Australian miners�to�benefit from a falling Australian dollar
Could the declining value of the Australian dollar prevent mining job losses?
Over the past year or so the Australian dollar has fought the US ‘greenback’ exchange rate battle and has come out on top. Although having a high exchange rate means good news in some areas, it has been devastating for the mining sector.
The Aussie dollar has dipped to the US80 mark and is expected to drop even further to about US75 . Experts are saying this could be just what the Australian miners need.
Mining companies benefit because mining commodities like coal, iron ore, silver, gold, copper etc, are traded in US dollars. At present exchange rates, every $US1.00 is worth around $A1.23 when paid to an Australian mining company.
As an example, BHP Billiton’s coal division in Queensland has stated that every 1 fall in the dollar can increase their profit by about $100 million. That’s a lot of money, which is then available to sustain jobs, develop new projects and keep the mining wheels turning in the right direction.
Mining royalties can add an extra $35 million to the Queensland State Government coffers for every 1 fall. The Qld Treasury calculated if the exchange rate keeps more or less the same throughout 2015, Qld taxpayers will benefit by an extra $245 million.
Of course, there is always someone who will surface and throw in a bit of a reality check. Queensland Resources Council chief executive Michael Roche said the dollar would have to fall a lot more before companies could start seeing an offset to the plunging prices for commodities.