Australia's dependance on natural resources

[boxy]

Gawd, if you're going to try an insult me, at least put a bit of effort into the image posted

Posting "a sheep"? No points for effort

[boxy]

SN have you forgotten that Australia once the richest country in the world rode then on the Sheep's back?

Wait up... Australia was "the richest country in the world", back in the early 20th Century?

Please elaborate. What was the measure?

[Super Nova]

SN have you forgotten that Australia once the richest country in the world rode then on the Sheep's back?

Don't know about the richest. I recall we were number one for quality of life and the lucky country... we have slipped a few pegs haven't we.

also in my OP I stated

We look like the stupid country that used to ride on the sheep's back and now the commodities market back.

So I hadn't forgotten it.

Now we try to ride on the back of our dirt.

[Super Nova]

Gawd, if you're going to try an insult me, at least put a bit of effort into the image posted

Posting "a sheep"? No points for effort

yeah... put some effort in.

[lisa jones]

Bloody hell!

I wasn't expecting that you bugger lmao!

[DrMattus]

There seems to be a few misconceptions around the resources industry flying around in this thread.

Let’s start with the assumption that mining is simple, low-tech, even crude. Just rip it out of the ground and ship it to some brainy country who will turn it into an iphone. In fact, extracting and producing minerals on the massive, profitable scale that Australia does requires absolutely cutting edge technology that could be more closely compared with the Mars rover than an iphone. It requires continuous innovation. Advanced mathematics and science directly contribute 22% of the value of Australia’s economy, and the vast majority of this is through their application in the resources sector.

To this end, the resources sector spends more than any other industry in R&D in Australia. IN WA alone, the resources sector invests $2.4 billion per year in research. That’s more than the financial sector invests in NSW research ($2.3 billion), or the manufacturing sector invests in Victorian research ($1.7 billion), or the construction sector spends on research in South Australia ($343 million). There are nearly twice as many engineers per capita in Western Australia than in anywhere else in Australia. In fact, only the Silicon Valley and Calgary have more engineers than Perth. In the last 5 years the number of scientists in Perth has increased 40%. Why do you think that is?

Another assumption is that the resources sector is too finite. That one day the resources will run out and what will we do then? Of course it’s true that, despite Australia’s massive resources endowment, the resources are indeed a finite resource. But real estate is a finite resource too. Should we not invest in real estate?

The fact is, while there will always be peaks and troughs along the way, the consumption of resources will never decrease over time. Demand will be ever increasing for resources. As others have pointed out, while the price of iron ore has fallen away from the massive peaks that results from China’s rivers of steel and the lag in ramping up production in WA, it is still above its average and increasing over time. Supply and demand economics suggests investment in a limited resource in the context of steady or increasing demand is wise.

Furthermore, there are decades of profitable resources left. That’s actually a blue-chip investment, few other sectors can guarantee decades of profit! Compare that to the technology sector where, for all the investment in developing it, any new product has a profitable lifespan of only a few years. The next new ipad will come on the market as hundreds of dollars but be utterly worthless within 2 years to the point where the industry will stop making it because it is not profitable. That makes the recent drop in the price of iron ore seem reasonable. Meanwhile the price of other Australian resources continues to rise. The nickel for our solar cells, vanadium, manganese and graphite for our Tesla cars and batteries, lanthanides and lithium in our wind turbines, gold for our nanotechnology, silver for a plasma TVs, tungsten for our (you guessed it) ipad. These all comes from mines in Western Australia. The resoruces sector will adapt to and supply whatever boom comes next. It is a solid investment. Unlike Apple.

Another assumption is that we rely too much on resources. That it represents too large a chunk of our economy. Certainly at $129 billion it’s a bigger part of our economy than agriculture ($36.9 billion). But really it’s pretty well balanced by our manufacturing ($100 billion), professional and scientific services ($100 billion), construction ($124 billion), and finance ($130 billion) sectors. Maybe it’s not that mining is too big. Maybe agriculture is just too small?

Our resources industry is certainly a huge success. Western Australia is the world’s most successful mixed mining and energy province. The value of the resources industry in WA alone is over $114 billion dollars per year. Compare that to the market capital value of major multinationals and you start to realise that each year the WA's resources sector is bigger than Facebook's entire market value ($97 billion). There are more than twice as many ASX listed companies with HQs in Perth than in Victoria. Why would we turn away from such an industry? I'd be looking more closely at the finance industry, on which we rely on even more than resources ($130 bill vs $129 bill), is far more prone to instability (GFC anyone?) and contributes nothing tangible to anyone.

[Outlaw Yogi]

Time for Australia to wake up and realise that beign over dependant on our natural resources for a high quality of life needs to stop.

We need to return to being the clever country and realise that in the long run the quality of life will diminish if we don't break this dependency.

I'd like to agree, but it's not going to happen for one very simple reason.
Our corporate sector has succumbed to affirmative action, meaning it's either going to crash or be considerably diminished in the not too distant future.

Why? ... Because women with no expertise let alone experience are being appointed as board directors of public companies, not because they're good at what they do or competent, but soley because they are women.

To me, that's like appointing a quadraplegic as Minister of Emergency Services because he's in a wheel chair, or appointing an Aboriginal as Commissioner of Police because he's been in gaol/jail.

Not that it bothers me, I don't gamble on the stock market. I consider private equity and real estate a far safer bet. Let's face it, this concept of continual expansion is absurd in a finite world, and is the major factor in trashing the planet for the sake of share holder's dividends.