Our Senior Mining Analyst, Alex Sutton, discusses the impact that mining plays on the Australian Economy.

Thanks to mining, Australia’s economy has been a stand out performer during the covid-19 pandemic. Like we saw in the 2008 economic crisis, Australia has for the most part withstood the pandemic related downturn. But why? What has happened? And who are the main players?

The why?

Well, Australia has been the beneficiary for two reasons.

• We have large amounts of iron ore that is of fairly good quality that is close to the consumer's marketplace. China’s behemoth steel making industry is not far from our doorstep and it’s easy for mining producers to sell their products.
  
  
• Australia’s major iron ore competitor has all but gone out of business mainly due to safety and environmental concerns. Yes, I’m referring to Brazil which is also blessed with vast mineral wealth but unfortunately due to the aforementioned concerns has all but been shut down its mining industry.
   

"But it’s not all about Iron Ore – Gold, Copper and Lithium have also been the winners out of the pandemic."

Alex Sutton, Senior Mining Analyst

 How much of it can be attributed to the economic downturn is hard to say, copper and lithium have benefited from high prices due to their use in the green energy sector…for instance in the lithium-ion battery world there is four times as much copper used in an electric vehicle than in a petrol fueled car. And lithium demand has increased due to consumers wanting to leave a smaller carbon footprint and car manufacturers wanting to tap into that demand. One of the companies that are due for growth is the copper explorer Locksley Resources, which has a good quality copper deposit in the central west of New South Wales.

You may have thought by reading this far that I had forgotten about gold, well in times of economic uncertainty gold prices tend to increase as investors flock to precious metals in order to protect their wealth and covid-19 is not an exception. Gold Companies like White Rock Minerals may be an opportunity as the company holds the Morningstar Gold Mine in country Victoria.

In summary, precious and green metals have been a big winner from the pandemic.

Read the Conversation:

Alex Sutton:

“Thanks to mining, Australia's economy has been a standout performer of the Covid 19 pandemic. Like we saw in the 2008 economic crisis, Australia's, for the most part, withstood the pandemic related downturn. There's two main reasons for this: Australia has large amounts of iron ore, which is a fairly good quality, and it's close to our consumer's doorstep, China's large steel making industry is not far from us, and it's easier for mining producers to sell their products. The second reason is Australia's major iron ore competitor, Brazil has all gone out of business due to safety and environmental concerns. But it's not all about iron ore; gold, copper and lithium have also been the winners out of the pandemic.

How much of it can be attributed to the economic downturn? It's hard to say. Copper and lithium have benefited from high prices due to their use in the green energy sector. For instance, a lithium powered car uses four times as much copper than a petroleum fueled one, and lithium demand has increased from car manufacturers wanting to tap into that demand.

One of the companies that is due for growth is Copper Explorer Locksley Resources, which has a good quality copper deposit in the central west of New South Wales. But what about gold? While in times of economic uncertainty, gold prices tend to increase as investors flock to the precious metals in order to protect their wealth and Covid-19 is not an exception. Gold companies like White Rock Minerals may be an opportunity as a company holds the Morningstar Gold Mine in Country Victoria. To receive more information about the mining sector, contact us directly by clicking the link in the description.”