INTRODUCTION

The report is based on the industry analysis of a particular Australian company. For better
understanding of the relevant concepts, aspects and forces present in the mining industry,
BHP Billiton of Australia has been taken into account. The report puts light on various
imperative sections while conducting the industrial analysis. Here, the main point of concern
is to analyse the size of the industry, Marketing, value factors, key players, consumers,
segmentation approaches and the growth potential of the industry in Australian market.

INDUSTRY ANALYSIS

BHP Billiton and Metals and Mining Industry

BHP Billiton is a B2B Australian mining company which belongs to the Metals and Mining
industry. The company also deals within the petroleum industry and its headquarters is at
Melbourne. According to the 2013 revenue statistics, it is considered as one of the top mining
company. There are approximately 30,000 employees working all over the world for the
growth, development and better revenue generation as well as more market entry of this
company. According to the 2015 organizational report, the company has revenue worth
A$61.2 billion with total assets and profit of US$124 billion and US$1.91 billion
respectively.

SIZE OF THE INDUSTRY

According to the Mining Market research report of IBISWorld, certain factors, such as-
demographic influences, product developments, lifestyle, distribution and supply chain as
well as economic and pricing issues. The market size of the mining, petroleum and metals
industry of Australia gets reflected from the revenue of it which is around $186 billion and
this industry covers around 7,000 businesses of Australia with the employment of more than
179,200 people. The large supply of hydrocarbon, non-metal reserves as well as minerals
comes under the extracts, selling and processes of the Mining division. The High-quality
reserves that are close to the surface of earth have enabled the price-competitive nature of
Australian mining sector. The export-oriented mining division of Australia is accountable for
more than two-third revenue of the industry in 2015-2016 statistics of mining industry size.
The experts of this industry are projecting a score of around three quarters revenue due to
division exports by 2020-2021 and with this, the exports of natural gas will be increased. In
2013-2014, substantial increase in case of investment in iron ore mining, coal mining and
natural gas reserves helped to increase the mining output of the industry and with this,
reduction in marginal costs was observed over the past five years. The industry products
mainly point towards- coal mining, metal ore mining, iron ore mining, diverse exploration as
well as mining services and Non-metallic mineral mining along with quarrying.

VALUE FACTORS

PESTEL Analysis
The external environment of the Australian mining industry can be conducted with the help
of analysing the current macro environmental factors linked with Australian industrial sector.

Political

According to Martin and Colebatch, there are certain political factors including the resource
super profits tax that is often coupled with the forecasted drop especially in case of iron ore
income can be seen affecting the industry because of the Clean Technology Program and the
related legislations of the Australian government. Relative instability is also seen in the
Australian political landscape that affects the mining tax. Here, political infractions can also
be seen that causes serious changes in the laws, regulations, resources and industry
competitiveness that ultimately affect the operations and management as well as revenue of
BHP Billiton.

Economic

The present dynamism of this industry in Australia has direct effect on its performance in the
Australian and international market. Here, falling commodity prices, slow economic growth
and debt crisis have considerable impact on the industry. On the other hand, increasing nature
of iron ore output especially from countries like- China and US is considered as a threat in
Australian mining industry. However, around 44% mining division imports is accounted for
the Australian mining industry operations which seem to be a strong point looking at the
economic factors. However, current reliance of Australian major portion of revenue towards
the mining sector has made it the most valuable export and import industry but prices could
soon soar and the economy will be in tatters.

Social

There are numerous social factors and trends that have significant impacts on the production
as well as consumption rates of the mining industry. The social threats have recently warned
about the declining demand in case of iron ore which can be stated in terms of the
overabundance possibility in case of global supply. The increasing concern of the Australian
communities and other nations about climate change, pollution as well as carbon emissions
also affects the industry. Other than this, wealth and goodwill creation, various indigenous
projects and flourishing nature of rule along with isolated communities are some of the social
factors in case of Australian mining industry.

Technological

The technological developments in this sector have considerable impacts on the society as it
involves a labour intensive activity with inherent risks. With technological advancement, the
industry successfully deployed the Electronic Delay Detonators or the EDDs so that blasting
holes can be done much safely by concerning the issue of loss of labour in the mining plants.
Efficiency and safety issues have become the main factors here while the Australian mining
industry and giant like- BHP Billiton consider technological development.

Environmental
With its membership in the UNFCCC, Australian has become a major player to address the
environmental impacts due to the mining industry and it affects the operations of BHP
Billiton. It is because, these concerns shape the decisions taken by the industry. The nation is
now a key contributor when it comes to carbon emissions as it accounts for approximately
1.4% of carbon emissions for which the industry has to often restore as well as rehabilitate its
mining facilities. Energy conservation, water conservation, climate change and pollution are
the main challenges of the industry looking at the case of degradation of the environment in
the Pilbara region.

Legal

The industry has to abide by the various laws, regulations and acts developed by the
Australian government and other regulatory bodies because the unions should always be
happy. The National Greenhouse and Energy Reporting Act has created some problem as it
involves reporting as well as indentifying the matters that are the core sources of greenhouse
gas emissions. Rail track issues also come under the legal factor here for which the industry
has to change its operations and management policies every now and then.

Partnership

Previously, BHP Limited merged with the Billiton PLC to form the mining industry giant
BHP Billiton and this merger has enterprise value worth $38 billion with elongated life
operations with outstanding low cost asset base with countryside diversifications. The
Australian mining industry is also in acquisition with the Canadian authorities to for the
exploration of potash properties in their regions. Rio Tinto has signed an agreement with
BHP Billiton so that a production joint venture can be established which can cover the
western regions of iron ore assets of Australia and it is non-binding agreement by which both
the companies own 50:50 partnership when it comes to the iron ore assets along with other
liabilities.

E-commerce

It has been found that previously only IT infrastructure is utilised that was covering the
proprietary inter-organizational system. But, with time EDI or Electronic Data Interchange
was also introduced in the mining sector of Australia so that data transfer without any human
intervention could be done and electronic exchange of documents was also a vital part of it.
However, for small businesses in the mining industry EDI is unaffordable, therefore the era
of web-based applications along with e-commerce started. E-commerce is much cheaper as
well as usable as compared to EDI in the industry. With ecommerce development in this
sector, low cost industry solutions, easy set-up as well as access, better services to the other
client companies and easy integration of technologies have been possible. But, there are also
certain barriers associated with it, because internet has become insecure and unreliable style
of data transfer has come to the surface that causes data losses. But, the positive points of e-
commerce have more gravity as marketing copper, iron ore, petroleum, potash and coal in
order to attract more client companies has become much easier. The modern online metal
trading model has been appreciated by the client companies as internet-sourced sales mainly
has positive impacts on cutting transmission times due to the availability of pricing, shipping
details as well as other information in the world of internet.

Innovation

Innovation in the Australian mining sector gets primarily reflected from the mining
automation as it successfully turns the mine data into information and the strategy innovation
of the industry in terms of MAS (Mine Automation System) is the perfect example here. With
such system, mathematical models can be used along with visualization tools so that wide
arrays of data sets can be interrogated as well as integrated that provide new insights.
Software and hardware upgrades as well as low capital costs are the results of innovation by
which the industry easily deploys the mining improvements in various sites. Innovation in the
areas of working in remote locations, dealing with extreme hazards and working on huge
scale are the success factors in Australian mining industry. New processes and equipment,
strata stabilization, breakthrough in modern rock drilling as well as coring processes, cutting
tools, oil field exploitation, blasting and mine design, wellbore systems etc are the points of
innovation in this industry.

Risk

Mining industry in Australia has several risk factors that affect the profitability and price
issue especially while dealing with large scale, hazards and remote operations. Many of the
companies implement the technological changes along with the innovation strategies very
slowly when it comes to operations and management which is a considerable risk factor here.
The increasing nature of government intervention that is unpredictable can be considered as
another risk factor here that adds complexity towards the mining industry. Higher taxation
issue, indigenization and restrictive regulations have serious risks on the extraction and
exploration related activities in the mining industry of Australia. The continuous reduction
related to the demand of mining products from China is also a risky issue that affects the
prices of diverse commodities in the sector.

KEY PLAYERS

Australia mining industry is a primary sector that contributes a major portion towards the
Australian economy and it also encourages immigration. This industry alone employs around
2.2% of the labour force in Australia and therefore the key players of the Australian mining
industry needs a thorough analysis. The key players present in this sector that contributes a
lot in the mining industry are- BHP Billiton, Rio Tinto, Newmount, Cuesta Coal, BECHTEL,
GVK, Yancoal, Oziminerals etc.

KEY BUSINESS CONSUMERS

US Onshore Energy Association, Steel Companies of China, Tangshan Iron & Steel Co,
Jiangsu Shagang Group, Wuhan Iron & Steel Corp, Maanshan Steel and Iron Company are
the key business consumers of the Australian mining sector. Recently, the Japanese markets
have started to do business with the mining industry of Australia. Mineral, petrol along with
steel are the mining products that are frequently exported to London, Singapore,
Johannesburg, Shanghai and many other countries. The short-term deals have also started by
various mining companies when it comes to the Asian clients.

SEGMENTATION APPROACH

BHP Billiton operates in more than 100 locations situated in more than 25 different nations
all over the world. The segmentation approach of the Australian mining industry to which
this company belongs revolves around geographic factors and therefore, geographic
segmentation strategy is followed by this particular industry. The B2B Company of the
Australian mining industry mainly involves in the Chinese, US and other European markets.
The large network chains of the industry help it to do the international businesses as well as
domestic businesses when it comes to import and export of minerals, natural gas, petroleum
and non-metals. Here, the Australian industry focuses on the various geographic
characteristics while considering the segmentation of diverse client groups, those
characteristics are- market sizes, regions, density of the presence of organisations, climate
and area. On the other hand, the segmentation approach also includes its operations in
different places in terms of 8 diverse mining products related to mining sector. This sort of
segmentation reflects demographic characteristics as needs of the client organisations matter
a lot here. Those segments are- petroleum, nickel, manganese, potash, aluminium, iron ore,
coal and copper.

FUTURE GROWTH POTENTIAL

Significant growth in the sector of metal ore mining, quarrying and mining of non-metallic
ores as well as exploration, extraction and different support services show the highest level of
future growth potential. Sales along with service income of the Australian mining industry
will be increased up to 7% by the end of 2020 which has been calculated around $300 billion.
Metal ore mining has huge future growth potential of a significant increase up to 16.1%
which is around $150 billion. On the other hand, coal mining and oil as well as gas extraction
might face a decreasing nature of sales and services. Looking at the employment rate growth,
it can be stated that this industry has higher level of growth expectation in next five years so
that it can contribute more towards the GDP increase of Australia. Long-term technological
growth for the safety issue, ecommerce sector and marketing approaches are being expected
and the exploration related changes will be better handled in the future. With 7-10 years
greenfields exploration programs will thrive looking at the environmental consequences and
it will positively affect the exploration related expenditure and the up and down nature of
commodity prices.

MARKETING

For product positioning, the Australian mining industry follows the 7Ps marketing mix
strategy. Here, three more marking mix elements that are people, process and physical
evidence have been added to the 4Ps marketing mixes, that are- product, pricing, place and
promotion. The Australian mining industry deals with exploration, extraction, processing and
delivery of high-quality mining products, especially in case of coals, iron ore, petroleum,
nickel, uranium, copper etc. The distribution networks of the industry are all over the nation
and in the international markets of China, US, Japan and other Asia-pacific and European
countries. The ecommerce development programs and utilization software and hardware for
mining data perform the best product placing. Pricing strategies are considered as per the
rules and regulations as well as legislations of the political and regulatory bodies of the
Australian government that involves labour, overhead and material costs. For promotion, the
industry follows both traditional as well as modern promotional approaches, like- printed
mediums, commercials and online promotion. The employees and labours of this industry are
the common people of Australian and many others from diverse countries. Here, the industry
mainly focuses on building interpersonal and technical skills of the workers. Process entails
maintaining the quality of mining products as well as quarrying, exploration and other
support services. The last one is Physical evidence that involves the tangible and intangible
elements of the industry which involve the reputation of Australian industry, service and
product marketing effectiveness, quality of the mining ores, metals, non-metals, petroleum in
terms of the infrastructure development, and technological integration in the mining sector.

CONCLUSION

The report focuses on the industry analysis approaches along with the imperative factors of
concern while performing the assessment of a particular industry. The multinational mining
company of Australian BHP Billiton has been taken into consideration so that all the areas of
industry analysis can be better covered. Size of the Australian mining industry, value factors
of the industry, key players, segmentation method and marketing of this industry are the main
points of concern here in this report.