FEATURE: The Wide-Reaching Effects of Australias Mining Boom
The end of Australia’s largest mining boom, an event that has enabled the country to go an astounding 23 years without a recession, is near. As the price of iron ore continues its year-long downward slide, and China’s demand for minerals and metals follows the same trend, many experts have started looking back to see just what kind of mark the mining boom has left on the business landscape of Australia – for better or worse.
National Farmers Federation: It Wasn’t All Negative (But a Lot Was)
This week the National Farmers Federation (NFF) shared that the mining boom actually did bring some benefits to agriculture. Farmers saw the benefit of region infrastructure, which probably would not have been constructed otherwise.
It was widely known throughout the mining boom that the agriculture industry was the main sector to suffer at the hand of mining’s success. It pushed the value of the Australian dollar up substantially. Ideally the sector would have liked to see it stay between 60 to 70 US cents to the Australian dollar, as “farmers would have got a much bigger pay cheque in Australian dollars," said Alan Langford, chief economist with Bankwest.
But agriculture wasn’t the only industry that saw difficulties brought on by the high Australian dollar. Langford mentioned, in his response to a report published by the Reserve Bank of Australia, that tourism on the Gold Coast has felt the same lingering effects of the boom.
Tony Mahr, general manager of policy with the NFF, shared his view on the issue: “"If you take a step back, the mining boom has had broader benefits for the economy outside of agriculture, so there's a balancing up of that impact also. But there's no doubt there'd be those in the community, and I agree, who say the high Australian dollar hasn't been good for agricultural exports."
How the “Boom” Was Spent
The Reserve Bank of Australia also published an infographic regarding how the money from the mining boom was spent. The biggest chunk of the pie went to motor vehicle purchases, which were 30 percent higher during the boom than purchases would have been otherwise. Perhaps a not-so-subtle indicator that the mining boom is indeed over has been the announcement of a mass exodus of the car industry from Australia.
The purchase of “durable goods” – household items – was 20 percent higher than it would have been without the boom.
These and the other statistics can be explained rather simply: for the most part, the mining boom boosted a majority of Australians’ incomes.
"We find that the mining boom has substantially increased Australian living standards," read the Reserve Bank research discussion paper, titled The Effect of the Mining Boom on the Australian Economy, written by economists Peter Downes, Kevin Anslow and Peter Tulip.
What Happens Now?
Some optimistic analysts are expecting a relatively easy way out of the mining decline. A major part of this optimism stems from the knowledge that the major LNG projects that have been built up during the mining boom have yet to be switched on. With their exports expected to triple from 2016 to 2020, the ramp-up in exports will be pretty much locked in. A major part of the equipment that was used in the construction of the mine expansions and the LNG projects has already been sourced abroad. Government debt is low – by global standards anyway – and analysts remain largely optimistic about the country’s exports to Asia.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.