Written by Ryan Finlay
Mining represents the largest sector of the Australian economy. In the last decade, the industry overtook the finance and insurance industry as the largest share of the nation’s economy (Reserve Bank of Australia, 2023). Today, the industry accounts for roughly 13.0 percent of the gross domestic product, and is slated to remain the country’s most productive sector for the foreseeable future (International Trade Administration, 2024). The industry is constantly in expansion; ore exports reached their highest value in Australian history in June of 2021, and it is estimated that there are 238.7 billion Australian dollars (154.89 billion US dollars) worth of investments currently planned in Australian mining (Trading Economics, 2024)(Bennet, 2022).
The mining sector is one of the most powerful lobbies for Australian immigration policy. There are over 350 active mining sites in Australia, with about a third of these located in the state of Western Australia. As a result, the state is not only the center of the mining industry, but mining interests have become the dominant political force in the state government (International Trade Administration, 2024). Today, the primary concern is the ongoing labor shortage, dating back to the onset of the Covid–19 pandemic, when Australian borders were closed to outsiders – including foreign workers. Mining has proved to be particularly sensitive to the national labor supply, and since Western Australia is home to most of the country’s mining operations, the state is a vocal advocate for boosting immigration quotas.
On the ground, the labor shortage has a clear effect on the prices of the exported commodities and the local employment rate. Goldman Sachs reported that between 2021 and 2022 the labor costs in the Australian mining industry rose by over 20 percent due primarily to a shortage of workers. Additionally, the demand for workers has pushed Western Australia’s unemployment rate down to 3.4 percent, the lowest of any state in Australia – and below the national average of 4 percent (Bennet, 2022). Running out of workers in the domestic Australian labor market, the crisis has forced mining companies to pursue increased immigration of skilled foreign workers to close the gap. The promise of hundreds of billions of dollars worth of future mining investments puts further pressure on the industry to secure future labor to prepare for the flux in output capacity.
In 2022, a consortium of mining companies operating in Western Australia estimated the industry labor shortage amounts to over 10,000 workers (Bennet et al, 2022). As a result, in 2022, the Business Council of Australia proposed raising the overseas immigration quota from 160,000 per year in 2021–2022 to 220,000 from 2022-2024 in an attempt to compensate for the closure of Australia’s borders to migrants during the pandemic (Bennet et al, 2022). Persistent lobbying by the mining industry did lead to an increase in the quotas for the Permanent Migration Program by the federal government. However, the increase amounted to tens of thousands fewer than the Business Council recommended.
Complicating the issue, mining is one of the smallest employers by sector in the Australian economy, employing over 200,000 people in 2011, out of a total workforce of 11 million Australians. Furthermore, mining is not among the top ten occupations for skilled permanent migrants (Richardson, 2011). A total of 1.76 million permanent migrants, or 59 percent of the 3 million immigrants who arrived in the last two decades, obtained visas through the skilled labor program. Of these, more than half would settle in the metropolitan areas of either Sydney or Melbourne – Australia’s largest cities. Just 1.2 percent of skilled permanent immigrants chose to settle in the rural tracts of Western Australia, where the bulk of the country’s mining industry is located (Australian Bureau of Statistics, 2024). Far from signaling irrelevance of the mining industry to immigration policy, it proves the industry is actually more sensitive to immigration policy than other sectors of the economy; mining companies face greater difficulties in attracting workers to the rustic Australian back–country, when many may instead prefer skilled opportunities in the cities.
It is important to note that the mining sector is export oriented. The vast majority of these exports are raw ore, rather than refined or finished metals, as Australia has a relatively undeveloped smelting and ore processing industry (International Trade Administration, 2024). Thus, most of the industrial infrastructure is oriented around transporting extracted earth from the mining sites deep within the landmass of the country to the coastal ports where it can be shipped for processing and use abroad. What this means for mining workers is employment hundreds of miles from the urban centers, isolated from access to many services and communities. There is no apparent solution to this dilemma. It is hoped that by drastically raising immigrant quotas, greater numbers of skilled immigrants will saturate urban labor markets, and push new arrivals to pursue alternative employment in Australian mining.
As a result of lobbying pressure, Australia added mining occupations to the Priority Migration Skilled Occupations List (PMSOL) in 2021 (Zakharia, 2021). This occurred in conjunction with a raising of the overseas immigration quota to 190,000 individuals, 30,000 below what was requested at the local level and by the Australian Business Council. This year, the Permanent Migration Program is set to lower the number of foreign immigrants it will accept this year. The permanent migration program has set the overseas immigration quota for 2023–2024 at 190,000 people, down from 195,000 in 2022–2023, signaling that the mining interest driven increases are over (Australian Government Department of Home Affairs).
Given that the national unemployment rate already makes for an exceptionally tight labor market, a rapidly expanding industry such as Australian mining will face severe challenges in filling skilled positions in the future without sustained increases in overseas migration to Australia. The federal government has instead elected to reduce the number of migrants allowed to become permanent residents in the past year, potentially exacerbating the crisis if the mining industry cannot find alternative sources of labor.
References:
Australian Bureau of Statistics. (2024). Permanent migrants in Australia, 2021. Australian Bureau of Statistics. https://www.abs.gov.au/statistics/people/people-and-communities/permanent-migrants-australia/latest-release#employment-and-income
Australian Embassy and Consulates . (2022, November 14). Visa requirements. Australia in the USA. https://usa.embassy.gov.au/visa-requirements
Australian Government Department of Home Affairs. (n.d.). Migration Program Planning Levels. Immigration and citizenship Website. https://immi.homeaffairs.gov.au/what-we-do/migration-program-planning-levels#:~:text=The%202023%E2%80%9324%20permanent%20Migration%20Program%20has%20been%20set%20at,planning%20level%20of%20195%2C000%20places.
Bennet, M. (2022, April 14). Wa miners short 10,000 workers, Border Reopening No Panacea. Australian Financial Review. https://www.afr.com/companies/mining/wa-miners-short-10-000-workers-border-reopening-no-panacea-20220414-p5adgk
Bennet, M., & Ludlow, M. (2022, April 19). Miners call for more migrants to deal with skills shortage. Australian Financial Review. https://www.afr.com/companies/mining/miners-call-for-more-migrants-to-deal-with-skills-shortage-20220419-p5aej2
International Trade Administration | Trade.gov. (2024, January 30). Australia – mining. Australia – Country Commercial Guide. https://www.trade.gov/country-commercial-guides/australia-mining#:~:text=It%20is%20a%20major%20contributor,oriented%2C%20with%20minimal%20processing%20onshore.
Reserve Bank of Australia. (2023, May 4). Composition of the Australian Economy Snapshot: Education. Reserve Bank of Australia. https://www.rba.gov.au/education/resources/snapshots/economy-composition-snapshot/
Richardson, D., & Denniss, R. (2011). Mining the truth: The rhetoric and realities of the commodities boom. The Australian Institute. https://australiainstitute.org.au/wp-content/uploads/2020/12/Mining-the-truth-IP7_4.pdf
Trading Economics. (2024). Australian exports of metal ores & minerals. Australia exports of metal ores & minerals. https://tradingeconomics.com/australia/exports-of-metal-ores-minerals#:~:text=Exports%20of%20%2D%20Metal%20Ores%20%26%20Minerals%20in%20Australia%20averaged%203114.56%20AUD,source%3A%20Australian%20Bureau%20of%20Statistics
Zakharia, N. (2021, July 6). Australia opens door to international mining workers. Australian Mining. https://www.australianmining.com.au/australia-opens-door-to-international-mining-workers/