Companies that rely on mining operations in Australia for their mineral procurement may soon seek other partners for the raw materials they need to operate and manufacture products. Prices could soon spike, and firms looking for the most cost savings could be concerned about continuing a relationship with an Australian supplier whose costs are far higher than those in other areas.
Increasing regulations in the Australian mining industry will force operations to pay more to extract raw materials, which could in turn force them to charge purchasers more to make a profit. A new carbon tax, the mineral resources rent tax (MMRT) and growing regulatory requirements are making it much more expensive for mining companies to do business, let alone make a profit with current prices. Mining advocates have complained the burdens stifle Australia's competitive advantage and make it difficult for the country's mineral firms to match the prices offered by suppliers operating in other countries.
As other countries expand their mining initiatives and offer businesses incentives to increase growth, they are quickly becoming more desirable places for companies to purchase their raw materials. Because of the lower material expenses, a firm can lower its costs and invest in new projects, enhance operations or expand its global reach, making it important for firms to save as much as possible on their raw mineral sourcing tactics.
Because global demand is growing so quickly, Australian mines could continue to lose current business, as well as miss out on future opportunities. However, the government has not taken the steps to reduce regulatory burdens or taxes on mining companies, meaning the problem could worsen before it gets better and the country's mining industry sees a massive increase in business.