Mineral and petroleum industry activity review 2021
Western Australia’s mining, mineral exploration and petroleum industries employed an average of 156,238 on-site personnel or 123,132 in full-time-equivalent (FTE) terms during 2021, representing another record for a single calendar or financial year.
The mining and mineral exploration industries were responsible for the majority of resources sector employment, with an average of 155,004 people (121,959 FTEs) working in the industries during the year (also a record).
This result reflected strong levels of mining, construction, and exploration activity and the industry’s ability to continue to operate largely without interruption as Western Australia remained sheltered from the most severe impacts of the global COVID-19 pandemic.
The largest number of people were employed in the iron ore industry (79,217 persons or 60,950 FTEs), while gold was the next highest single commodity with average employment of 35,553 persons (29,983 FTEs), followed by the mining of bauxite and processing of alumina (10,090 persons or 6,851 FTEs).
The numbers of persons on mining operations was up for most mineral commodities, with the exception of diamonds (down 254 persons or 256 FTEs) following the end of production at the Argyle operations) and coal (down 142 persons or 36 FTEs amid issues at the Griffin operations).
The biggest contributors to growth in mining industry employment were from sectors enjoying strong market conditions:
- the iron ore industry was up 7,361 persons or 3,613 FTEs;
- the gold industry was up 2,397 persons or 2,108 FTEs;
- the lithium industry was up 743 persons or 589 FTEs; and
- the nickel industry was up 622 persons or 514 FTEs.
Average employment on minerals exploration operations was also up 960 persons (840 FTEs) to 4,808 persons (4,521 FTEs) – its highest ever level.
An average of 1,234 personnel (1,173 FTEs) were employed in onshore petroleum operations. This was up by 111 people (163 FTEs) from 2020, but still low historically.
Almost $22 billion was invested into Western Australia’s mining and petroleum sector – this was a five-year high, but remains less than half of the level observed during the mining investment boom from 2011 to 2015.
It continued to be supported with ongoing investments by Rio Tinto, BHP and Fortescue Metals Group in large-scale iron ore production sustaining projects, as well as the Iron Bridge magnetite project.
Western Australia’s share of national mining and petroleum investment was 58 per cent due to higher levels of investment growth in Western Australia compared to the rest of the country. The State’s share was slightly above its 10-year average share of 56 per cent.
The resources sector was a key contributor (69 per cent) to growth in total new capital expenditure in Western Australia, though its share remains well below the 80 plus per cent during the mining investment boom.
The level of mining and petroleum investment in Western Australia has continued to rise despite the COVID-19 pandemic. In fact, resources sector investment in Western Australia has increased for the last nine quarters after adjusting for seasonal variability.
DMIRS also monitors and collects information on mineral and petroleum projects under development in Western Australia and estimates the total capital cost of projects.
As of March 2022, the total estimated value of mining, petroleum, and associated infrastructure projects under development in Western Australia was $136 billion, up by almost $10 billion from the September 2021 estimate.
 Mineral and petroleum projects are categorised as follows:
- Under construction – those actually under construction.
- Committed – company has reached a positive final investment decision.
- Planned – those that have completed advanced feasibility studies including definitive and bankable feasibility studies.
- Possible – those at an early stage of development including initial scoping and pre-feasibility studies.
The value of projects under construction or in the committed stage of development was an estimated $52 billion, up by more than $16 billion from September 2021.
Factors that fuelled this increase included:
- a final investment decision on the Scarborough project and Pluto expansion;
- several other projects being commissioned and moving into construction phase including the Mardie salt and potash project, the incremental expansion of the Beyondie potash project to 120,000 tonnes per annum, and preliminary infrastructure construction at the Yangibana rare earths project; and
- updates and revisions to capital expenditure estimates on several projects, most notably the Pyrenees Infill Phase 4 project, the Greenbushes tailings retreatment plant project, and the Waitsia Stage 2 Expansion.
The value of projects under medium to longer-term planned or possible stages of development was an estimated $84 billion.
It declined by $7 billion between September 2021 and March 2022 largely due to the final investment decisions on Scarborough and the Pluto expansion, as well as Mardie.
However, these high-value projects advancing through development stages masked updated development studies and revisions to capital expenditure on projects across several commodities:
- Iron ore – Ashburton Hub, South West Creek Hub, Southdown magnetite, Jimblebar plant improvements, and Lake Giles
- Gold – Marillana and Havieron
- Nickel – Sherlock Bay
- Copper – Nifty restart, Caravel, and Whim Creek restart
- Lithium – Greenbushes Chemical Grade Plant 4 expansion and Kathleen Valley
- Other – Yangibana rare earths and Lake Throssell potash
The Western Australian pCAM (precursor Cathode Active Material) Hub for the processing of nickel, manganese, and cobalt was also announced.
As with mining and petroleum projects in production, despite the global COVID-19 pandemic, Western Australia’s exploration sector was able to continue operating largely without interruption in 2021.
As a result, the State recorded mineral exploration expenditure of $2.4 billion, an increase of 34 per cent from $1.8 billion in 2020 and a new single year high.
Mineral exploration expenditure was up for all commodities. Spending on gold exploration once again surpassed $1 billion and represented the largest increase in mineral exploration (up $195 million), while iron ore exploration was up by $144 million and at $527 million was at its highest level since 2013-14. Copper, at $256 million, was up by $120 million to reach its highest ever level. There were also notable increases in spending on nickel and cobalt (up $63 million) and silver, lead and zinc (up $9.8 million). Total nickel-cobalt exploration at $216 million was at a nine-year high.
These commodities also represented the main targets of mineral exploration in Western Australia: gold (47 per cent), iron ore (22 per cent), copper (11 per cent) and nickel-cobalt (9 per cent).
Spending in greenfields locations recovered from the impacts of COVID-19 in 2020 and even surpassed earlier levels. It was valued at $779 million in 2021 (a new high), up 35 per cent from $577 million 2020, and 12 per cent from $696 million in 2019.
In comparison, there was $1.6 billion spent on exploration activity in brownfields areas in 2021 (also a new high), up 33 per cent from $1.2 billion in 2020, and up 65 per cent from $952 million in 2019.
The share of expenditure in greenfields locations, compared to brownfields areas, was stable compared to 2020 at 33 per cent, but down from 42 per cent in 2019.
This means that exploration on existing deposits (already generally lower cost than greenfields exploration) remained preferred over exploration targeting new deposits compared to pre-COVID-19 times.
The State’s share of national mineral exploration expenditure increased to 65 per cent, highlighting that Western Australia continued to fuel overall growth in exploration expenditure for the country as a whole.
Petroleum exploration expenditure in Western Australia increased from a 25-year low to $491 million, however it remained low against historical levels.
A greater increase in petroleum exploration spending in Western Australia, compared to the rest of the country (increases in expenditure in Queensland and the Northern Territory were offset by a fall in Victoria), resulted in Western Australia’s share of the national spend increasing marginally to 43 per cent.
The Government of Western Australia received royalties from, and grants related to, the State’s minerals and petroleum producers totalling a record $14 billion in 2020-21. This surpassed the previous record of $11 billion received in 2020-21, and the $9.1 billion received in 2020.
This outcome was due to primarily an increase in royalty receipts from the iron ore industry amid record high iron ore prices.
Royalty receipts from the iron ore industry alone were $12.4 billion. This is almost $1.5 billion dollars more than the previous single year record for total royalties and grants paid for all commodities in 2020-21. The industry’s share of total royalty revenue was 89 per cent, up from 86 per cent in 2020 but the same as in 2020-21.
Consistent with the improved market conditions, Western Australia’s grants from the North West Shelf project also increased to $732 million, while royalties collected from the copper, lead, and zinc (up 39 per cent to $89 million), nickel (up 17 per cent to $87 million), and lithium (up 29 per cent to $61 million) also grew.
These increases were partially offset by a $10.7 million fall in royalty payments by the gold industry to $400 million. This was down from previous record levels due to a combination of lower Australian dollar prices and lower production.
Principal resource projects
WA’s mining industry consisted of 125 predominantly higher-value and export-oriented mining projects in 2020-21, up from 123 in 2019-20.
The State’s mining industry also comprised hundreds of quarries and small mines producing clays, construction materials, dimension stone, gypsum, limestone, limesand, and spongolite for the local construction industry.
There were also 13 major mineral processing operations which transform bauxite into alumina; gold dorè into gold bars; nickel concentrate into nickel matte, nickel powder and nickel briquettes; rutile and synthetic rutile into titanium dioxide pigment; zircon into fused zirconia; and silica sand into silicon metal.
On the back of record prices, the number of iron ore projects rose from 25 to 32 with the emergence of a set of new small-scale producers such as Fenix Resources (Iron Ridge), GWR Group (Wiluna West) and Young Australian Mines (Spinifex Ridge).
The number of gold projects was up to 53 in 2020–21 from 52 in 2019–20. There were five new projects for 2020-21, as high prices provided an incentive for the restart of small-scale operations. However, four other projects reached the end of their current life.
These increases were largely offset by the suspension of other projects in recent years including Metals X’s Nifty copper project, Panoramic Resources’ Savannah nickel project, the MARBL Joint Venture’s Wodgina lithium project, as well as the suspension and subsequent acquisition of the former Altura Mining lithium project by Pilbara Minerals.
The total number of petroleum projects was unchanged from 2019-20.
There were 22 principal petroleum projects producing oil, gas and condensates from 55 fields onshore and in the Commonwealth waters around WA. These projects had 13 processing plants, predominantly for LNG exports and domestic gas sales.
For an overview of how Western Australia’s key commodities performed, please see mineral and petroleum review 2021.