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How To Start a Small Mining Company or Become a Mining Supplier In Australia

Are you looking to explore natural minerals and rocks present in your area for a commercial purpose? If you and your team want to own a mine or own a mining company to extract these resources or become a mining supplier to sell extracted resources to companies, governments or individuals, this article can provide guidance on starting your own mining business. 

Starting a mining business can be a risky venture because the price of metals and other commodities are inherently volatile. Accordingly, this may have significant impacts on the business’ profitability. Although the risks are material, consistent hard work, thorough planning and a bit of luck are key elements to success within this lucrative industry.

Read on to learn more about how to start a mining business.

Table of Contents

What does a small mining company/ supplying business entail? 

A mining business works with extracting natural rocks and minerals from the Earth that is used for commercial purposes. A small mining company or supplying business uses a small workforce with basic tools to extract the minerals and supplies to a few partners/local retailers. 

Mining businesses can commercially provide minerals to energy production companies, jewellery businesses, etc. 

Getting started: The Pre-Planning Steps

To have a successful mining business, it is necessary to understand the industry itself. Although it may be difficult to begin directly mining a region, you can offer a number of services to start. These services include consultancy, transportation, machine sales, risk assessment services, equipment leasing and safety services. Accordingly, it is necessary to understand these specific areas of the mining industry.

This means having practical, theoretical and technical expertise required for the business. There are a number of ways to build these skills. A few of these educational channels include tertiary classes, as well as online tutorials.

Further, given the volatile nature of the mining industry, it is necessary to stay up to date with the news and trends occurring. This will be a significant portion of the continued learning that will be necessary to succeed.

Research 

Further, given the volatile nature of the mining industry, it is necessary to stay up to date with the news and trends occurring. This will be a significant portion of the continued learning that will be necessary to succeed.

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Create a Business Plan

Creating a business plan is essential for your long-term success. Business plans should cover the direction of your business, competitors in your area or sector, funding options, costs and expenses as well as projected profits and growth plans. This is a document that you can produce to investors to secure funding. 

Find out how to write your own business plan here.

Your business plan can also help you answer the following questions:

  • What kind of business am I establishing?

You will need to determine if your small mining business will mine a variety of resources, only minerals, only gems, a certain resource, etc. 

  • What kind of customers can I attract?

Your small mining business will require a customer base in order for commercial success. If you are planning to mine gemstones, your potential clients could range from local gemstone-dealers and jewellery stores to individual gemstone enthusiasts. 

Acquire Funding

You can organise your spending by creating an estimate of your monthly, quarterly and annual profits. This can help you in determining if you will need to acquire additional funding, either through personal savings, loans, or investors to fund your business before your profits are able to cover your operation costs. 

Establish Your Business

Although establishing your mining business can be intimidating, a simple checklist can ease this process. In Australia, you should prioritise the following:

  1. Registering your business

Your mining business, like all businesses in Australia,  needs to be registered. In order to register your business you will need to apply for an Australian Business Number (ABN) using your business name to be able to operate in Australia. An ABN also enables you to apply for the goods and services tax (GST) concessions.

  1. Open a business bank account to separate your funds
  2. Seek legal assistance to create legal contracts to use with your clients

For further information, please see the Australian Business License and Information Service to learn about the laws you need to follow based on the specifics of your business.

How to Choose the Best Business Structure 

The success of your business can also be dependent on the structure you choose for your business. Some business structures can provide risk-protection and tax-benefits whereas some might create higher tax-liability than other structures. 

  • Sole trader: This can be a low-cost option for an individual running the business. A sole-trader and their company are considered the same entity and hence they are responsible for the company’s debts and obligations.
  • Partnership: A partnership is controlled by two or more people who also share the debts and obligations of the company.
  • Company: A company has a complex structure and can legally sue and be sued. In other words, it is a legal entity in itself. Companies are incorporated under the Corporations Act 2001 (Cth) and are governed by the Australian Securities and Investments Commission (ASIC).

You can decide your business structure based on some of the following factors:

  1. Ownership: If you want to co-own the company with another partner, you can register as a partnership. Here, the obligations of the company will be divided out between the partners.
  2. Taxation: In ​​Australia a company has a lower tax rate than the highest tax bracket for individuals. Therefore, registering as a company can have lower tax obligations. However, companies might have higher regulatory costs.

Sourcing the right employees for your business

Your company will also require employees to manage clients, load, store and ship goods. Employees might also be required for book-keeping, cleaning, packaging, etc. You need to determine if you want to hire casual, part-time or full time employees for your business.

  • Part-time employees: Part-time employees generally work for less than 38 hours a week. They can still receive some employment benefits, such as sick-leaves or annual leaves, on a pro-rata basis. 
  • Full-time employees: Full-time employees work consistently for fixed pay, subject to change on employer discretion. Generally full-time employees receive a wide variety of employment benefits such as sick leaves, health insurance, etc. 
  • Independent Contractors: Independent contractors are freelancers or individuals who offer their services for a fixed period of time to a company for a fixed price. 

Here is a webinar on how to hire the right employees for your business.

https://www.youtube.com/watch?v=kYV6NYJETBI&ab_channel=Lawpath

Advertise your business

Now that you have set up your business and hired a group of talented employees, you will also need to set up a marketing team to advertise and market your warehouse to potential clients. Your marketing team would run outreach programs, use social media or new outlets to advertise your products and services to the right audience. With effective marketing you can quickly create a loyal customer base. 

Mining Supply Business and the Legalities 

Once you are set to start your business, you will need to apply for a mining licence depending on the region where your mining business will be operational. 

  • Queensland: In Queensland, you need to apply for a mining lease. Before the lease is granted, you will need to meet approval requirements, such as environmental approvals, native title and Aboriginal cultural heritage agreements, private landowners compensation and addressing any objections to the application. 
  • Western Australia: In Western Australia, you need to apply for a mining licence subject to approval on other requirements such as 
  • Tasmania: You can apply for a mining licence based on the mineral you are hoping to extract. 
  • New South Wales (NSW): In NSW, you can apply for an exploration or mining lease. If you apply for a mining lease you must demonstrate that the area has viable resources in the area and that you have the funding to conduct mining.
  • Victoria: You can apply for an exploration licence, a mining licence, a prospecting licence, retention licence or buy a miner’s right to conduct any mining activity in Victoria.
  • South Australia: You can apply for a mining licence or exploration licence based on your needs in South Australia. An exploration licence does not grant mining rights.

So, depending on your area of operation, you can apply for licences and permits. You can only begin mining activity upon approval of your mining permit. This can be a complicated process. Talking to a lawyer can help streamline this process. 

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FAQs

  1. Can I mine on a prospecting licence?

You cannot mine on a prospecting licence. A prospecting licence only allows you to conduct a survey of the space, to check for existing mineable minerals. 

  1. Can I mine in all parts of Australia if I have a South Australia mining licence?

No, you will need to apply for regional mining permits and licences.

  1. Can I extend my mining lease?

Mining lease in Australia is generally granted for up to 21 years with the option to renew your lease.

Conclusion 

Natural resources are limited and hence can be extremely profitable to mine and supply. If you are ready to own your small mining business or become a mining supplier, you can reach out to a lawyer to ensure your business is compliant with existing laws.

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