Australian Mining and Economic Linkages : An Input-Output Analysis Using the Hypothetical Extraction Method

Little is known about the mining sector’s potential to structurally transform and diversify Australia’s broader economy. We use the national IO tables and develop the Leontief and Gosh models based on two Hypothetical Extraction Method (HEM) scenarios to examine the Australian mining sector’s inter-sectoral linkages. We find that, first, mining’s backward linkages are ‘key’, whereas forward linkages have largely been through non-metallic materials. Second, the business services sector and the construction sector offer the pathways through which the mining sector appears to generate potentially transformative linkages. This may mainly be realised via the skilling and reallocation of skilled labour and technical supplier capacity and the development of physical infrastructure that supports existing economic sectors and creates new ones. Third, the linkage pathways via the construction sector rely on energy intensive sectors that are currently dependent on coal mining. These pathways are, thus, vulnerable given the efforts to transition from coal