Introduction

Coal mining industry is considered to be one of the most important industries in Australia, which
significantly contributes in the economy of the country. The coal mining industry has been the
source of employment, government revenue and energy from the several decades1. The coal
mining industry is concentrated in eastern states of Queensland, New South Wales, and so on. It
has smaller operation in the states of Western Australia in South, Australia, and Tasmania. This
essay focuses on the characteristics of coal mining industry as a market. The structure of coal
mining industry of Australia will be assessed in this Assessment. Further this essay will explore
how the market structure of coal mining industry in Australia differs from other market
structures. This essay will further look into the impact that covid-19 pandemic had in Australian.
Coal mining industry and Australian coal Market

Oligopoly market structure

Assessing the various characteristics of coal mining industry, this industry can be characterized
by dominance of few large firms. Due to the dominance of small number of large firms, the
market structure of Australian coal mining industry can be called an oligopoly Market structure2.
Oligopoly Market structures refers to the market structure in which there are few dominant firms,
which controls the market and owns most of the market share3. In this structure the oligopolists
are the few dominant firms that Take the decisions regarding pricing and quantity supplied based
on the actions of competitors. In Australian coal mining industry, the industry is dominated by
the key form such as BHP Billiton, Rio Tinto, Glencore, Anglo American and so on. The two of
the major characteristics of oligopoly market structures are dominance of few large firms and
high barriers to entry4. Australian coal mining industry by nature is a capital-intensive industry. It
demands significant investment in the technology and infrastructure, equipment and so on. Due
to capital intensive nature and requirement of high investment and technological expertise it is
challenging for the new firms to penetrate the was coal mining industry. Further Since there are
few large firms, they have access to economies of scales. They are well established and they
have abundant number of resources. The lower cost of this few dominant firms, Technological
1
https://www.ips-journal.eu/topics/economy-and-ecology/australia-remains-committed-to-coal-6481/
2
https://www.jstor.org/stable/23268095
3
https://www.simplilearn.com/market-structures-rar188-article#:~:text=Market%20structure%20refers%20to
%20the,monopolistic%20markets%2C%20and%20monopolistic%20competition.
4
https://www.oecd.org/daf/competition/oligopoly-markets.htm
and resource advantage of these firms make it very difficult for new entrants to come and
compete in this industry.

One of the key characteristics of the oligopoly market structure is interdependence among the
firms in the industry5. Due to this feature, the large firms in the industry often collaborate in
terms of fixing price and quantity to supply6. In the Australian coal mining industry as well, the
key firms like BHP Billiton, Rio Tinto, Glencore Etc. have formed Queensland Coal
Corporation. This Corporation has control over 90% of the whole production activity in
Queensland bowel basin. It gives substantial Market power to these firms.

Further, the, another key feature that Australian coal mining industry exhibits is the control over
price of the product. An oligopoly market structure firms have power over the pricing decisions,
which is a cause for the market inefficiencies in these markets. One common practice seen in
oligopoly market and in Australian Coal industry is the price discrimination practice which
means selling the product at different prices to different set of buyers, depending upon the
bargaining power of the buyer. The oligopoly market structure of the Australian coal mining
industry being a significant contributor of the economy holds various implications for the
economy. Due to the market power that dominant firms in the industry, they can influence the
coal prices. Due to the influence on coal prices, it can affect the companies that use coal as an
input can they can affect the profitability of this firms severely. Further another aspect is that due
to the market power in the hands of a few large firms, it reduces the encouragement for
innovation and investment in new technology, new processes and so on7.

Difference

As stated above the Market structure of Australian Coal Mining industry is oligopoly market
structure. The market structure of the Australian coal mining industry differs from other market
structures in many ways. Significant differences can be observed. from other market structures
such as perfect competition, monopsony, monopoly and so on. Some markets such as the
agriculture industry, is characterized with large numbers of buyers and sellers which shows the
perfectly competitive market structure.

5
https://www.economicshelp.org/microessays/markets/oligopoly/
6
https://link.gale.com/apps/doc/A64997552/AONE?u=googlescholar&sid=googleScholar&xid=dc581ea8
7
https://www.sciencedirect.com/science/article/pii/S0049089X97906086
One of the key differences that can be observed in the market structure of Australian, coal mining
industry from other market structures is regarding the barriers to entry8. In case of Australian,
coal mining industries, there is high barrier to entry for new firms, to enter, or penetrate the
market, especially due to the capital-intensive nature, the requirement of technological expertise,
the availability or access to economics of scale and scope to the large firms and so on. However,
this is not the case for other Market structure such as perfectly competitive market structures in
which there is no barriers to entry. And firms are free to enter and exit the market.

One of the key characteristics of the oligopoly the market structure of Australian coal mining
industry is the number of firms, which has the control over the market. There are few large firms
in Australian. Coal mining industry; it differs from the market structure of Monopoly, because in
Monopoly, there is only one firm in the industry, which dominates the market9. Further there is
sole control of the Monopoly firm in fixing the price and quantity. However, in oligopolistic
Market, the firms are often interdependent with each other in price determination.

Another difference that can be seen in Australian coal mining industry from other markets is
regarding product differentiation. In oligopolistic market structures, few variations and
differentiation are provided in order to appeal the different segments of the customers. However,
this is not the case in perfectly competitive market structure. Identical or homogeneous products
are offered by all of the firms in the market. Overall, the coal mining industry of Australia can
become best characterized by the oligopoly Market structure due to the dominance of few large
firms, High barrier to entry for the new firms. The interdependence among firms in the prices
and quantity. The imperfect competition, the influence over price and so on. There are various
factors in which the Australian coal mining industry differs from other Market structures

Covid 19 impact

The impact that covid-19 pandemic had in the world economy was very significant. The
Australian coal mining industry was also not immune to the effects of covid-19 pandemic.
During the period, there was a global slowdown in economic and there was a slowdown in
economic activities and industrial activities. Due to the economic slowdown, decrease in demand
for coal was observed, which is the key input for many Industries in the world. Due to the
8
https://corporatefinanceinstitute.com/resources/economics/market-structure/#:~:text=Market%20structure
%20refers%20to%20how,monopoly%20market%2C%20and%20monopolistic%20competition.
9
https://www.vedantu.com/commerce/types-of-market-structures
Slowdown of activities, the demand for coal decreased. And, it has significant impact on the
production and profitability of the coal mining industry. Not only the demand but restrictions in
the supply chain or disruption in supply chain affected international travel and trade among the
various countries. The Australian coal mining industry was negatively impacted from covid-19
pandemic due to the decreased demand from various countries including China and India. A
report of Australian Bureau of Statistics shows that coal exports had fallen around 11% in the
year 2020, compared to the previous years. It led to loss of billions of dollars of revenue for the
Australian economy.

The covid-19 pandemic had highlighted the externalities that are associated with the Australian
coal mining industry. Externality is the concept which refers to the unintended cost or benefit
which affect the parties that are not directly involved in the transaction. In case of Australian,
coal mining industry, the negative externalities of the industry are air pollution, degradation of
land, Health impacts on the local people and so on10. During the covid-19 pandemic, the health
risk associated with air pollution, and other environmental aspects of the coal mining industry,
which effects the local community and the worldwide community was focused upon11. One of the
key insights that came from covid-19 pandemic was the importance of diversifying Australian
economy from the coal mining industry.

Conclusion

Coal mining industry is considered to be one of the most important industries in Australia. The
coal mining industry of Australia can become best characterized by the oligopoly Market
structure due to the dominance of few large firms, High barrier to entry for the new firms. The
interdependence among firms in the prices and quantity. The imperfect competition, the
influence over price and so on. There are various factors in which the Australian coal mining
industry differs from other Market structures Australian. Coal mining industry is characterized by
oligopoly Market structures and it differs from other Market structures in terms of barriers to
entry differentiation in product, interdependence among the firms in Market. The impact of
covid-19 pandemic in Australian coal mining industry was significant. There was decrease in
demand of coal from all over the world; there was decrease in prices and it led to significant loss

10
https://www.sciencedirect.com/science/article/abs/pii/S030142072100026X
11
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7084742/
in revenue and profitability of the coal mining firms. The pandemic also highlighted the negative
externalities that are associated with coal mining industry12

12
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8177661/