WA’s minerals sector remains a significant employer in the State, with 108,930 people directly employed in mining and exploration as at 30  June in 2016–17.

Significant issues

During 2016–17, global commodity markets continued to rebalance amid slowing investment, mine closures, global political uncertainty and policy change. Despite these challenges, many commodity markets saw the first signs of recovery, providing much needed relief for local producers.

Western Australia’s mineral and petroleum industry reported sales of $105 billion, an increase of 19 per cent on 2015–16. The increase was led by better than expected iron ore prices and the continued strength of the gold sector.

The State’s iron ore sales rose almost 31 per cent to $64 billion in 2016–17 while the gold sector accounted for $11 billion in sales, a 7 per cent increase on 2015–16.

Despite continued pressure on the global petroleum market, the value of WA’s petroleum sector increased for the first time since 2013–14. Overall, the sector was valued at $19 billion, up 5 per cent on last year. LNG remained the State’s most valuable petroleum product in 2016–17 contributing almost $13 billion in sales.

WA’s minerals sector remains a significant employer in the State, with 108,930 people directly employed in mining and exploration as at 30 June in 2016–17. Direct employment remains high relative to just 10 years ago, when the average number of people employed was 62,112 (an increase of over 75 per cent).

As an indicator of the strength and resilience of WA’s mineral and petroleum industry, the State remains Australia’s leading investment and exploration  destination.

  • WA’s share of national mining investment has averaged about 59  per cent for the past 10 years. In 2016–17, more than $22  billion was invested in Western Australia.
  • WA accounted for 66 per cent ($1 billion) of Australia’s total mineral exploration expenditure ($1.6 billion). Gold exploration drove the bulk of this with $509 million expended in 2016–17 compared with $386 million in in 2015–16.
  • The completion of a major exploration drilling project in the State’s north, combined with the start of a new activities in the Northern Territory saw Western Australia’s share of national petroleum exploration expenditure fall from 73 per cent in 2015–16 to 47  per cent in 2016–17.

Value of Western Australia’s resource sector

Value of Western Australia’s resource sector

Some of the global trends impacting on Western Australia’s mining and petroleum industry during 2016-17 included:

  • Community engagement: International incidents such as the collapse of the Samarco tailings dam in Brazil and the fracking debate have reinforced the critical importance of resource companies maintaining their social licence to operate. Successful companies have shown the value of transparency, communication and operating in tandem with communities through local labour and services procurement, including employing indigenous persons, as well as supporting local infrastructure and events.
  • Operational productivity and rising costs: Extensive cost cutting has continued to be delivered by industry.
  • Innovation: Soft commodities prices emphasise the need for productivity improvements through innovation. For example, the use of drones to conduct geophysical surveys has aided resource calculation, erosion detection, and surface stability monitoring. Digital technologies and integrated data collection are another example where innovation is improving safety, planning, control and decisions to optimise volume, cost and capital expenditure.
  • Isolationism and protectionism: Isolationism and protectionism are emerging policy approaches with implications for commodity markets. For example, the US proposes to encourage domestic steel production through tariffs on Chinese imports, and China is proposing to provide fiscal stimulus through intensive infrastructure expenditure. A  massive infrastructure investment program in China can potentially boost demand and prices for major mineral commodities.

Section highlights

DMP has commenced a major legislation reform initiative Petroleum 2020 to modernise and streamline the State’s petroleum and geothermal legislation to better reflect developments in the petroleum industry.