Yesterday we had a quick squiz at the profitability of the Australian mining industry compared to other domestic industries as well as the world’s largest 40 mining companies. Today, it’s worth a taking a closer look at how mining industry profitability in Australia plays out on the basis of business size as well as a look at the proportion of all mining firms that are actually profitable.

The ABS “Australian Industry” report released last month not only provides data on Sales and Service Revenue and Operating Profit Before Tax (OPBT) for the mining industry as a whole in Australia — with the  ABS dividing the latter by the former to give us its definition of profit margin — but also provides that data broken down into business size cohorts within the Australian mining industry.

The ABS uses three business size categories here:

  • Small — businesses which employ less than 20 people
  • Medium — business which employ between 20 and 199 people
  • Large — businesses which employ 200 people or more.

If we look at the profit margins of the mining industry broken down by those business sizes, as well as the share of sales and service revenue and share of OPBT  that each cohort experienced, this is what we get:

100617_possum1

For some context, we’ll repost the chart from yesterday that compares how other industries are performing on the identical measure of “profit margin”:

100617_possum2

As we can see, the small and medium-sized mining firms are experiencing profits comparable to other Australian industries (albeit with medium-sized firms at the top of the rest of the pack) — but large sized mining firms come in at a massive 46.1% aggregate profit margin.

Peter Fray

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