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Australia’s 5 Most Valuable Mineral Exports

One of the richest nation’s on Earth, Australia’s economy is built on mineral resources. Here’s a look at the country’s five most valuable mineral exports.
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Australia’s economy is largely based on its natural resources, with the minerals sector making the greatest contribution to the nation’s exports.

Four of Australia’s states and territories rank in the top 20 mining jurisdictions in the world, according to the Fraser Institute’s latest annual survey of mining companies: Western Australia (fourth), Southern Australia (seventh), Queensland (16th) and the Northern Territory (19th).

These mining jurisdictions demonstrate a high level of investment attractiveness mainly due to their mineral-rich geology, solid infrastructure, stellar economic environment and government support for the resources industry at both the federal and state level.


 

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In the 2018/2019 period, Australia’s minerals exports grew by 26.4 percent over the previous period. Here are the top five most valuable mineral resources exports for the Australian economy; combined they brought in nearly half of Australia’s AU$470 billion worth of exports in the 2018/2019 financial year, as per the most recent data from the Department of Foreign Affairs and Trade (DFAT).

1. Iron ore

Australia is the king of the iron game. US Geological Survey (USGS) information shows it accounted for some 37 percent of global iron production in 2020, well ahead of Brazil in second place. The nation also ranks as the world’s largest exporter of iron ore.

Iron is the definitive base metal, and is used in everything from infrastructure to transportation to advanced technology — meaning Australia and its many iron ore mines in Western Australia have enjoyed a mighty run of economic prosperity as China has leaned into its push for industrialization.

DFAT’s data from 2018/2019 shows that iron ore accounted for over 16 percent of Australia’s total exports in that period, with a value of more than AU$77 billion.

2. Coal

While more western nations around the world are turning away from coal, in Australia the sooty black rock is a source of incredible wealth.

Australia hosts coal deposits across the country, with major operational mines up and down the east coast, including the controversial Carmichael mine in Queensland, which is being developed by India’s Adani Group (BSE:512599,NSE:ADANIENT).

 

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For its part, coal makes up another 15 percent of Australia’s total exports at AU$69.5 billion, with most of it again going to China despite increasingly strict environmental standards. However, simmering political tensions between the two trading partners resulted in China effectively banning Australian coal imports in 2020. And yet, Australia has plenty of other customers as well.

3. Gas

Natural gas is Australia’s third most valuable resource export, earning more than AU$49 billion for the economy with its 10.5 percent share of total exports.

The island continent is home to 14 different basins that yield natural gas. The country has significant natural gas reserves, with much of it locked up in coal seams that require unconventional drilling.

Most of Australia’s natural gas production occurs offshore in the northwest, which has seen an increase in large development projects over the past few years by some of the biggest names in natural gas.

4. Gold

Gold accounted for nearly AU$19 billion in exports in the 2018/2019 financial year in Australia, earning its place as the fourth most valuable mineral export and sixth most valuable export overall.

According to the USGS, Australia produced 320 tonnes of the yellow metal in 2020, making it the second largest gold-producing nation, behind China and ahead of Russia.

Much of Australia’s wealth is founded on gold, with a number of gold rushes triggered in the mid-1800s that supercharged the nation’s development and set it down its path of prosperity through mining. Today most of the top-producing gold mines in the country are located in Western Australia.

 

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5. Aluminium ore

Aluminium ore comes in as the fifth most valuable mineral export from Australia, accounting for 2.3 percent of all exports and earning AU$11.4 billion in 2018/2019. Aluminium is sourced from bauxite, of which Australia has the second largest share of resources in the world.

Aluminium ore is produced from mines in Queensland, New South Wales, the Northern Territory, Western Australia and Victoria. Refined aluminium metal earned its own spot in DFAT’s list of valuable exports for the country at 16th. Australia’s refined aluminium industry has been struggling under the weight of heavy energy costs associated with smelter operations for a number of years now.

“Australia is one of the world’s most emissions-intensive aluminium producers,” reports the Institute for Energy Economics and Financial Analysis. Renewable energy sources may be the answer to saving the country’s aluminium sector.

And the rest

While the five resources above represent the most valuable mineral exports to the Australian economy, the country sits on significant reserves of almost every mineral you can find on the planet. Other major commodities of significant value to the Australian economy are oil, which is the sixth most valuable resource and ninth most valuable export overall, and copper ores and concentrates, which are the seventh most valuable mineral export and 10th overall.

Wondering where uranium and rare earths are on this list? Despite having 30 percent of the world’s reserves, uranium didn’t rate a mention in exports as its three operational mines only produced 6,613 tonnes of uranium in 2019. And while Australia also ranks as the fourth largest producer of rare earths globally, rare earths production did not rate as a major contributor to the Australian economy.

This is an updated version of an article first published by the Investing News Network in 2019.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

 

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Economics

Inflation In Context: A Liquidity Adjusted CPI Index

First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at…

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First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at one, if not the best hospital in the world.  Even in her critical condition, she contributed to this post — though she may not agree with all its final points.  She’s truly an amazing and incredibly strong human being.  Semper Fi and Godspeed, CK.  

We had a few requests to write up something about today’s hot U.S consumer price inflation data. So we put together a quick note in honor of our friend from down in the Land of Oz, GMac, one of the most decent human beings on earth. He is one proud father of a super studly 18-year son, who is an incredible surfer and someday wants to surf Mavericks.  God. Bless. His. Soul.

Let us preface our inflation note with one of our favorite quotes:

World War II was transitory – GMM

Recall our post in January, Ready For 4 Percent CPI By Mid-Year?, when we speculated the U.S. would be experiencing 4 percent inflation, possibly 5 percent by mid-year.  We were beaten down like a red-headed stepchild (I am at liberty to say that as I have been a ginger most of my life).

GMM was also one of the first to point out the base effects (12-month comps) would kick in April and May 2021 due to the deflation that troughed last year from the COVID crash.  But don’t be gaslighted the lastest few month-on-month core prints essentially negate the base effect excuse for high inflation as three-month core CPI is now running at 7.9 percent on an annual basis.

We don’t know for certain if inflation will stick and move higher or lower but as better folk we are taking the over, however.

Liquidity Tsunami

We do know the major global central banks have pumped in a shitload of high-powered money into the global financial system over the past year — as in around $10 trillion, close 50 percent increse of their collective balance sheets.   Here’s Dr. Ed’s excellent chart,

Moreover, banks now seem eager to start lending, thus creating more endogenous money on top of the trillions upon trillions of base money central banks have already injected.

Transitory?  Yeah, right.   

It’s not a question whether the Fed has the tools to reign it in, it’s do they have the ‘nads?  Given the multiple asset bubbles that would burst, and bust spectacularly, if the Fed draws it word,  we seriously doubt it. 

The following chart from Dr. Ed also illustrates not only has the digital printing press been working overtime, the credit system is just fine and dandy as deposits are expanding.  Don’t be confused by, yes, the base effect, as the money aggregates have a much large base to grow from they did a year ago before the pandemic.

Tough to beat comps after expanding over 25 percent 

Note, these are monetary aggregates, which include cash in circulation, bank deposits among near money and other short-term time deposits, not the expansion of the Fed’s balance sheet, though it does hugely influence the data.  

This image has an empty alt attribute; its file name is yardeni.png

Big spurts from the digital printing press without a credit crisis and an impaired financial system — as was the case after the Great Financial Crisis — will almost always generate inflationary pressures.   Stimulating demand without production during a supply shock is not optimal unless carefully targeted to those who need it most.   

It’s very amusing to us to see the FinTweets, “peak inflation has arrived.”  True, if the financial markets crash.  But what do they base their conclusion on?  A warm feeling in their tummy?   

Show me the money data, Jerry.  

Banks Itching To Lend

Banks now seem eager to start lending, thus creating more endogenous money on top of the trillions of base money central banks have injected.  

Loans are “starting to pick up,” and there’s plenty of borrowing capacity because companies have unused credit lines, {BofA CEO Brian ]Moynihan said. Loan growth has been a challenge across the banking industry because many consumers and businesses are sitting on cash from savings and stimulus during the pandemic. – Bloomberg, June 6

This should send shivers up the Fed’s spine, but we are not so sure.  We are also not so sure they are not flying blind and will again miss the next big one just as they have in the past. 

The Chart: Liquidity Adjusted Inflation. 

It’s late and we want to present the chart in honor of GMac. 

We have taken the non seasonaly adjusted year-on-year change of CPI and subtracted a scaled up version of the Chicago Fed’s  National Financial Conditions Index (NFCI), which measures how loose or tight monetary conditions are in the U.S..  It’s has been running at an extreme historical low — i.e., very loose financial conditions.   

You can see the 105 indicators it is based upon here.

We are trying to give context to the inflation data of how loose and accomodative finnancial market and monetary conditions are currently.   As you can see, today’s year-on-year CPI print less the NFCI is at the highest level since November 1990, which was in the middle of the first Gulf war, Where the Fed was facing spiking inflation due to the run-up in oil and a recession.  

Prior to that our adjusted inflation index hasn’t been so high since the high inflation late 197Os and early ‘80s.  Gulp. 

Clearly, it is a different environment in today’s economy.  In fact, just the opposite – the economy is ready to roar for the next several quarters as consumers are flush with cash, the supply chain is still a mess due to the “bullwhip effect” (more on this in a future post), and new businesses should be looking for credit and loans to rebuild and start new ventures.    

Most of all, folks, the central banks still have their pedal to the metal and balls to the walls, and as we all know (well some of us),

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. – Milton Friendman 

The Upshot

Inflation is way too high given exremely easy financial and monetary conditions.  There will be blood. 

Finally 

Life is transitory. 

Inflation has eroded my purchasing power in my transitory life.  Bring back the $.35 Big Mac, which was only about 20 percent of the minimum wage.  Now?  About 40-50 percent.  Enough to spark a revolution. 

Finally, the Democrats should begin to worry.

Stay tuned. 

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Commodities

Euro 2020 – a football tournament where the big players come from China and the US

Much of the money that pays for the competition is spent to build global brands.

Simon Lehmann / Alamy Stock Photo

With Euro 2020 now under way after a year of pandemic delay, football fans will be hoping for great performances from Europe’s finest players. Some of us will watch the tournament unfold on our Hisense televisions, and many will choose to order in some half time refreshments, maybe via the Just Eat delivery service, possibly sent using a Vivo mobile phone.

Sustained by cans of Heineken, as goals are scored, supporters will upload celebration clips on to TikTok. And after the final, what better way to recharge than by arranging a holiday on Booking.com, perhaps flying on Qatar Airways.

For while fans will have their eyes firmly fixed on the efforts of players worth billions of pounds on the field, another big money game will be taking place off it. The Euros is one of the world’s biggest sport events, and a bonanza for corporate sponsors and partners (just a few of which are mentioned above).

In return for being exposed to the eyes of the world, Euros sponsors pay huge amounts of money. Just how much is difficult to say, as fees are commercially sensitive data. But in one case – that of Alipay (part of the Alibaba empire) – it is believed the Chinese company paid £176 million for an eight year deal.

UEFA has sold these deals in three ways: National Team Football Official Sponsors, Euro 2020 Official Sponsors, and Euro 2020 Official Licensees. And the origins of the companies and brands sponsoring this year’s event are a clear indication of how the beautiful game is valued by the corporate world.

Alongside UEFA partners such as FedEx and Konami, each of the national teams bring their own roster of sponsors, which makes for quite a cluttered selection of brands competing for attention. There’s England’s £50 million, five-year contract with BT, for example, while the Germans will bring Lufthansa to the tournament, Carlsberg will promote its association with Denmark and South Korea’s Hyundai will be represented by the Czech Republic.

The list goes on (and on). To capture the complex network of sponsors at Euro 2020 we created a network graphic of some of the most prominent and significant deals on show over the coming weeks. For reasons of clarity, we wern’t able to include every sponsor, but the range on display is revealing.

Graphic of Euro 2020 teams and sponsors.
Euro 2020 teams and associated sponsors. Paul Widdop and Simon Chadwick, Author provided

What becomes immediately clear is that although the UEFA European Championship is a continental tournament, its commercial reach is truly global. A significant number of sponsors are either not European or else have divisions that operate way beyond the borders of Europe.

At the same time, the sponsorship portfolio shows us that football is at the heart of the entertainment, lifestyle and digital economies. Gone are the days of motor-oil and office photocopier sponsorships. Instead we see a profusion of drinks brands, confectionery products and airlines.

In addition, the sponsorship of teams appears to go hand-in-hand with the promotion of national identity and national industry. “Brand Germany” for instance, is strongly represented by some of the country’s most important corporations, including Adidas and Volkswagen.

The appearance of Gazprom meanwhile, reflects the increasing use by nations of sponsorship as a geopolitical instrument. Indeed, the state owned Russian gas company has recently put its associations with UEFA and others to influential use.

Europe’s own goal

Equally, “Brand China” is now a major industrial and political power, and home to five of UEFA’s biggest tournament sponsors (Alipay, Antchain, Hisense, TikTok and Vivo).

Corporate America continues to endure too, represented by the likes of Coca Cola and IMG. The US has always been the home of contemporary sport sponsorship, and the country’s businesses continue to derive significant commercial value from it.

In fact, the underdogs in this big-money corporate competition appear to be the Europeans themselves. For an event being staged in countries including England, Italy, Spain and Romania, UEFA draws very few of its sponsors from the continent. Instead, it is clear that organisations from China and the US have both the financial muscle and the tactical brains to successfully dominate the tournament.

This reflects broader global trends which indicate the declining presence of European industry. European companies account for a falling percentage of global output. The market capitalisation of European firms is way behind that of American corporations and is fast being caught by Chinese firms. And the world’s technological hot spots are found in places such as Shenzhen and Silicon Valley, not in Europe.

Whether the footballing squad from France, Portugal or Switzerland lifts the trophy in July, there is no doubt that the UEFA tournament will be an on field triumph for Europe.

But the forces of globalisation, digitalisation and politico-economic change, reflected in the Euros’ portfolio of sponsors, will keep on playing long after the final whistle blows. And European industry could pay the penalty with a swift exit from the global industrial competition.

Simon Chadwick works with UEFA on its Certificate in Football Management programme.

Paul Widdop ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.

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Economics

The spike in inflation is not a concern – yet

  – by New Deal democratBy now you’ve probably already read a fair amount of commentary on yesterday’s consumer inflation report for May. I’m going to cut to the chase as to my take right off the bat:1. The primary driver of this inflationary…

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 - by New Deal democrat

By now you’ve probably already read a fair amount of commentary on yesterday’s consumer inflation report for May. I’m going to cut to the chase as to my take right off the bat:


1. The primary driver of this inflationary spike is supply bottlenecks rather than increased demand.
2. The inflationary spike has wiped out any “real” wage gains during the past 10 months.
3. The inflationary spike is not a concern - yet. If this continues about 3 more months, it becomes a real concern and I would expect the Fed to act at that point.

To the graphs ...

1. Here’s a look at retail sales (blue) and personal consumption expenditures (gold) since the beginning of 2020:


Just as with last year’s stimulus, the effect of this year’s stimulus has petered out after a few months. Demand has stabilized.

On the contrary, YoY commodity prices have spiked in a fashion last seen when gas prices hit $4.25/gallon in the early part of the Great Recession:


This *can* be a great concern, but note that there have been other spikes approaching 10% YoY in the past 25 years that did not cause recessions or even major slowdowns. Note that those spikes only lasted a few months.

2. Here are average real hourly wages for nonsupervisory workers for the past 3 years, normed to 100 as of February 2020:


As of May, these are up 3% since just before the recession - and not at all since last July. The inflationary spike this year has actually caused them to decline slightly. This will create a problem for consumer spending (70% of the economy) if it continues too much longer.

3. As I’ve said many times before, typically inflation has not been a concern over the past 25 years unless CPI excluding energy (gas) is up 3% YoY or more. As of May, we crossed that threshold:


Another way to look at this is to compare our current trajectory with that which was in place leading up to the pandemic. In the latter part of the last expansion, consumer prices were increasing at the smoothed rate of 2.65%/year. Had that trend continued after February 2020, prices would be up roughly 2.9% since then. With the inflationary spike of the past several months, they are instead up 3.8% since February 2020:


Here’s the bottom line: this is not a big deal if it only lasts another month or two. But if the trend continues longer than that, it will begin to impact consumer spending, and it will get the Fed’s attention. Unfortunately I have no special insight into supply chains; all I know is that it is important that the supply chain bottlenecks be promptly resolved. 

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