BHP Billiton's Economic Analysis

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This essay will look at BHP Billiton a mining company, which operates in the oligopolistic market in Australia. The emphasis would be to use the tools of economic analysis to illustrate how a current domestic Australian government policy could affect the business and its competitiveness. Dunning (2014) explains oligopoly as a market situation where there are only a few number of sellers and large number of buyers. This can result in reduced competition and higher prices for consumers. The chosen business is BHP Billiton. It is an Anglo-Australian multinational mining, metals and petroleum company headquartered in Melbourne, Australia. BHP Billiton (2014) official website states that it is the world's largest mining company measured on 2013 revenues. BHP Billiton dominates in the copper market in Australia. BHP Billiton has almost 40% of market share in Australia for mining and resources industry. Other competitors in mining industry includes Rio Tinto, Adani Group, Alcoa Anglo American Company etc. The extent of market share of BHP Billiton has in Australia for Copper mining alone is shown in figure 1. Figure1: Top ten company holdings of economic demonstrated resources of copper in Australia. Source:…show more content…
The reason why a government may influence the market is to control it and ensure that no unfair practices are being carried out and that all the suppliers and consumers are protected. Barnett & Morse (2013) state that a government sets legal and institutional frameworks for markets in order to ensure best outcomes for consumers, companies and government. They usually influence markets through either direct participation or indirect participation. The types of market interventions government uses would be many and some of them are acting as a supplier, acting as a buyer, taxes and subsidies, regulation and influence(Dunning ,
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