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Statement - Economic benefits of gas-based manufacturing - 21 September 2020

Statement attributable to Chemistry Australia CEO Samantha Read:

Contrary to recent statements suggesting lower gas pricing will only have a modest impact on local employment, the use of natural gas by the chemistry and broader manufacturing sector adds significant value to the Australian economy.

As found by Acil Allen Consulting in the Chemical Sector Economic Contribution Analysis report, the business of chemistry contributes $38 billion annually to Australia’s GDP and supports the employment of hundreds of thousands of Australians thanks to its role as a critical enabler of almost every industry in Australia.

The Australian chemistry sector is a major consumer of gas, which drives direct employment of 61,500 Australians in highly skilled full-time equivalent jobs and underpins employment of 212,000 people in related supply chains.  According to Acil Allen, the sector generates more than 1,600 full time equivalent jobs and $286 million of economic value for every petajoule of gas it uses.

As a supplier to 108 of Australia’s 114 industry sectors, the chemistry industry is highly integrated in local supply chains within regional and metropolitan economies.  This results in the transfer of investment and growth through upstream and downstream supply chains, creating an important multiplier effect for jobs in every state in Australia.

The sector’s supply chain centrality also results in direct and indirect contributions to the economy through value-adding, as it purchases goods and services including energy, raw materials, engineering and other contract services.  The industry’s employees generate even further economic activity as they spend their income in local communities.

Gas is used in three ways by small, medium and large chemistry sector companies – as non-substitutable raw material feedstock for larger firms; a source of process heat for steam and other energy needs; and through gas-powered electricity generation consumed for manufacturing.   For these businesses, gas can represent between 35 to 50 per cent of input costs.

The sector uses approximately 3 per cent of Australia’s annual gas production to create a broad range of products that are crucial to critical supply chains underpinning our economy. These include:

  • Fertilisers and crop protection for farming
  • Medical and industrial gases
  • PPE, hygiene and cleaning products 
  • Explosives and other chemicals used in mining
  • Polymers for safe food storage, water storage, piping, irrigation and other infrastructure 
  • Water treatment and sanitation chemicals
  • Various chemicals and polymers that are essential for building and construction

Australia has an opportunity to add significantly more value to its abundant gas resources through access to reliable, affordable energy for consumers.

Globally competitive input costs will be essential for Australia to retain its industrial base and underpin further investment in technologies that provide solutions to our future challenges such as emissions reduction and developing a more circular economy.

Investment in gas-based manufacturing industries will also provide vital employment opportunities for Australia’s STEM graduates, ensuring Australia is equipped with the workforce and skills to respond to these challenges.

As Australia looks to rebuild its economy and society, it’s especially important we secure the local manufacture of essential products to strengthen our sovereign capability and ensure Australian is best placed to realise the benefits of these significant value-add activities.

Listen to our podcast to learn more about gas-based manufacturing and the economy.

 

Media contacts:

Shayna Welsh – swelsh@chemistryaustralia.org.au or 0448 660 443


Chemistry Australia is the pre-eminent national body representing the Australian chemistry industry, one of the largest manufacturing sectors in the country. The industry supports more than 212,000 full time jobs and contributes more than $38 billion to Australia’s GDP. Members of Chemistry Australia are positioned across the entire value chain including manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, fabricators, compounders, recyclers, research, academia and service providers to the industry. These businesses range from small family-owned companies to leading national and multinational enterprises.


 

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