a mineral prospect, a number of factors need to be determined and weighed in balance, including geology and mineralogy at the time, and ore valuation forecasts over the various horizons for possible life-time periods of the potential mine. Into the planning investigations also goes potential mining methods and sizing for mine production, the openings, productivity and costs.

Without the giant mineral resources of the Australian continental mass much of the huge expansion of the Chinese economy, now one of the biggest and fastest growing in the world, might not not have taken place, at least on the 10 per cent per year rate it has. The same is true for India, almost equal in population even if its economy is not yet on such a vast scale.

Particularly the iron ore deposits of Western Australia have fed the industrial production of these two fast growing economies, along with supplying another Asian powerhouse economy, Japan, which remains a crucial customer. But coking coal from central Queensland, one of the world largest suppliers of high grade iron smelting coke coal, has been equally important. Energy resources including thermal coal deposits and increasingly gas, oil and other fuel supplies have also come into their own. New South Wales and to some extent the other states, also produce.

"You could say that we have just about every part of the periodic table in Western Australia," says Rick Rogerson, the executive director for the Geological Survey of Western Australia (GSWA), part of the state government’s Department of Mines and Petroleum (DMP). There is oil and gas both onshore and offshore and all that is missing, he says, are high grade coal deposits. But these are amply made up by the giant coal bearing basins to the east.

According to the Australian government Web site the country overall has the world’s largest reserves of brown coal, mineral sands yielding rutile and zircon, nickel, lead, silver, uranium, iron ore and zinc.

It has the world’s second largest reserves of bauxite for aluminium and tantalum used in mobile phone production. For copper it comes up as the world’s third largest reserve and for silver the fourth largest reserves of silver. It is also a significant gold producer, just outside the top three.

Above the clouds

All this has meant that until recently Australia had managed, almost uniquely among Western economies, to ride out the impact of the 2008 credit crunch, or global economic downturn. Though its tourism, manufacturing and service sectors were hit like many others, its mining not only held up but was expanding significantly until this year. Some downturn was apparent in 2012 and there has been a significant slowdown in 2013, though still continuing on a large scale.

For the mining sector and mining services sector the year 2011 showed one of the largest increases ever in exports, increasing over 15 per cent to a record AUD 190bn (USD 179bn), based on strong demand for minerals and commodities from China and other parts of Asia.

Overall GDP for Australia continued to rise, partly on the strength of this industry. Although it dropped back in the wake of the global recession to USD 923bn for the year to the middle of 2009 it increased subsequently to USD 1.14tn, USD 1.38tn to the middle of 2012 and USD 1.52tn this year.

But although it has held ground the impact of world trading difficulties also make themselves felt in Australia. The earlier part of 2013 has seen fallbacks in the mining industry and greater problems for the sectors servicing it, including the machinery sales. Boom conditions in the coalfields of Queensland have disappeared and local press reports suggest once highly-priced housing and apartments in mining areas have become much cheaper.

The picture is mixed. According to the international executive search and recruitment company Swann Global: "The number of people directly employed by the Australian mining industry has grown, reversing the contraction over the past two quarters." In February 2013 the Australian Bureau of Statistics estimated the total workforce to number 246,100 people, an increase of 4,100 in the quarter but still well short of the peak employment of 261,000 people recorded in May 2012.

The exports peak of AUD 190M (USD 179M) fell back in 2012-2013 to AUD 177bn (USD 167bn), according to the Australian government’s Bureau of Resources and Energy Economics (BREE( in its Resources and Energy Quarterly for the June quarter.

According to BREE’s executive director and chief economist, professor Quentin Grafton, "large fluctuations in equity and foreign exchange markets, coupled with weakening sentiment have negatively affected the price of some resource commodities, particularly precious and base metals." He says the largest fall was in the price of gold, "which declined in value by 12 per cent in one week during April."

Evidence of softening in the Chinese economy and concerns surrounding the tapering off of the US Federal Reserve’s quantitative easing before the end of 2013 contributed to a more than 10 per cent depreciation of the Australian dollar relative to the March quarter 2013, the bureau goes on.

"While a depreciating dollar increases the Australian dollar value of resources and energy exports denominated in US dollars, this was more than offset in 2013 by weakening commodity prices," Grafton says.

He adds that "the nominal value of resources and energy exports is forecast to increase by around 11 per cent to AUD 197bn USD (187bn) in 2013-2014. An assumed depreciation of the Australian dollar-US dollar exchange rate in 2013-2014 will provide support for Australian dollar denominated resource and energy exports."

A major factor now could well be a change in direction politically. The industry is now waiting to see what will happen with a new government in place. Elections at the beginning of September saw the end of a six-year period of Labor government at the federal level and a major victory for the Liberal-National Coalition of the new prime minister, Tony Abbott.

The conservative right wing government is likely to be more ‘industry friendly’, particularly over the confusing issue of the Minerals Resource Rent Tax. This was to be a tax on profits generated from the exploitation of non-renewable resources in Australia and was itself a replacement for a proposed Resource Super Profit Tax.

The tax, which levies a 30 per cent charge on ‘super profits’ from the mining of iron ore and coal in Australia, was introduced on 1 July 2012 but is heavily opposed by the mining companies and owners. In the election campaign the new government had promised to repeal the tax.

As well as allowing companies to keep more of the profits they generate, some Australian commentators suggest there could be an upturn in investment because of greater certainty. The tax has not only been contentious but was hampered in its early form by a fallback in mining industry profits just after its introduction.

Other issues that might now affect the mining industry are changes to the carbon tax to which the new government has a very different approach, according to Michael Roche, chairman of the Queensland Resources Council, an industry lobby group for the mining and energy sector representing about 90 companies large and small in the state. "Things will depend very much on what the new government can pass in legislation as they do not control the upper house," he says, "but they would like to scrap the tax." This would be significant for mines, he said, which pay tax on methane emissions, and through altering the tax paid by emissions intensive industries, major users of coal.

There is also a possibility that there will be some ‘modest’ tax changes for exploration companies, he says. Particularly smaller companies, known as junior resource explorers, have been suffering from the squeeze on credit in the post 2008 financial atmosphere.


The vast spaces of this 2,600km long Pacific seaboard state, covering 1.8Mkm2, range from tropical humidity in the north to the surf and sunshine coastline around Brisbane. It is a major agricultural producer but increasingly exploits its minerals too.

Much of Queensland’s mining activity focuses around coal in a number of major basins throughout the state though it also has substantial metal mining activity, particularly in the remote Mount Isa inland region. Activity includes silver, lead, zinc and copper, as well as three-quarters of the country’s bauxite production putting the state at the fifth largest producer in the world. There are also substantial uranium deposits, which only recently were given the go-ahead for exploitation once again last year after a long ban.

The north-west minerals region is difficult and suffers from very dry conditions, which make water for operations difficult to find; it is also remote with a 1,000km rail journey needed to reach port access.

Gemstones exploration is also significant, including sapphires, though not diamonds. For coal the state has vast resources in both high grade high carbon coking coal used in iron and steel production and in thermal coal for power stations. Some 34bn tonnes of reserves exist though much of this remains unexploited as yet. According to state government figures there were 54 operating coal mines in 2012, which produced 187.6Mt of saleable coal in 2011-2012. Of these export sales were 165M.t worth AUD 30.9bn (USD 29.3bn).

Mining and energy constitutes one fifth of the state economy, says Michael Roche, chief executive of the Queensland Resources Council, the main industry lobby group for the mining sector, based in Brisbane. It provides one in eight jobs

"We have 60 per cent of the Australian coal export and 25 per cent of all internationally traded coal."

He points out that that is only a tiny percentage of world production, at around three per cent.

"But we have the advantage of very high grade coal for coking and in that sector we produce 75 per cent of the world trade for the steel industry."

He believes the level of production will climb significantly yet perhaps reaching some 300-325Mt by 2020, though these figures could be affected by downturns currently hitting even the huge growth of China, which has dropped back to around seven per cent at present, still staggeringly high but a big fall from the past rates. India too has seen cutbacks and is facing a drop in the Rupee at present which may have serious implications for the future.

"The impact has been felt in the state," he says, declaring in June that the "industry was staring down the barrel of the worst operating conditions for more than a decade."

Despite this there are long term projects underway that he says will greatly expand coal capacity. These include further developments in the Bowen coal basin and as yet untapped coalfields such as the Galilee further inland and the Surat basin towards the south. For many of these potential investments there is a question of infrastructure to be able to move out the coal from the developments, including the need for railways and port expansion.

A number of the large companies are looking at gigantic investment schemes, says Roche. These include completely vertically integrated investments by companies like India’s Adani, which intend to develop 60Mt per annum thermal coal mine in the north Galilee Basin in central Queensland.

All coal will be railed via a privately-owned rail line connecting to the existing Aurizon rail infrastructure near Moranbah, and shipped through coal terminal facilities at the Port of Abbot Point

"They are going from the mine to generating the electrons," says Roche, and "would build everything from the mine to the rail and port facilities to take the coal in Adani ships to Indian mainland power stations."

Meanwhile the jointly owned Indian-Australian GVKHancock Coal company is readying two similar projects. The Kevin’s Corner project and the Alpha Project, also in the Galilee basin, and both producing over 30Mt per annum to be carried by a newly-built railway, again to the Abbots Point port facility where the scheme would build further shipping infrastructure. The mines would initially be open cut and then long wall underground mined.

"Huge volumes are needed to make these schemes cost effective," says Roche. Current economic conditions were not likely to affect the thinking on these schemes, and several others, because "they take a very long view."

Meanwhile the advent of underground fracking and other technologies is having a big impact in Queensland. A number of technologies are under development for extracting gas and oil from the ground.

One of the major developments is the use of coal seam gas, which extracts existing methane in coal seams by drilling the reserves and draining the groundwater. The geologically trapped gas can escape along with the dewatering and is separated at surface. It is a technique that allows significant energy recovery from otherwise inaccessible coal seams, says Roche.

Alongside this is the development of underground coal gas. This is a very different technology involving controlled combustion within a coal seam to convert coal to gas.

A vast number of exploration wells and significant production has already begun for these methodologies, though they can be controversial and have provoked protests, as they have elsewhere in the world. But plans are well advanced for the export of the gas in liquefied form with three major liquefying plants recently completed or under construction at the port of Gladstone (see page 47), at a cost of around AUD 45bn (USD 42.6bn). A fourth scheme to sit alongside the others is in design by Arrow Energy, a joint venture between Shell and Petro China.

The four units are part of major expansion works located at Gladstone, which is also seeing significant increased coal handling capacity and other industrial developments such as aluminium smelting.

The port growth is one among up to 11 port developments planned for the Queensland coast to cope with the massive increases in output due in the next decades. But plans have caused major controversy around environmental fears for the Great Barrier Reef and the world heritage national park that surrounds it, since most of the ports and the shipping movements to service them, would be inside its boundaries.

The mining industry and Queensland government claim the fears are overstated and that evidence from Gladstone’s ongoing development indicates little impact on the reef and its environment. But it is not an issue that is going to disappear.

Other gas production is also underway from shale deposits in the south-west of the state, more akin to the fracking in the US and even Britain.

"We also have oil production from shale," says Roche, "which is not an underground methodology but the surface excavation of oil shale sands which are then processed to remove the oil."

This is more akin to the shale extraction used in northern Alberta, Canada. Much now hinges of the rest of the world and the economic developments in the next period.

Western Australia

If Queensland is a huge area then Western Australia is a sprawling giant occupying 2.5km2, one third of the whole continent. The population however is just 11 per cent at 2.4 million, nearly 80 per cent of them in the south-west corner around the capital, Perth.

The vast spaces contain even more in the way of mineral and energy resources than the rest of Australia and the mining activity to extract them has been the engine of the Australian economy in the last decade particularly. In 2011 sales were a record AUD 108bn (USD 102bn). This dropped back to AUD 97bn (USD 92bn) in 2012 as major customers like China’s fast expanding industrial sector slowed down, and India as well. Japan is another major customer.

The picture this year is more uncertain as the global economic crisis continues to make itself felt. Even so overall the state economy grew 6.7 per cent in 2011-2012 to AUD 239bn (USD 226bn), "primarily due to an intense investment phase in iron ore and LNG," says Colin Barnett, the state premier, in the latest Prospect magazine issued by the DMP.

It is iron that makes the biggest contribution to the mining economy, accounting for AUD 51bn (USD 48bn) last year, around 70 per cent of total mineral sales. This was a drop of 19 per cent on the previous year largely caused by a major fallback in prices; physically, output increased 12 per cent to 476Mt. Most of this comes from the giant open cast mines of the Pilbara area, where huge semi-automated mine operations carve their way through mountains of ore. Deposits are estimated at around 26,000Mt. Drilling and transport is increasingly done by remote operations, some from Perth by satellite telemetry, and even the long ore trains on the purposebuilt railways to the coast are automated and sometimes driverless.

But a huge workforce is still required for many operations like loading and trucking, which uses some of the biggest excavators and trucks in the world, such as the 363t capacity Caterpillar 797F. They are loaded with excavators like the Terex RH400, with a 50m3 capacity and the 40m3 Hitachi EX8000-6 and Liebherr R9800. Komatsu also makes a giant PC8000-6. Drilling and blasting execavation also needs a workforce still for many operations.

The highly paid miners mostly work on a fly-in flyout basis, arriving for one or two week shifts and leaving again. Staying in the small towns in the area is costly, with apartments fetching as much as AUD 6,000 (USD 5,686) a week. The impact is socially distorting, say many of the original residents of the small towns in the area and even Perth can feel dominated by a transient population.

The Pilbara is one of nine regions in the huge state, which has one of the most varied and important geologies in the world, with rock dating back more than 3bn years in places, and at the same time, some of the youngest too. Many of these have minerals resources from diamonds and copper in Kimberley in the north, to the gold and nickel of the Kalgoorlie Goldfields-Esperance area in the central east of the state. Oil, condensates, gas, liquefied natural gas, and LPG butanes and propanes are also found, some offshore, and provided a AUD 24bn (USD 22.8bn) contribution in exports in 2012.

"Much of the region is ancient," says GSWA’s Rogerson, though of a complexity and variability that keeps an 800 strong team busy in his department.

The Pilbara lies over very ancient rocks up to 3.4bn years old he says, although the richness of the iron ore deposits is due to movements and activity in a thick layer of eroded rock and soil above, a regolith that is 30-40M years old. "It transformed lower deposits of magnetite into haematite which is an ore with much higher iron content."

Another important mining area is in Goldfields-Esperance, which was once a location for a classic gold rush at the turn of the 20th century, around the town of Kalgoorlie, 600km west from Perth. Even water had to be transported there for a 100,000 population in the arid semi-desert outback, though a pipeline from Perth was eventually built that now brings a supply for a reduced modern population of 30,000.

Gold is still produced, in an area, which is about fifth in world output, notably from the giant ‘Superpit’ opencast mine outside the town, the world’s ninth largest single mine, which is making a vast open pit down through an ants nest of tunnels from older underground workings, processing the still bearing ground from around the worked out seams.

Outside the town in the flat sparse bush landscape, dotted with salt lake pans, it is still possible to find gold nuggets loose on the ground, or just under the surface here and there even – very rarely – weighing more than 1kg.

But across the flat landscape by the long straight highways, there can be seen spoil mounds from open pit and sometimes associated underground mines, mostly for gold although nickel is also mined.

Gold activity in recent years has been driven by a high gold price even though costs in Western Australia higher than some of the world’s gold mining regions, says Roger Pike, a spokesman for the DMP.

At USD 1,800 an ounce at peak last year it was ‘irresistible’ for mine companies to invest. Though it has since fallen back to around USD 1,300, this is still a high price compared to pre-credit crunch levels.

The gold ore here tends to be found in the so-called greenstone belts that pass through ancient granites dating back as much as 2.7bn to 3bn years. The belts have mixtures of rocks including sedimentary rocks like sandstone and "tend to be quite well folded," says Barnett. "The gold bearing fluids come from deep down, even close to the mantle and are forced up through major faults to points where there are structural weakness laterally. Physical and chemical changes in the rock force the gold to drop."

Mostly to date the gold is mined near the surface although deeper underground mines follow seams to about 1,000m. "There is not a special reason why they will not eventually go deeper," says Barnett, "except that it gets more difficult and expensive."

Some mines go long distances laterally, he says, under the salt lakes.

To date the mines lie in a large area around Kalgoorlie, which has become a major service community with equipment, maintenance and materials suppliers routinely driving the up to six or seven hours needed to reach them.

Recently the state government has been keen to see expansion to the east of this area, says Pike, closer to the state border. The gum tree outback gives way to even drier scrub and near desert towards the centre of the continent and so conditions are difficult. The government offers subventions for exploration activity and there have been some large discoveries. One of the biggest is the Tropicana, 330km northeast of Kalgoorlie, which begins production this year.

One of the problems of the very remote mines is that they encourage a trend already well established of complete ‘self-sufficiency,’ which has seen mine operators more and more using tightly-priced contract suppliers bringing materials and repairs from outside, and even directly from overseas, says Hugh Gallagher, president of the Kalgoorlie Chamber of Commerce.

"Accommodation units for example are brought in prefabricated from outside rather than using locally workshops," he explains.

This trend can damage the smaller and medium businesses locally that rely on service and supply contracts. "This business cycle we are missing some of the follow on effect that usually occurs as there is an upturn."

Without the flow of work into local business he believes the social fabric of towns like Kalgoorlie could be undermined. The boom in oil and gas in the north, and in iron, has seen towns disrupted because the bulk of the population is transient, attracted by the high wages paid by the very large mining companies. The fly-in fly-out workforce does not forge the social connections locally to build communities like Kalgoorlie and the high costs become an issue even for local cafes and supermarkets, he says. For the minute he says, the gold industry has a different character and the town is holding onto its soul. The boom times have been good and helped Australia keep afloat despite the global downturn. But the local people should not be forgotten