Research and analysis

Extractive industries in the UK

Published 20 December 2019

The extractive industries comprise mining and quarrying, including oil and gas production. The sector has made a sizeable contribution to the UK economy for many years and remains an important sector, both directly and by supporting substantial added value in downstream industries and related supply chains. By far the largest economic contribution comes from oil and gas production.

In 2018, total UK extractive industry gross value added (GVA) is now estimated to have been £18 billion, with oil and gas production and associated support service activities accounting for 90% of the sector’s GVA^{[footnote 1]}. The oil and gas industry was directly responsible for 40,000 jobs in 2018, with many more supported in the industry’s wider supply chain. It is estimated that in total 260,000 jobs across the UK were supported by the offshore oil and gas industry in 2018.

Construction minerals, principally crushed rock and sand and gravel aggregates, represent the largest materials flow in the UK. The market for these minerals depends upon the level of UK construction activity and longer-term construction-related demand.

Ahead of collection and publication of information on extractive-related payments to the UK government in 2018, the UK EITI Multi-Stakeholder Group (MSG) decided to exclude payments made by coal mining companies to the Coal Authority from this year’s reconciliation. These payments are no longer material relative to overall government revenues and the MSG believes that their exclusion will not affect the comprehensiveness of UK EITI reporting. The continuing economic contribution of the coal sector is, though, still included in the background information set out below.

Figure 1. Extractive industry gross value added (GVA)

Source: ONS, UK GDP(O) low level aggregates, 30 September 2019.

In some of the summary information below, coal is grouped with oil and gas (for example where data are available for fossil fuels but not for other parts of the sector). However, for most of this chapter, oil and gas are treated separately from mining and quarrying, including coal. In addition, it should be noted that the phrase “mining and quarrying” as used in UK national statistics embraces the whole UK extractive sector including oil and gas production as well as coal production. Mining support services are also included in this sector. Some of the data reported below include those activities while other data exclude them.

Value of the sector

Table 1 shows GVA for the main components of the mining and quarrying sector as reported in UK national statistics. As noted above, this sector includes fossil fuel production, other mining and quarrying and mining support service activities, but excludes the value of products manufactured with extracted minerals. The table gives for each subsector its percentage share of total UK GVA for the most recent year. It also shows the whole sector’s GVA as a percentage of national gross domestic product (GDP) for each year^{[footnote 2]}.

Table 1. Gross Value Added (GVA) (£ million)

Year	Extraction of crude petroleum and natural gas	Mining of coal	Other mining and quarrying	Mining support service activities	Total mining and quarrying including oil and gas	Total UK GVA	Total UK GDP	Extractives share of total GDP
Calculations	(A)	(B)	(C)	(D)	(E) = sum of (A) to (D)	(F)	(G)	(E) / (G)
2014	15,743	189	1,514	2,046	19,492	1,660,188	1,844,295	1.06%
2015	9,339	167	1,679	2,227	13,412	1,709,325	1,895,839	0.71%
2016	8,403	138	1,680	1,289	11,510	1,778,134	1,969,524	0.58%
2017	8,809	176	1,572	1,470	12,027	1,846,694	2,049,629	0.59%
2018	14,703	164	1,539	1,611	18,017	1,923,440	2,117,724	0.85%
%*	0.76%	0.01%	0.08%	0.08%	0.94%	100%

*The percentages in this row are shares of total UK GVA for all industries in 2018.

Source: ONS, UK GDP(O) low level aggregates, 30 September 2019, ONS, UK Economic Accounts: main aggregates, 29 September 2019

The following tables give a finer breakdown of the sector in the latest recent year for which data are available to give a sense of the scale of activity in each subsector. Although the GVA data in the first table and the one above are sourced from official Office of National Statistics (ONS) data, they are not identical. Note that in value terms support service activities are almost entirely related to extraction of petroleum and natural gas.

Table 2. Mining and Quarrying (including Oil and Gas) – number of enterprises, GVA and employment costs in 2017

SIC 07 Code	Description	Number of enterprises	Approximate gross value added at basic prices (aGVA)	Total employment costs
		Number	£ million	£ million
06	Extraction of crude petroleum and natural gas	159	15,423	2,027
09.1	Support activities for petroleum and natural gas extraction	215	*	1,657
08.11	Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate	222	1,040	429
08.12	Operation of gravel and sand pits; mining of clays and kaolin	161	797	370
08.92	Extraction of peat	16	24	10
08.93	Extraction of salt	8	117	29
09.9	Support activities for other mining and quarrying	169	*	20
B	Mining and quarrying	1,261	20,103	4,729

Source: Annual Business Survey, 7 November 2019

Note: SIC = Standard Industrial Classification (in which, in the 2007 edition which is still used to classify UK industries, mining and quarrying including oil and gas make up Section B which comprises Divisions 05–09).

Table 3. Number of businesses in the private sector and their associated employment and turnover, by number of employees and industry division, UK, start 2019

All business	Businesses number	Employment thousands	Turnover £ million
05 Mining of coal and lignite	15	*	*
06 Extraction of crude petroleum and natural gas	785	13	20,868
07 Mining of metal ores	5	*	*
08 Other mining and quarrying	1,950	22	6,106
09 Mining support service activities	5,775	26	6,435
B Mining and quarrying including oil and gas	8,530	61	33,409

All employers	Businesses number	Employment thousands	Turnover £ million
05 Mining of coal and lignite	15	*	*
06 Extraction of crude petroleum and natural gas	90	12	20,835
07 Mining of metal ores	0	*	*
081 Quarrying of stone, sand and clay	315	18	5,598
089 Mining and quarrying n.e.c.	180	2	421
08 Other mining and quarrying	500	20	6,019
091 Support activities for petroleum and natural gas extraction	155	19	5,834
099 Support activities for other mining and quarrying	70	1	102
09 Mining support service activities	225	20	5,936
B Mining and quarrying including oil and gas	830	52	32,790

Notes:
1. n.e.c. = not elsewhere classified; industrial classification follows UK SIC 2007
2. A * symbol replaces data that are deemed to be disclosive.

Source: Business Population Estimates for the UK and Regions 2018, BEIS, 10 October 2019, Tables 6 & 7

Government revenues

UK government accounts cover a financial year running from April to March rather than a calendar year, so most of the data on government revenues are of necessity on a financial year basis. Where possible, calendar year data have (also) been provided. Oil and gas companies have a distinct tax regime, allowing identification of their extractive-related tax payments (and repayments), whereas mining and quarrying companies pay mainstream corporation tax. This means the data for extractive-related tax receipts from mining and quarrying companies cannot be separated out. Details on tax revenues can therefore be found in the separate upstream oil and gas in the UK chapter.

Section 106 payments are made (in England, plus equivalent payments made elsewhere in the UK) to local authorities relating to the granting of planning permission for mining operations to cover, for example, local road and infrastructure improvements. These are the only mandated social expenditure by extractive companies.

There are no non-monetary arrangements between extractive companies and the government in the UK.

Forecasts of UK government oil and gas revenues are published by the independent Office for Budget Responsibility (OBR). The OBR also publishes details of its underlying forecasts of oil and gas production, prices and expenditure broken down between exploration and appraisal, development capital expenditure, operating costs and decommissioning costs.

Table 4 includes environmental taxes paid by the UK extractive industries. These are not extractive-related so are not included in the reconciliation of payments and receipts.

Table 4: Environmental taxes paid by the mining and quarrying sector (including oil and gas)

Revenue £ million	2012	2013	2014	2015	2016	2017	2018
Government revenue from energy taxes	314	321	321	262	177	nya	nya
Government revenue from transport taxes	106	115	116	106	114	nya	nya
Government revenue from pollution and resource taxes	266	284	344	356	407	nya	nya
Total government revenue from environmental taxes	685	720	782	724	698	nya	nya
of which Aggregates Levy	264	282	342	354	405	375	381

The Aggregates Levy was introduced in 2002 and is a tax on sand, gravel or rock that has been dug from the ground, dredged from the sea or imported into the UK. It is generally payable by the quarrying industry but can also apply when aggregate is removed in the course of infrastructure projects. More information available in the Aggregates Levy Bulletin and Aggregate Levy archive.

nya = not yet available

Source: Environmental taxes in the United Kingdom (ONS, 5 June 2019)

Exports

The UK both imports and exports all types of mining and quarrying production but is generally a net importer of each type. Information on trade flows is given in the relevant sectoral sections.

Gross extractives exports in 2018 as reported by ONS amounted to 4% of total UK gross exports by value.

Employment

Table 5 gives estimates of the total UK workforce jobs directly supported by the UK mining and quarrying sector including its major sub-sectors. It also shows the industries are typically capital- rather than labour-intensive and correspondingly represent a significantly smaller share of workforce jobs than of GVA.

Table 5. Workforce jobs estimates (thousands)

Year	Extraction of crude petroleum and natural gas	Mining of coal	Mining of metal ores and other mining and quarrying	Mining support service activities*	Total mining & quarrying including oil & gas	All UK industries
2014	17	4	17	29	68	33,223
2015	18	2	21	30	71	33,763
2016	17	1	21	24	63	34,339
2017	14	1	19	25	59	34,682
2018	12	1	19	28	60	34,914
2018	0.03%	0.00%	0.06%	0.08%	0.17%	100%

*Almost all of this is in support of oil and gas production

Sources: ONS, BEIS DUKES 2019

Table 6 shows estimates of extractive industry employment in Great Britain (the UK excluding Northern Ireland) at a finer level of disaggregation than is available for the workforce jobs estimates for the UK.

Table 7 shows the gender split of employment in recent years for the mining and quarrying sector as a whole. Although the proportion of women in the workforce has declined slightly since 2014 the longer-term trend is more positive; the female share in 1996 was only 7%, less than half the share in 2019. All extractive employment shown in this and subsequent tables is in the private sector.

Table 6. Extractive industry employment in Great Britain and United Kingdom (in thousands)

SIC 2007	Subject	2014	2015	2016	2017	2018
GB 05101	Deep coal mines	1.6	0.9	*	-	0.1
GB 05102	Open cast coal working	1.3	1.1	*	1.2	1.2
GB 05	Mining of coal (1)	2.9	2.0	1.1	1.3	1.3
GB 06	Extraction of crude petroleum and natural gas (2)	16.6	15.7	15.2	12.2	12.8
GB 07	Mining of metal ores	-	-	-	-	-
GB 08110	Quarrying of ornamental and building stone; limestone; gypsum; chalk and slate	6.7	7.4	8.6	7.7	8.2
GB 08120	Operation of gravel and sand pits; mining of clays and kaolin	7.1	7.7	6.9	7.0	7.3
GB 081	Quarrying of stone; sand and clay	13.8	15.1	15.5	14.7	15.6
GB 08910	Mining of chemical and fertilizer minerals	*	1.3	*	*	*
GB 08920	Extraction and agglomeration of peat	*	0.2	*	*	*
GB 08930	Extraction of salt	0.4	0.4	0.3	0.3	*
GB 08990	Other mining and quarrying n.e.c.	1.1	1.3	1.2	0.9	1.0
GB 089	Mining and quarrying n.e.c.	2.7	3.2	2.4	2.0	1.9
GB 08	Other mining and quarrying (other than mining of metal ores)	16.4	18.3	17.9	16.7	17.5
GB 091	Support activities for petroleum and natural gas extraction (3)	25.1	22.4	18.8	18.4	18.1
GB 099	Support activities for other mining and quarrying	0.3	0.4	0.4	0.3	0.5
GB 09	Mining support service activities	25.4	22.9	19.2	18.7	18.6
GB sum of 05-09	Total extractive industries	61.3	58.9	53.4	48.9	50.2
GB (1) + (2)	Fossil fuel extraction	19.5	17.7	16.3	13.5	14.1
GB (2) + (3)	Oil and gas extraction and support services	41.7	38.1	34.0	30.6	30.9
UK 05 & 06	Mining of coal and lignite; Extraction of crude petrol / gas	21	20	18	15	13
UK 07 & 08	Mining of metal ores; Other mining and quarrying	17	21	21	19	19
UK 09	Mining support service activities	29	30	24	25	28
UK sum of 05-09	Total extractive industries	68	71	63	59	60

Notes: (1) Data for 2014 and 2015 come from the provisional rather than revised results. (2) n.e.c. = not elsewhere classified

1. Employment is defined as employees plus working proprietors.
2. Figures are rounded to the nearest thousand and to one decimal place. For example, 2.4 is equal to 2,400 and represents a figures in the range 2,350-2,449. Figures may not add up due to rounding.
3. Cells containing an asterisk (*) represent disclosive data that cannot be published.
4. Cells containing a hyphen (-) represent a zero or less than 50.

Source: ONS, Business Register and Employment Survey (Table 2a)

Table 7: Male / female split of total workforce jobs (thousands) - Mining and quarrying (M&Q) sector and All industries

Year	M&Q Male	M&Q Female	M&Q Total	M&Q Female share	All industries Male	All industries Female	All industries Total	All industries Female share	M&Q share of all industries
2014	56	11	68	17%	17,618	15,843	33,461	47%	0.20%
2015	59	11	70	16%	17,929	16,056	33,986	47%	0.21%
2016	53	10	62	16%	18,135	16,418	34,553	48%	0.18%
2017	49	9	59	16%	18,316	16,568	34,884	47%	0.17%
2018	51	9	60	15%	18,421	16,670	35,091	48%	0.17%
2019	49	9	58	15%	18,643	16,945	35,588	48%	0.16%

Source: Unadjusted data downloaded from Nomis on 18 October 2019

Regional location of extractive industries

Extractive industry employment levels have fallen markedly from their historic peak decades ago, mainly due to the decline of the coal industry, but extractive-related activities still contribute significantly to local employment in a number of regions.

The broad geographic spread of employment in the UK extractive sector (including oil and gas and mining support service activities) is illustrated in Table 8. The concentration of employment in Scotland reflects the dominance of the Aberdeen area in terms of oil and gas-related activity. While the importance of the sector for the Scottish economy is well known, the relatively high share of activity in the East Midlands is also noteworthy.

Table 8: Regional distribution of number of employees in 2018

Location	Extraction of crude petroleum and natural gas	Support activities for petroleum and natural gas extraction	Extraction of petroleum and natural gas	Mining of hard coal from deep coal mines (underground mining)	Mining of hard coal from open cast coal working (surface mining)	Mining of hard coal	Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate	Operation of gravel and sand pits; mining of clays and kaolin	Mining of chemical and fertiliser minerals
London	1,825	400	2,225	0	0	0	20	175	0
South East	175	100	275	0	0	0	175	1,000	0
East	710	175	885	0	0	0	300	600	0
South West	150	100	250	0	0	0	1,250	1,500	0
East Midlands	100	150	250	0	0	0	3,000	600	20
West Midlands	0	5	5	0	0	0	175	500	10
Yorkshire and The Humber	210	250	460	0	0	0	600	700	0
North East	315	50	365	0	300	300	125	175	500
North West	150	300	450	10	20	30	600	600	10
England	3,400	1,500	4,900	10	350	360	6,000	6,000	600
Wales	50	100	150	50	600	650	500	500	0
Scotland	9,050	16,000	25,050	0	300	300	1,250	1,000	0
Great Britain (GB)	12,500	18,000	30,500	75	1,250	1,325	8,000	7,000	600
Sector share of GB Total	0.04%	0.06%	0.10%	0.00%	0.00%	0.00%	0.03%	0.02%	0.00%

Location	Extraction of peat	Extraction of salt	Other mining and quarrying n.e.c.	Support activities for other mining and quarrying	Other mining and quarrying	Mining and quarrying including oil and gas	Region total all industries	Sector share of region total
London	0	0	200	125	520	2,745	5,160,250	0.05%
South East	0	0	15	5	1,195	1,470	4,151,000	0.04%
East	0	10	35	5	950	1,835	2,779,000	0.07%
South West	15	0	125	75	2,965	3,215	2,468,000	0.13%
East Midlands	30	0	75	25	3,750	4,000	2,070,000	0.19%
West Midlands	0	0	40	10	735	740	2,561,000	0.03%
Yorkshire and The Humber	0	0	150	35	1,485	1,945	2,398,000	0.08%
North East	0	0	50	100	1,250	1,615	1,053,500	0.15%
North West	0	350	100	75	1,765	2,215	3,328,000	0.07%
England	40	400	800	450	14,650	19,550	25,976,000	0.08%
Wales	0	0	25	10	1,685	1,835	1,272,000	0.14%
Scotland	20	10	125	45	2,750	27,800	2,509,000	1.11%
Great Britain (GB)	50	400	900	500	18,775	49,275	29,758,000	0.17%
Sector share of GB Total	0.00%	0.00%	0.00%	0.00%	0.06%	0.17%	100.00%

The level of rounding applied varies by estimate. Please see this article for further information on how rounding of Business Register and Employment Survey estimates is applied. ONS Crown Copyright Reserved (from Nomis on 16 October 2019)

Almost all UK oil and gas production comes from fields located offshore. The Oil and Gas Authority (OGA) publishes maps showing the location of oil and gas fields in GB and on the UK Continental Shelf (UKCS). These maps also show which areas are under licence offshore and onshore in Great Britain. The Northern Ireland Department for the Economy (DfE) publishes a map showing which areas are under licence in Northern Ireland, but there is as yet no production there.

The majority of coal production comes from sites in Scotland, England and South Wales, as mapped by the Coal Authority. The mining and quarrying of non-hydrocarbon minerals are widely distributed across the UK. There are no significant hard-rock aggregate deposits in the South and East of England, so these materials are transported for use in these regions from further afield in the Midlands and South West in particular.

UK fossil fuel production and UK energy demand

UK production of fossil fuels has been, and continues to be, significant in terms of meeting UK energy demand. This is particularly true of oil and gas but, nowadays, much less so for coal. While the share of total demand represented by fossil fuels has been declining, they still account for around 4 fifths of total primary energy demand and are currently forecast by BEIS to account for nearly 70% of total primary energy demand even in 2035.

Figures 2 and 3 show the evolution of UK energy demand and production since 2000. The recent decline in coal use and growth in renewables are shown clearly.

Figure 2: UK energy demand

Figure 3: UK energy production

Source: UK Energy in Brief 2019 dataset (BEIS, August 2019), Aggregated Energy Balances showing proportion of Renewables (BEIS, September 2019) and DUKES 2019 (BEIS, July 2019).

Glossary of abbreviations

Term	Definition
BEIS	Department for Business, Energy & Industrial Strategy
billion	one thousand million or 10 to the power of 9
DfE	Department for the Economy
DUKES	Digest of United Kingdom Energy Statistics
EITI	Extractive Industries Transparency Initiative
GB	Great Britain
GDP	gross domestic product
GVA	gross value added
MSG	Multi-Stakeholder Group
OBR	Office for Budget Responsibility
OGA	Oil and Gas Authority
ONS	Office for National Statistics
SIC	Standard Industrial Classification
UK	United Kingdom
UKCS	UK Continental Shelf

1. GVA is a measure of economic output – capturing the value of goods and services produced by a sector – and is often used to indicate a sector’s contribution to the economy. It should be noted that the sectoral GVA data published here are very different from (and often much lower than) those previously published by the ONS. The revised estimates of GVA reflect methodological changes introduced for Blue Book 2019 (October 2019). ↩

2. Generally in this page, unlike in the ONS table and some other official sources, a terminological distinction is made between “oil and gas” and “[other] mining and quarrying”, the latter comprising the extraction of coal and of all non-hydrocarbon minerals. We have included mining support service activities in the total for the sector when calculating its contribution to GDP. ↩