Industries with Most Risky Business Environments in Australia in 2024

1. Coal Mining in Australia

Business Environment Risk for 2024: 7.6

Coal is a key input in steelmaking and energy generation. Although coal deposits are found all over the world, Australia is one of the world's lowest cost producers and a major coal exporter. Domestic reserves exceed domestic demand, are high grade and economical to access. As a result, exports account for a large share of coal mining revenue. Imports are negligible, as local production is higher than domestic demand for coal. Black coal mining accounts for most activity, with some brown coal used domestically for electricity generation in Victoria.

Coal mining revenue is expected to grow at an annualised 14.6% over... Learn More

2. Cotton Ginning in Australia

Business Environment Risk for 2024: 7.2

The Cotton Ginning industry is an important part of the agricultural support services and national cotton sectors, and is closely linked to the Cotton Growing industry. Various factors also indirectly affect cotton ginners, like climatic conditions, water supply regulation, cotton stockpiling, and global cotton consumption and production fluctuations. Typically, cotton is harvested and ginned towards the end of the financial year, with any surplus production carried into the following year. Higher cotton production correlates with higher revenue, often with a one-year delay due to the timing of harvest season. The variability of these factors has caused significant revenue volatility in... Learn More

3. Credit Unions and Building Societies in Australia

Business Environment Risk for 2024: 7.1

The Credit Unions and Building Societies industry has faced challenging operating conditions over the past few years. While low interest rates after the COVID-19 outbreak cut into interest income generated on providers' loan books, the RBA has since been consistently hiking the cash rate. This trend has elevated interest income through higher interest rates on existing loans, but this factor – alongside drops in consumer sentiment – have discouraged people from entering new mortgages or loans. In particular, mortgage affordability has toppled, causing potential buyers to put off purchasing property. Many credit unions and building societies have pivoted to providing... Learn More

4. Non-Depository Financing in Australia

Business Environment Risk for 2024: 7.0

The Non-Depository Financing industry has grown on the back of increased loan volumes. The low interest rate environment that characterised the Australian lending landscape for most of the past five years lowered profit margins for non-bank lenders, but also spurred on higher volumes of activity with many businesses and households feeling empowered to take out loans, even without deposits. Tighter lending standards placed upon conventional banks in the wake of the Banking Royal Commission have indirectly benefited non-bank lenders, with many borrowers looking to them for easier and less restricted access to loans. Strong housing market growth and capital expenditure... Learn More

5. Iron Ore Mining in Australia

Business Environment Risk for 2024: 7.0

Iron ore miners have benefited from major increases in iron ore prices, and modest growth in production volumes over the past five years. Iron ore revenue is expected to increase at an annualised 8.1% over the five years through 2022-23, to total an estimated $124.1 billion. Strong demand from China and disruptions to iron ore producers in Brazil prior to, and during the COVID-19 pandemic, sent iron ore prices soaring. Iron ore prices are projected to fall in 2022-23, prompting iron ore revenue to drop an estimated 16.2% over the year.

Over the past decade, strong economic growth in China has... Learn More

6. Oil and Gas Extraction in Australia

Business Environment Risk for 2024: 7.0

Oil and gas producers have experienced significant revenue volatility. Changes in oil and gas prices, exchange rate movements, annual production volumes, and domestic and export demand for oil and gas all influence performance. Output has expanded over the past decade, while world oil and natural gas prices have displayed significant volatility.

Australia's natural gas production, which makes up most of the industry has soared over the past decade as new gas fields have been developed to feed Australia's liquefied natural gas (LNG) facilities. Global trade in LNG has expanded with growing demand for LNG in Asian markets and weakness in the... Learn More

7. Foreign Banks in Australia

Business Environment Risk for 2024: 6.8

The Foreign Banks industry includes domestic subsidiaries of foreign banks, and branches of foreign banks, all of which have grown over the past few years as soaring interest rates has contributed to a sharp rise in revenue. The Reserve Bank of Australia (RBA) maintained a relatively low cash rate over much of the past decade, especially in response to the COVID-19 pandemic to stimulate economic activity. In May 2022, this all changed as inflation rose quickly, leading to the fastest and largest hike cycle on record. These trends combined to ensure an explosion in revenue in 2022-23, especially after a... Learn More

8. Coal Seam Gas Extraction in Australia

Business Environment Risk for 2024: 6.8

Revenue for the Coal Seam Gas Extraction industry has been significantly volatile over the past five years. Technological developments have reduced the cost of exporting natural gas, encouraging investment in export facilities and new gas fields in Queensland over the past decade. Three international consortiums have invested $69.7 billion in constructing three gas liquefaction and export facilities on Curtis Island near Gladstone, QLD, and in associated gas wells and pipelines throughout the state. Queensland Curtis LNG exported the world's first LNG produced from CSG in late December 2014, with five other LNG export trains becoming operational over the three years... Learn More

9. Road and Bridge Construction in Australia

Business Environment Risk for 2024: 6.7

The injection of public funding and progress on landmark public-private partnership (PPP) developments has underpinned record levels of activity in the Road and Bridge Construction industry and supported an improved profit performance. Many of the industry's smaller contractors also benefitted from growth in roadwork on residential subdivisions in response to the surge in house construction under the Commonwealth's HomeBuilder stimulus. Industry revenue is expected to climb at an annualised 0.6% through 2023-24 to reach a record $34.9 billion, with the pace of expansion moderated by the commencement and completion of large-scale motorway, bridge and tunnel developments.

Public sector funding by each... Learn More

10. Petroleum Refining and Petroleum Fuel Manufacturing in Australia

Business Environment Risk for 2024: 6.6

The Petroleum Refining and Petroleum Fuel Manufacturing industry has faced highly volatile conditions over recent years, as the COVID-19 pandemic wreaked turmoil on global energy supply chains. The global situation filtered down to Australia's petroleum market, contributing to the closure of two of Australia's last four remaining oil refineries. BP closed its refinery in Kwinana, while ExxonMobil shut down the Altona refinery. The closures resulted in these two energy giants leaving the industry altogether. Both the closed refineries were converted into import terminals, which meant that they directly intensified import competition in the industry. Overall, industry revenue is expected fall... Learn More