Report forecasts up to 75,000 job losses in Australian mining sector
11 July 2014
A report from ANZ bank forecasts that between 50,000 and 75,000 jobs will disappear over the next few years as the Australian mining industry moves from the development to the production phase of its resources boom.
“We expect 50-75K jobs, at most, remain to be shed across the economy over the next couple of years as the resources sector continues to transition from the investment phase to operational phase,” ANZ economist and report author Justin Fabo said.
ANZ expects resource investment to fall from about 7.5% to 4% of GDP over a three year period, and investment is closely linked to job creation.
The Australian mineral and hydrocarbon sector has seen $450 billion investment over the last few years. A report last year by the Australian Workforce and Productivity Agency put total jobs in the resources industry at 263,000, which represented an 80% increase across five years. A loss of 50,000 jobs from the sector would represent a decline of 20%, and 75,000 jobs 28% of that total.
Most of the recent job cuts have been in the price-stressed coal industry and from Pilbara iron ore operations. Falling commodity prices will have a significant effect on job creation.
“Iron ore projects in Western Australia require, on average, one worker during the production phase for every two or three workers directly employed during the investment phase (but the ratio can vary markedly project to project),” Fabo said in the report.
The resources industry is capital rather than job-intensive. It is not a big employer of workers, accounting for only 2% of the total workforce of 11.5 million people. But it does underpin ANZ expectations that Australia’s trade balance will improve from a deficit of 1.5% of GDP in 2012 to a surplus of more than 2% over the next three years.
ANZ expects iron ore exports to grow from $55bn in 2012 to $75bn by 2020. Exports of LNG, where $170bn in investment in Queensland and Western Australia is winding down, are forecast to rise in value from $15bn in 2013 to $67bn in 2020.