Two recent world-class discoveries have turned the light even brighter on Australia’s premier resources industry destination – Western Australia (WA).
De Grey Mining’s (ASX: DEG) dazzling Hemi gold discovery in WA’s Pilbara region, and Chalice Mining’s (ASX: CHN) nickel-copper-PGE found just 70km north of the capital of Perth, have displayed that WA’s mineral riches are still out there to be found for junior explorers.
Significantly, both discoveries were made in areas that many had bypassed as they headed to richer and “more promising” grounds. Now, both discoveries have opened exciting new “plays” and attracted significant new exploration funding into Australia’s largest state. WA’s ongoing exploration success is also reflected by the funds being invested in development projects.
Chamber of Minerals and Energy (CME) chief executive, Paul Everingham, recently stated that WA’s mining and resources sector is one of the most advanced, innovative, and successful in the world.
He said WA not only has abundant natural resources, but the sector has a strong track record of extracting and refining them to benefit communities around WA and across Australia.
“In order to maintain our status as a world leader, it’s vital that industry, the government, and communities continue to collaborate to unlock the potential of the A$140B of projects currently in the sector’s pipeline in WA.”
While the Fraser Institute shuffled WA back from number one to number four in its annual mining jurisdiction survey earlier this year, there is no doubt WA is a world leader in many areas.
The WA resources sector continues to successfully navigate the global COVID pandemic and managed to deliver mineral and petroleum sales valued at a record A$210B in 2020-21. This smashed the previous single highest calendar year or financial year sales value of A$177B set in 2020.
The result was largely driven by the iron ore industry, which recorded sales valued at a massive A$155B.
WA has played a major role Australia domination as the world’s leading iron ore producer – with the nation’s current exports more than double its closest rival.
Golden bounty
Australia recently superseded the number one position from China as the world’s leading gold producer and WA is the dominant player in the nation’s gold market.
Gold mining in WA is the third-largest commodity sector in the state with a value of A$11.9B.
WA’s gold sales were valued at A$16.6B in 2022/21, up by 4% from 2019-20, with nearly 6.7Moz of gold sold during the year. Australia has 14 of the world’s biggest gold mines, 11 of which are in WA.
About 60% of Australia’s gold resources occur in WA, with the remainder in all other states and the Northern Territory.
Other metals
According to the government of Western Australia’s latest statistics release, softer prices from a regional market oversupply and related demand weakness meant that the value of alumina and bauxite sales declined to $A5.6B in 2020-21. This was despite the quantity of alumina and bauxite sales increasing to a record 14.4M tonnes and 1.8M tonnes respectively.
The report goes on: “The value of nickel sales was A$3.5B – the industry’s highest sales value in seven years. This was largely due to the price of nickel increasing to a level previously reached eight years ago, to new mines, and to improved operational stability. The ramp-up of the sales quantities also increased 3% year-on-year from the rising output of the Nickel West operations following the start-up Ravensthorpe project, which restarted in the first half of 2020.
“Base metals sales were up to A$1.7B (up 6% from $A1.6B in 2019-20), the highest level since 2014. This was primarily due to a spike in copper prices to record levels of more than A$10,000 per tonne due to supply constraints, increased demand from COVID-19 economic stimulus measures, and a weak U.S. dollar. Higher prices offset a fall in sales quantities to a decade low as many of WA’s producers reported lower volumes and the Nifty operations were suspended in November 2019.
“Market conditions in the lithium sector reached bottom at the end of 2020 amid excess spodumene concentrate supplies and issues further down the supply chain. The turning point came in the new year and with strong electric vehicle sales, as well as concern over future supply. These factors saw average monthly prices grow 65% from A$526 per tonne in December 2020 to A$870 per tonne in June 2021. In a sign of improving market conditions, sales quantities were up for the first time in three years as projects, including Mt Cattlin and Pilgangoora, moved back towards capacity, offsetting the suspension of Altura Mining’s operations in October 2020. WA’s spodumene concentrate sales were valued at A$938M.”
The report shows that the remaining major minerals sales included:
- Mineral sands sales of A$824M (up 6% on 2019-20)
- Other mineral sales including rare earths and manganese of $657M (up 3%)
- Salt sales of A$553M (up 47%)
- Coal sales of A$306M (down 6%)
- Cobalt sales of A$294M (down less than 1%)
- Silver sales of A $153M (up 40%)
- Diamond sales of A$112M (down 60%)
Battery metals: production
- Like other jurisdictions across Australia, battery metals have become a major focus in 2021.
- WA is the world’s largest producer of mined lithium and produces most other battery minerals
- It accounted for 49% of global lithium production in 2020, followed by Chile (22%), China (17%) and Argentina (8%)
- WA also ranked among the top five global producers for cobalt (4% of global share), rare earths (7%) and nickel (7%) in 2020
Battery metals: reserves
- WA has globally significant battery minerals reserves of a quality suitable for battery manufacturing
- WA accounted for 21% of the world’s lithium reserves in 2020 and has the world’s second-largest lithium reserves behind Chile (44%)
- WA accounted for 19% of the world’s nickel reserves in 2020 and has the world’s second largest nickel reserves behind Indonesia (22%)
- WA accounted for over 10% of the world’s cobalt and vanadium reserves in 2020
The value of WA’s estimated battery minerals exploration expenditure rose 31% to A$443M in 2019 20
The state’s attractiveness to battery metal explorers and developers has been reflected in the recent hand out of WA government grants offered to 51 exploration projects.
More than 35% of the drilling projects will be looking for battery minerals with 73% of those searching for nickel. Other battery commodities on the companies’ exploration list include manganese, lithium, tantalum, rare earth elements, and cobalt.
“The race to find battery minerals underscores the McGowan government’s goal to position WA as a global powerhouse in the export of future battery minerals and materials,” West Australian Mines and Petroleum Minister, Bill Johnston, noted in announcing the grant allocations.
