Question

How would I structure the answer to these economics questions?

q1) The significance of the Australian coal mining Industry to the Australian economy in general

q2) Discuss the challenges the Australian coal mining industry faces now and the impact these challenges may have on the Australian coal mining industry in the long term

Answer 1

Question 1)

The significance of the Australian coal mining Industry to the Australian economy in general.

Gross Domestic Product (GDP) determines the economic size and also it gives a clear idea about the working of an economy. Out of the total Gross Domestic Product of the Australia, mining industry put up 8.5% of the whole. It provide job to around 200000 people which come around 2% of the aggregate workforce of Australia.

Taking the Australian mining industry, Coal and Iron are the major mining products. There are approximately 90 coal mines in Australia. It can be seen in the east coast. Coal came in the second position in case of export. $54 billion was the contribution of coal industry to the nation.

Thus, coal mining industry provide huge profits to the government by way of income from exports, providing employment opportunities to a number of people, payment of royalty etc. If the net export of coal is considered globally, Australia is the biggest. Out of the world exports of coal, net export of coal of Australia came to 32%.

Question 2)

Challenges the Australian coal mining industry faces now

• Allocation of capital - Mining companies which are new to the industry may invest a huge amount of capital to highly expensive projects due to their negligence. Hence, capital will be reduced.  Due to lack of capital, several high level contracts for mining became flop.

• Depletion of resources - Due to continuous usage and drilling, resource may become scarce. At that tome, new mines has to be explored.

• Occupational hazards to health - Mining is very dangerous occupation. Inhalation of dirt and dust, damage to ears due to the loud noise of drilling, hazardous chemicals etc. may occur due to mining.

• Hazardous to environment - Mining exhibit carbon gas to the atmosphere which may cause damage to the environment.

• Volatility of the prices of commodity - Income and expenditure planning will be difficult due to this volatility.

While considering the long-term challenges, Coal mining seems to be in a declining path. Coal was meant for generation of power. Hence, in the long-run, it may be replaced with the help of certain renewables. Thus the profit of coal mines is supposed to decrease in the future.