Independent economics commentator Dr Ed Shann, in a Minerals Council of Australia policy monograph Maximising growth in a mining boom, says the mining services sector output is growing at 15-20% a year.
However, he argues, some commentators seem to think of the mining sector as relatively small.
Not hard to understand when it is realised there is no official classification for the mining services sector. Instead its outputs are recorded in a number of disparate industries ranging from chemicals to building manufacture.
So what? Such misclassification can mean that a sector Australia is rapidly developing a competitive advantage in gets ignored at the expense of “traditional” industries that are struggling.
On budget forecasts Treasury concludes over the three years to 2012-13 the mining sector will grow at 5% and mining-related sectors at more than 20% on the back of the investment boom.
By contrast, Shann says, the non-mining sectors comprise 75% of the economy but are only growing at 1% a year.
“Mining companies demand high quality competitive inputs,” he said.
“This has created many leading edge mining service firms that invest in research and development, enabling them to export and compete offshore.
“Mining service industry growth has been customer-driven and public policy has not played an important role.
“The success of mining services reflects the demand of mining itself for competitive inputs if it is to compete in world markets.”
Shann points to the 122 firms listed on the Australian Securities Exchange with substantial mining services revenue.
He said these firms were not identified as a sector by the Australian Bureau of Statistics or the ASX, so their importance and rapid growth was easily overlooked.
“They represent a cluster of internationally competitive Australian firms in construction, engineering, drilling, manufacturing, logistics and services that often produce high technology products and high value-added services,” Shann said.
“In conventional treatment the expanding mining sector is associated with a contraction in existing tradeable industries such as manufacturing and agriculture while the non-tradeable service sector also expands.
“Yet the rapid growth in mining services currently underway generates increased demand in several manufacturing sub-sectors.
“Explosives is recorded in chemicals; rail wagons in transport equipment; high technology in mining equipment for drilling and excavation in machinery and equipment manufacturing; fabrication in metal manufacturing; and off-site homes in prefabricated building manufacturing.”
