5. Production

Over the past decade, there has been a substantial increase in Australia's production and exports of mineral commodities. Traditional export destinations, such as Japan and South Korea, continue to be key destinations for Australian minerals; however it has been the rapid economic rise of China that has supported growth in Australia's mining sector. From 2003 to 2012, China's economy grew by 170%, an expansion that has resulted in a significant increase in its demand for mineral resources.

As a country with considerable mineral wealth, Australia has played an important role in supplying this increase in demand. In Australia, the phrase 'mining boom' is commonly used to refer to the rapid increase in exports and growing importance of the mining sector to the Australian economy. Although commodity prices have moderated as supply has caught up to demand in many commodity markets, thus reducing the earnings from Australian exports, the demand for resources is not expected to subside. For Australia, the mining boom is now transitioning from a period of investment to one of high production. The large investments in mining projects made over the past several years are expected to result in a period of sustained high production that continues to provide economic benefits to the country in the form of export revenues, royalties, employment and regional development.

Bauxite

Bauxite is a raw material used in the production of alumina and, subsequently, aluminium. Like many metals, world demand for aluminium, and therefore bauxite, has grown substantially over the past 10 years in response to economic growth in emerging Asian economies. Aluminium is typically consumed in economies with higher incomes as it is used principally in consumer items, such as cars and beverage containers, and construction activities that use more advanced materials.

Australian bauxite production has grown at an average annual rate of 3.6% from 55.6 Mt in 2003 to 76.3 Mt in 2012 (Figure 5.1). The growth in bauxite production was mainly supported by higher output at existing sites in Western Australia, Queensland and the Northern Territory rather than mines in new regions. In 2012, Australia was the largest producer of bauxite in the world, accounting for 29.7% of total production (Figure 5.2).

Although Australia is the largest producer of bauxite, Indonesia is the largest exporter. In Australia, most bauxite is consumed in domestic alumina refineries with only 14% of production exported. Australia's bauxite exports increased by 43% from 2003 to 2012; however, this represented an increase in export volume of only 3.2 Mt (Table 5.1) compared with bauxite production, which increased by 20 Mt over the same period. Australia's alumina production increased 27% (or 4.4 Mt) from 2003 to 2012, to total 20.9 Mt in 2012.

Figure 5.1 is a bar chart showing Australia's bauxite production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in millions of tonnes (Mt). Bauxite production has steadily increased from 55.6 Mt in 2003 to 76.3 Mt in 2012.

Figure 5.1 Australia's bauxite production.
Source: Bureau of Resources and Energy Economics.

Figure 5.2 is a pie chart showing the percentages of bauxite production produced by different countries in 2012. Total bauxite production in 2012 was 257 million tonnes.

Figure 5.2 Shares of world bauxite production (2012).
Source: World Metal Statistics.

Table 5.1 Australia's bauxite production and exports
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Bureau of Resources and Energy Economics; Australian Bureau of Statistics; Mt = million tonnes.
Production Mt 56 57 60 62 62 64 66 69 70 76
Export volumes Mt 7 6 5 6 7 9 6 8 10 10

Black coal

In 2003, black coal was Australia's most valuable mineral export, worth around $11 billion. Although iron ore has since overtaken coal to be the most valuable export, coal export values still grew by 280% from 2003 to 2012 to be worth more than $41 billion. The strong growth in export values was the result of robust growth in production and significant increases in world coal prices. Although Australia's export volumes have increased over the past 10 years, it has been replaced by Indonesia as the world's largest exporter of coal (Figure 5.4). However, in terms of energy content, Australia still remains the world's largest exporter as Indonesian coal typically has a much lower calorific content.

The growth in Australia's black coal production and exports has been supported by substantial investment in both mines and infrastructure in two key coal-producing regions over the past decade. These are the Bowen basin in Queensland, which produces the majority of Australia's metallurgical coal, and the Hunter-Gunnedah region in New South Wales, which produces most of Australia's thermal coal.

Australia's raw black coal production increased at an average annual rate of 4% between 2003 and 2012, to total 501 Mt in 2012 (Figure 5.3). Saleable production has grown at the same rate, totalling 379 Mt in 2012. Most of this growth in output has been sold abroad, with Australia exporting 316 Mt of black coal in 2012 (Table 5.2). This included 171 Mt of thermal coal and 145 Mt of metallurgical coal. This represented about a quarter of total world seaborne coal trade in 2012 (Figure 5.4).

Higher production was supported by greater export demand, particularly from emerging economies in Asia. Total exports of black coal increased from 215 Mt in 2003 to 316 Mt in 2012, representing average annual growth of 5%. The high calorific content of Australia's coal and security of supply have made Australian coal appealing to energy import-reliant countries in Asia. Over the past 10 years, Japan and South Korea have accounted for more than half of Australia's coal exports. China has been importing increasingly more of Australia's coal exports, particularly thermal coal. The availability of cheap international supplies of coal has seen China emerge as a net coal importer over the past five years and, in 2012, it accounted for 20% of Australia's total black coal exports.

Figure 5.3 is a bar chart showing Australia's coal production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in millions of tonnes (Mt). In addition the bars are split into thermal coal (grey) and metallurgical coal (brown). Production of both types of coal has generally increased from 163.9 Mt of thermal coal in 2003 to 228.6 Mt in 2012, and 117.4 Mt of metallurgical coal in 2003 to 148.4 Mt in 2012.

Figure 5.3 Australia's saleable coal production
Source: Bureau of Resources and Energy Economics.

Figure 5.4 is a pie chart showing the percentages of coal production produced by different countries in 2012. Total coal production in 2012 was 1137 million tonnes.

Figure 5.4 Shares of world black coal exports (2011).
Source: International Energy Agency.

Table 5.2 Australia's black coal production and exports
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Australian Bureau of Statistics; Bureau of Resources and Energy Economics; Coal Services Australia; Queensland Department of Natural Resources and Mines.; Mt = million tonnes.
Raw production Mt 360 376 401 408 425 438 455 470 465 501
– thermal (saleable) Mt 164 171 177 185 184 197 203 200 205 229
– metallurgical (saleable) Mt 117 123 131 130 145 141 140 165 138 148
Export volumes Mt 215 224 233 236 250 261 274 300 280 316
– thermal Mt 103 107 108 112 112 126 139 141 148 171
– metallurgical Mt 111 117 125 124 138 135 135 159 133 145

Copper

Australia is the world's fifth largest producer of copper ore and accounted for 5% of world production in 2012 (Figure 5.6). Australian mine production of copper grew at an average rate of 1% per year between 2003 and 2012. Production fluctuated over the decade as existing operations were periodically shut down and restarted in line with fluctuating prices. Copper production peaked at 959 kt in 2011 and declined to 914 kt in 2012 owing to lower grades of extracted ore and production disruptions at several mines.

New facilities commissioned in Australia over the past decade include the Lady Annie project (CST Mining Group Ltd) in Queensland, Prominent Hill (OZ Minerals Ltd) and Kanmantoo (Hillgrove Resources Ltd) in South Australia, and Boddington (Newmont) and the Jaguar project (Independence Group NL) in Western Australia. The Olympic Dam mine (BHP Billiton) in South Australia is the largest underground mine in Australia with an annual capacity of around 200 kt of copper. Plans are still being developed to increase this capacity further.

Australia's exports of copper ores and concentrates increased at an average annual rate of 3.6% to 531 kt (metal content) in 2012 (Table 5.3). Export volumes were supported by greater demand for raw materials in China to support its rapid expansion of construction and infrastructure developments and manufacturing output. As a result of this growth in economic activity, China's consumption of refined copper increased 187% over the past decade, from 3.1 Mt in 2003 to 8.8 Mt in 2013.

Figure 5.5 is a bar chart showing Australia's copper production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in kilotonnes (kt). Copper production has varied widely from a low of 830.4 kt in 2003 to a high of 959.5 kt in 2011. Production in 2012 was 914.3 kt.

Figure 5.5 Australia's copper mine production.
Source: Bureau of Resources and Energy Economics.

Figure 5.6 is a pie chart showing the percentages of copper production produced by different countries in 2012. Total copper production in 2012 was 17 096 kilotonnes.

Figure 5.6 Shares of world copper production (2012).
Source: World Metal Statistics

Table 5.3 Australia's copper mine production and exports
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Bureau of Resources and Energy Economics; Australian Bureau of Statistics ; kt = kilotonnes.
Mine production kt 830 875 928 879 863 879 855 871 959 914
Refined production kt 484 498 468 429 442 503 445 424 477 460
Ores and concentrates exports (metal content) kt 371 328 449 433 400 447 466 501 494 531
Refined exports kt 324 323 315 284 295 360 316 316 376 371

Gold

Australia is the world's second largest producer of gold after China and accounted for around 9% of global production in 2012 (Figure 5.8). Australia's production of gold peaked at 304 tonnes in 1997 but has since declined and averaged around 250 tonnes a year for the period 2003 to 2012 (Figure 5.7). There were significant drops in production in 2008 and 2009 owing to lower ore grades being mined at a number of operations and mine closures in response to the global financial crisis. Australia's gold production has since recovered to around 250 tonnes in 2012 but moderating prices in 2013 will place pressure on some of the higher cost mining operations.

Around 72% of Australia's gold production is sourced from mines in Western Australia. Australia also imports a substantial amount of gold ore for refining and re-export. Higher gold prices over the past five years supported a rise in imports and, while domestic production peaked in the 1990s, exports peaked in 2008.

Australia's gold exports grew 32% in the five years from 2003 to 2008 and peaked at a record 415 tonnes. Since then, exports have declined to levels below that of 2003 and were 282 tonnes in 2012 (Table 5.4). Conversely, earnings from gold exports increased at an average annual rate of 11% from $5.6 billion in 2003 to $15.2 billion in 2012 because of a five-fold increase in the price of gold between 2003 and 2012.

Figure 5.7 is a bar chart showing Australia's gold production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in tonnes. Gold production has varied from a high of 281.4 tonnes in 2003 to a low of 215.2 tonnes in 2008. Gold production in 2012 was 251.4 tonnes.

Figure 5.7 Australia's gold mine production.
Source: Bureau of Resources and Energy Economics.

Figure 5.8 is a pie chart showing the percentages of gold production produced by different countries in 2012. Total gold production in 2012 was 2861 tonnes.

Figure 5.8 Shares of world gold production (2012).
Source: Gold Fields Mineral Services.

Table 5.4 Australia's gold production and exports.
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Bureau of Resources and Energy Economics; Australian Bureau of Statistics ; t = tonnes.
Mine production t 281 258 262 247 247 215 224 260 259 251
Export volumes t 313 311 306 349 411 415 362 331 308 282

Iron ore

The growth of Australia's iron ore industry has been the principal driver of the 'mining boom'. Between 2003 and 2012, Australia's iron ore production increased by 144%, or 307 Mt, to total 520 Mt in 2012 (Figure 5.9). Australia's production of iron ore increased by 43 Mt in 2012 alone, an amount greater than the total annual iron ore production of many countries (Table 3.23).

Demand growth in China has been the principal driver of the expansion of Australia's iron ore industry and the majority of Australia's iron ore exports are now sent to China where demand for iron ore has increased sharply over the past decade because of rapid growth in its domestic steel production. To supply this additional demand, iron ore producers have taken advantage of Australia's high-quality iron ore deposits and relatively close proximity to China by investing in mining projects. This investment has included large expansions of capacity at existing operations owned by Rio Tinto and BHP Billiton, and the start-up of Fortescue Metals Group Ltd's Chichester hub. The growth in production has also been supported by the emergence of new producers in the Pilbara region such as Atlas Iron Ltd, BC Iron Ltd and Citic Pacific Ltd.

Australia is the largest exporter of iron ore in the world and accounted for 44% of total world iron-ore trade in 2012 (Figure 5.10). Three of the world's four largest iron ore exporting companies, Rio Tinto, BHP Billiton and Fortescue Metals Group, are based in Australia with operations in the Pilbara region of Western Australia. Many Australian producers are still placed at the lower end of the world cost-curve for iron ore production and are well positioned to meet the growing resource demands of Asia in the coming decades.

Figure 5.9 is a bar chart showing Australia's iron ore production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in millions of tonnes (Mt). Iron ore production has steadily increased from 213.0 Mt in 2003 to 519.7 Mt in 2012.

Figure 5.9 Australia's iron ore production.
Source: Bureau of Resources and Energy Economics.

Figure 5.10 is a pie chart showing the percentages of iron ore total exports of different countries in 2012. Total iron ore exports in 2012 were 1127 million tonnes.

Figure 5.10 Shares of world iron ore exports (2012).
Sources: Bureau of Resources and Energy Economics; United Nations Conference on Trade and Development.

Table 5.5 Australia's iron ore production and exports
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Bureau of Resources and Energy Economics; Australian Bureau of Statistics ; Mt =million tonnes.
Production Mt 213 234 262 275 299 342 394 420 477 520
Export volumes Mt 188 210 239 247 267 309 363 402 438 494

Nickel

In the past 10 years, Australia's nickel mine production increased by 27% to total 244 kt in 2012. Growth in output has not been uniform over this period, which can be characterised into three phases. For the period 2003 to 2008, Australia's mined nickel output averaged around 19 kt before declining substantially to below 170 kt per year in 2009 and 2010 (Figure 5.11). In this two year period, market volatility in the aftermath of the global financial crisis saw mines such the Blair, Cawse and Lake Johnston operations in Western Australia cease production.

Although nickel prices have not recovered to the record high levels seen in 2007 they have, nonetheless, rebounded, displayed less volatility and supported both the re-opening and commissioning of new mines in Australia. This included the restart of the Lake Johnston mine (Norilsk Nickel Group) and the redevelopment of the Ravensthorpe mine by new owners First Quantum Minerals Ltd and the commissioning of Spotted Quoll mine (Western Areas Ltd). As a result, Australia's nickel production reached a new record of 215 kt in 2011 and 244 kt in 2012. Although a record year for nickel production, Australia was the fourth largest producer of mined nickel in 2012, behind the Philippines, Russia and Indonesia (Figure 5.12).

Underpinned by higher production in 2011 and 2012, Australia's exports of nickel (total metal content) increased by 19.7% from 2003 to 255 kt in 2012 (Table 5.6). Australia's exports are bolstered by refining and re-exporting ores imported from Indonesia, New Caledonia and the Philippines. Like most of Australia's mineral exports, growth in nickel exports has been driven by higher demand in China.

Figure 5.11 is a bar chart showing Australia's nickel production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in kilotonnes (kt). Nickel production varied little from 2003 to 2008, ranging around 190 kt. There was a decrease in production in 2009 to 165.8 kt but production has increased since then to 243.6 kt in 2012.

Figure 5.11 Australia's nickel mine production.
Source: Bureau of Resources and Energy Economics.

Figure 5.12 is a pie chart showing the percentages of nickel mine production produced by different countries in 2012. Total nickel mine production in 2012 was 1946 kilotonnes.

Figure 5.12 Shares of world nickel production in 2012.
Source: Bureau of Resources and Energy Economics.

Table 5.6 Australia's nickel production and exports
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: Bureau of Resources and Energy Economics and the Australian Bureau of Statistics; kt = kilotonnes.
Mine production Kt 191 188 189 185 185 199 166 169 215 244
Export volumes (total metal content) kt 213 204 221 200 195 210 215 214 217 255

Uranium

In Australia, uranium was one of the few mineral commodities that did not exhibit substantial growth in production as a result of the growing demand for resources in emerging Asian economies that has occurred over the past 10 years. Although Australia has a large proportion of the world's identified uranium resources, changes to policies surrounding exploration and mine development have meant it has taken some time to result in the commissioning of new projects. Consequently, current production capacity is almost unchanged from a decade ago.

In 2012, Australia had four operating uranium mines that produced a combined total of around 8200 tonnes of uranium oxide (Figure 5.13). While this was down only 8% relative to 2003, it is 27% lower than the record high of 11 200 tonnes produced in 2005.

Approximately 95% of production in 2012 was attributable to BHP Billiton's Olympic Dam mine in South Australia and Energy Resources of Australia Ltd's Ranger mine in the Northern Territory. Although production from the pit at the Ranger mine ceased in December 2012, the facility is now processing previously extracted ore and tailings while it continues to progress with plans to develop a new underground mine at the same site.

Figure 5.13 is a bar chart showing Australia's uranium production from 2003 to 2012. The horizontal axis shows the years and the vertical axis shows the amount of production in tonnes. Uranium production has varied from 8957 tonnes in 2003 to a high of 11 222 tonnes in 2005 to a low of 7019 tonnes in 2010 and has increased since then to 8240 tonnes in 2012.

Figure 5.13 Australia's uranium production (tonnes U308).
Source: Bureau of Resources and Energy Economics.

Figure 5.14 is a pie chart showing the percentages of uranium production produced by different countries in 2012. Total uranium production in 2012 was 69 kilotonnes.

Figure 5.14 Shares of world uranium production in 2012.
Source: World Nuclear Association.

Table 5.7 Australia's uranium production (tonnes U308).
  Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Bureau of Resources and Energy Economics; t = tonnes.
Production t 8957 10 625 11 222 8970 10 141 9998 9349 7019 7030 8240