Minister Madeleine King calls urgent industry sit-down as WA’s nickel, lithium woes spiral into crisis

Federal Resources Minister Madeleine King has called an urgent meeting with her WA counterpart and industry heavyweights as the State’s critical minerals industry implodes on price pressures. The announcement follows Andrew Forrest’s Wyloo Metals shuttering its nickel mines in the Goldfields earlier on Monday, seeking to cauterise financial wounds that are likely well into the hundreds of millions of dollars for the mining billionaire. That announcement has already had a flow-on impact to BHP’s Nickel West, which will put some operations into care and maintenance. Minister King and WA Mines Minister David Michael will meet in Perth on Thursday with nickel and lithium producers, as well as mining peak bodies and unions, to discuss the mounting challenges facing the industry and the government’s response to the crisis. Ms King said though commodities traditionally go through natural and cyclical boom and bust cycles, the current state of the lithium and nickel markets is cause for worry. “The potential prolonged impact this could have on Australia’s energy transition, local workforce and development of Australia’s minerals sector is a matter of great concern,” she said. “I will be working with industry and experts to develop an urgent plan to ensure we can turn the world leading reputation of our resources industry into an advantage in the international market for our local companies. “I am determined to ensure Australian miners can continue to compete with cheaper and lower grade and high carbon intensity minerals produced elsewhere.” Nickel has been hardest hit as technological advancements have enabled Indonesia to flood the market with cheaper, low-grade nickel ore, which has pushed prices down severely and made many WA operations untenable. The structural shift has put more than 1000 WA jobs on the chopping block with Panoramic’s Savannah nickel mine in the Kimberley the first to fall earlier this month, followed by First Quantum Minerals’ Ravensthorpe operation ceasing mining. The downturn reached a new nadir on Monday after Wyloo said it would put two mines out in the Goldfields on care and maintenance, which would have an immediate ripple effect on WA jobs at customer BHP. Twiggy’s immense iron ore operations will keep the cash flowing for the mining billionaire, but his latest unsuccessful foray into nickel has been a very costly exercise. In July Mr Forrest closed a deal to buy the mines’ original owner, Mincor Resources, for $760m. The deal for Mincor has parallels with IGO’s ill-fated $1.3 billion purchase of nickel miner Western Areas in 2022. IGO has written down the value of its acquisition by nearly 75 per cent and applying that metric to the nearby Mincor assets carves out $570m of paper wealth from Twiggy’s net worth. But a spokeswoman for Wyloo said comparisons could not be drawn given when the mine was acquired and the differences between the two projects. In its final quarter before being swallowed up into the Forrest empire — when nickel prices were strong — Mincor was still watching around $8m of cash go out the door a month. Based on current nickel prices and inflationary pressures, Forrest could have been losing at least $20m of cash per month on top of the $570m writedown. Lithium is also feeling the pain as electric vehicle uptake moves slower than anticipated. On Monday plummeting lithium prices gave bankers cold feet on a $760m funding package to bring Liontown Resources’ Kathleen Valley project in the northern Goldfields — Australia’s next major lithium mine — online. Last week US giant Albemarle pumped the brakes on expansion plans at its Kemerton lithium plant near Bunbury. Major WA lithium player Mineral Resources shed 9.6 per cent of its value today — equivalent to about $1 billion — as investors digested news of a gloomier-than-expected lithium price outlook by respected industry forecasting firm Wood Mackenzie.