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Australia’s mining industry is being encouraged to diversify its export markets beyond key commodities such as iron ore and gold.

A Joint Standing Committee on Trade and Investment Growth report, Pivot: Diversifying Australia’s Trade and Investment Profile, suggests that Australia’s export reliance on China and growing demand from other East Asia countries may incite political and security risks, and threaten the strength of nation’s economy.

Iron ore, gold, bauxite and nickel were listed as the commodities most dependent on a single market, while coal and precious metals have the most diverse markets.

“Australia has capitalised on its natural advantages to grow its exports, particularly in the resources and agricultural sectors,” the report stated.

“While this has been highly profitable, a low level of economic diversity in Australia’s exports may create longer-term challenges for economic growth.”

According to the Department of Foreign Affairs and Trade (DFAT), at least 60 countries listed China as their number one merchandise trading partner in 2018, which has boosted its reliance on imported resources.

The report cited the United States Studies Centre, which stated that Australia is more vulnerable in its reliance on exporting natural resources than its largest trading partner, China.

METS Ignited, who aims to improve the global competitiveness of Australian suppliers to the mining industry, suggested that the country can diversify its exports by commercialising its mining-related technology.

Resource Industry Network also stated the technological advancement of Australia’s mining industry could be commercialised and provide opportunities for Australian businesses.

Minerals Council of Australia (MCA) chief executive officer Tania Constable agreed with the report’s incentive to diversify the customer base of the mining industry.

“Broadening our customer base will improve the security of demand for Australia’s industries, just as security of supply is vital for countries with which Australia trades,” she said.

“In this context, it is important to note that Australia’s resources sector is not overexposed to China. For example, when iron ore is excluded from our trading profile, China only represents 15 per cent of Australian resource exports.”

Constable encouraged the industry to look toward new markets in countries part of the Association of Southeast Asian Nations (ASEAN).

“The MCA has been a long-term advocate for free trade and trade expansion and diversification through trade and investment agreements which can help build and maintain strong and enduring government to government connections,” Constable said.

The Australian Bureau of Statistics revealed that Australia’s iron ore exports increased by 20 per cent in 2020 to reach $116 billion, while gold exports rose by 12 per cent to $27 billion.