IBISWorld’s analysis of various commodities’ revenue revealed that while the iron ore mining and oil and gas extraction industries have rebounded strongly from 2014-15, other key mining industries have struggled to bounce back.

Black coal mining suffered a 4.1% decline in revenue and brown coal mining a 1.1% decline, while oil and gas extraction (12.8%), iron ore mining (5.5% and uranium mining (4.5%) all enjoyed revenue increases between 2014-15 and 2015-16.

IBISWorld’s analysis projects a recovery for Australia’s overall mining division in 2015-16, following a dramatic drop in both revenue and exports in 2014-15.

“The substantial year-to-year volatility has been driven by increased production of some of Australia’s key resources, which resulted in a global oversupply and a subsequent slump in commodity prices,” IBISWorld said.

This growth projected for 2015-16 was in stark contrast to all these extractive industries losing ground in 2014-15 compared to the previous year.

Plummeting commodity prices in some of Australia’s largest mining industries – iron ore mining, oil and gas extraction, and black coal mining – caused revenue in the mining division to decline by 10% in 2014-15, to reach $211.8 billion.

IBISWorld projected black coal mining’s revenue to decline further from $41.04 billion in 2014-15 to $39.36 billion in 2015-16.

The firm noted that while black coal deposits were found all over the world, Australia was one of the world's lowest cost producers and was a major black coal exporter.

“Domestic reserves are high-grade, economic to access and in surplus to domestic requirements,” IBISWorld said. “As a result, exports account for a large share of total industry revenue, while imports are negligible as domestic demand for coal falls well below total local production levels.”

Coking coal, meanwhile, accounts for a smaller share of total output compared with steaming coal, but it accounts for the largest share of revenue due to its higher price, IBISWorld said.

IBISWorld senior industry analyst Spencer Little said that for black coal miners, revenue and exports had declined due to falling prices. However, unlike other key industries, black coal mining was unlikely to recover in 2015-16.

“World prices for both steaming and coking coal, which are used in electricity generation and steel manufacturing, fell in 2014-15 due to an oversupply in the global market,” Little said.

The brown coal mining industry also struggled in 2014-15, but Little said a range of different factors contributed to the industry’s poor performance.

“Brown coal is essentially a product in search of a secure market,” he said.

“Deposits are abundant in Australia, where brown coal is found close to the earth’s surface and is therefore cheap to extract.

“Unlike black coal miners, brown coal miners have been unable to develop export markets. This is because brown coal is too heavy, unstable and low in energy value to make overseas transport or use in other domestic applications economically viable.

For brown coal mining, the firm projected revenue to also drop more slightly from $991.8 million to $980.9 million from 2014-15 to 2015-16.

Brown coal deposits in Australia are abundant, cheap to access and occur so close to the earth's surface that some industry participants use bulldozers to clear away overburden.

“As it stands, the industry's activities are limited to supplying the fossil fuel electricity generation industry,” the report stated.

“Miners have been unable to develop export markets, as brown coal is too heavy, unstable and low in energy value to make overseas transport and use in other domestic applications economically viable.”

Demand for brown coal is determined by energy demands in the downstream fossil fuel electricity generation industry.

Brown coal mining firms are typically vertically integrated along the entire energy supply chain, from mining and generating to distribution and retailing.

IBISWorld’s conclusion from this is that weaker demand for brown coal inputs at these operators' power stations therefore negatively affected the brown coal mining industry's performance in 2014-15.

“This trend is expected to continue, causing a further drop in revenue in 2015-16,” the report stated.

Uranium upshot

The uranium mining industry expanded dramatically in 2014-15, with strong growth in uranium revenue and exports also projected for 2015-16.

“Rising global demand for uranium has boosted world prices,” Little said.

“Despite ongoing environmental concerns, the continued expansion of nuclear electricity generation facilities – particularly in China, India and South Korea – has driven global demand for uranium oxide.

“The continued depreciation of the Australian dollar is expected to contribute to uranium revenue and export growth. Australia’s total uranium production and export volumes are likely to rise due to new mine developments and several expansion projects.”

Overall, Australia’s mining division is expected to recover in 2015-16, after facing several major supply challenges in the previous year.

Despite declines in black and brown coal mining, growth in the division’s larger industries is expected to boost overall revenue.

Rebounding prices for iron ore and crude oil, and additional LNG export capacity are projected to underpin stronger division performance in 2015-16.