It was a busy second day at Diggers and Dealers 2018, with nickel taking centrestage. Here's what happened.
Nickel looks set to play a major role in Kalgoorlie’s future, despite cost hurdles causing headaches for developers.
BHP Nickel West is planning to build three new nickel mines in the north of the Goldfields region over the next two years, in a move that’s set to create hundreds of jobs.
The company is just waiting for environmental approval from the WA Government before work can start at its Mt Keith satellite project, Yakabindie, in January. Next to be developed is the 40-year-old Leinster mine where stoping will begin in the middle of 2019, and pre-commitment funding and development have also started on the Leinster B-11 ore body, beneath the mothballed Perseverance mine. If approved, that mine alone is set to deliver 600,000 tonnes of ore to the Leinster Concentrator each year from 2020.
Mining People Managing Director Steve Heather said it looked like nickel, which is being buoyed by the rise of electric batteries and the renewable energy industry, is “moving into a good space” and that was great news for employment in Kalgoorlie.
“When you’ve got a company like BHP, who a few years ago were trying to sell their nickel assets, now turning around and potentially trying to turn their nickel assets into something quite significant, that tells you something,” he said.
“Then you’ve got the famous Kambalda Dome, which was discovered 50 years ago and has basically been dormant for five years. All those companies are firing back up again. That’s going to be fantastic for employment in Kalgoorlie and also for the broader industry.”
But it wasn’t all good news for nickel, with Western Areas Managing Director Dan Lougher questioning whether the oncoming battery boom would make high-cost projects viable for mining companies hoping to develop assets to take advantage of the battery minerals boom. Specifically, large-scale nickel laterite mines can be expensive to develop and operate because of the intense and tricky extraction process required.
Mining’s marketing problem
Heather said a continuing theme of day two of Diggers and Dealers had been concern about emerging cost pressures in areas like salaries.
Cost pressures are caused by a simple supply and demand calculation – there’s a skills shortage so those who are available for work can demand more money.
Jake Klein, Executive Chairman of Evolution Mining, told the forum the problem was one that needed a long-term solution.
“I think it’s something that the nation, the country and sector needs to think about over a 20-year profile, because we’ll get through the next few years,” he said.
“But in the next 20 years how do we position ourselves as a global leader where people come and want to study and skill up in Australia because we’re known as the best?”
Heather agreed there was no quick fix for the problem.
“I don’t think the mining industry has got its head around exactly what it’s going to take,” he said. “It’s a ‘whole society’ approach to change the general public’s perceptions of what the mining industry is about. At the moment, they have no idea and it’s quite easy (for those against mining) to get a negative campaign up.”
That’s a topic Heather has written about before. You can read more here. (Scroll down to the heading A course of action to save mining’s reputation.)
Gaines plays straight bat on Atlas
And lastly, a real highlight of day two, Heather got to ask a question of Fortescue Metals Group chief executive Elizabeth Gaines.
FMG and cross-town rival Hancock Prospecting are engaged in something of a tug of war over loss-making miner, Altas Iron, a company in which both have shares. FMG had a 19.9% stake in the business but last week revealed it had sold down to 11.37% — meaning Gina Rinehart’s Hancock would not be able to get the 90% shareholding required to trigger the ability to compulsorily acquire the company.
“I asked her what motivated you and the board to buy 19.9% of the shares in Altas Iron,” Heather said. “And she played a pretty straight bat!”
Her response? It’s a strategic stake.
“It’s in our backyard and it’s in the iron ore sector so, as we said in the statement yesterday, we’ve taken a long-term view on the prospects and the fundamentals of the iron ore sector in the Pilbara,” she said.
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