Western Australia’s economy is largely driven by extraction and processing of a diverse range of mineral and petroleum commodities. The structure of the economy is closely linked to the abundance of natural resources found in the State, providing a comparative advantage in resource extraction and processing. As a consequence:
• The Western Australian economy is more capital-intensive than all the other states.
• Diversification (i.e. a greater range of commodities) over the past 15 years has provided a more balanced production base and less reliance on just a few major export markets, insulating the economy from fluctuations in world prices to some extent.
• There has been strong growth in the services (finance, insurance and property) and construction sector, which have increased their share of economic output.
• Recent growth in global demand for minerals and petroleum, especially in China (iron-ore) and Japan (for LNG), has ensured economic growth above the national average.
The state’s major export commodities include iron-ore, alumina, crude oil and liquefied natural gas (LNG), nickel, gold, ammonia, wheat, wool, and live sheep and cattle.
Western Australia is a major extractor of bauxite, which is also processed into alumina. It is the world’s third-largest iron-ore and extracts large quantities of gold. Diamonds are extracted at Argyle diamond mine in far north of the Kimberley region. Coal mined at Collie is the main fuel for baseload electricity generation in the state’s south-west.
Agricultural production in WA is a major contributor to the state and national economy. Although tending to be highly seasonal, 2006-07 wheat production in WA was nearly 10 million tonnes, accounting for almost half the nation’s total. and providing $1.7 billion in export income. Other significant farm output includes barley, peas, wool, lamb and beef. There is a high level of overseas demand for imports of live animals from WA, driven mainly by South East Asia’s feedlots and Middle Eastern countries, where cultural and religious traditions and a lack of storage and refrigeration facilities favour live animals over imports of processed meat. Approximately 50% of Australia’s live cattle exports come from Western Australia.