The paper "Current Crisis with the Australian Mining Sector: Its Causes and Impact on the Economy" is an outstanding example of a macro and macroeconomics coursework. The Australian mining sector has been a major contributor to the economy of the country. Anything that affects it, in turn, affects the economy of the country. Australia is a country so much dependent on the export of raw materials obtained from mining such as coal, aluminium, bauxite, alumina, and iron ore among others. Since the discovery of gold and other mineral resources in Australia, the economic growth due to mining has gone up.
This growth has since been shattered by recent events of the world. The world has experienced a global economic crisis which has led to a crisis in the mining sector too. The extent of the effect of the crisis on the mining sector and on Australia’ s economy will be discussed including the causes. The current crisis in the mining sector is lack of funds to run the mining industries, high debts and retrenchment of workers in order to survive.
There are high chances of the mining sector bringing down the economy with it down as it is going down currently (Martin 2009). As has been noted, Australia depends on exporting raw materials obtained from the resources the country has. Markets for such good have therefore to be available. The world has been experiencing a global financial crisis which has affected markets for Australian exports leading to effects on the Australian economy. Australia exports its goods to China, Asia and other markets which have reduced their imports due to the global credit crisis.
The cause of the Australian mining sector crisis is all due to a depressed market with reduced profits. The prices of materials such as iron ore are indicated to have reduced to half the price in the previous years (Mining Exploration News 2009). The global economic crisis has caused very bad effects on the mining sector with some companies being feared not to survive if the current situation of the financial crisis continues. Mining companies have cut down the number of employees by a very big number in order to pay off debts, reduce overheads and to be at a position for weaker commodities demand (Martin 2009).
These companies have suffered due to the reduced revenues and poor business in mining states and the inability to access funding due to severe credit crunch (Martin 2009) making them consider their viability first. In 2008 for example, Rio Tinto, one of the largest mining companies announced it would reduce its capital spending, reduce its workforce by 14,000 and sell some company assets in order to reduce its debts. An article from the Australian dated January 17th 2009 noted that Rio had cut down 14000 workers from its mining workforce (The Australian 2009).
Just recently, the company announced some plans to reduce the workforce again by shedding 570 contractor positions and 135 full-time jobs. This is an announcement that came after the company had stopped bauxite production in Queensland at the Weipa mines (The Bull. com 2009)
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