Mineral and petroleum industry activity review 2020-21
Western Australia’s mining, mineral exploration and petroleum industries employed an average of 149,469 people (based on the number of individuals or NoI terms) or 119,502 (based on full-time-equivalent or FTE terms) during 2020-21, representing another record for a single calendar or financial year.
The mining and mineral exploration industries were responsible for the lion’s share of employment, with an average of 148,395 people (139,790 FTEs) working in the industries during the year (also a record) compared to just 1,073 persons (1,097 FTEs) in the onshore petroleum industry.
The largest number of people were employed in the mining of iron ore (76,150 persons or 60,810 FTEs), while gold was the next highest with average employment of 34,153 persons (28,420 FTEs).
1This figure includes people employed in mine site infrastructure construction, mineral processing, mine site surveying, transport, and catering – essentially those people operating on site. DMIRS collects mining employment data from monthly accident reports, which all operating mines, as well as companies undertaking exploration activities on exploration and mining leases, are required to submit. The data identifies the number of direct employees and contractors and includes sites under State Agreement Acts. It does not include personnel in administrative locations not on operating sites. Petroleum employment data includes people employed at operating sites, including contractor employees. It comprises only operations subject to State petroleum legislation, and excludes LNG operations and land-based service operations. Employment data collected and published by the Australian Bureau of Statistics (ABS) is classified using ANZSIC and is not directly comparable to data collected by DMIRS.
Most of the growth in mining employment was due to:
- the iron ore industry amid production sustaining construction projects and the emergence of new small-scale producers in a high price environment (up 9,149 persons or 8,843 FTEs); and
- the gold industry amid high prices (up 2,645 persons or 2,081 FTEs).
- For its part, employment in minerals exploration was up 846 persons (901 FTEs).
- Conversely, employment was down in other parts of the mining sector:
- diamonds was down 346 persons (360 FTEs) following the end of production at the Argyle diamond mine in November 2020;
- base metals was down 317 persons (181 FTEs), largely due to the suspension of the Nifty copper operations;
- coal was down 278 persons (58 FTEs) as the Griffin coal operations experienced ongoing operation issues; and
- lithium was down 243 persons (717 FTEs) due to the worsening market conditions in the second half of 2020.
Employment in the onshore petroleum industry was down 204 persons (52 FTEs) in an environment of weak prices.
During the height of Western Australia’s COVID-19 restrictions and measures in April 2020, average employment in the mining and exploration sector had decreased. The difference between average employment numbers and FTEs in the mining industry also declined as people were staying on-site for longer.
However, the impact of these restrictions and measures has proven to be short-lived.
Average employment numbers and FTE numbers in the mining industry had surpassed pre-COVID-19 levels by July 2020 and strengthened across the remainder of the 2020-21 financial year.
By the end of 2020, the disparity between average employment numbers and FTEs in the mining industry had returned to pre-COVID-19 levels and this was maintained through the first half of 2021.
In the exploration sector, average employment numbers and FTEs largely exceeded pre-COVID-19 levels throughout 2020-21.
Overall, the figures suggest that employment numbers in Western Australia’s mining and exploration sectors have continued to strengthen from the early months of the COVID-19 pandemic. This likely reflects Western Australia largely being sheltered from its most severe global and national economic impacts.
The recovery in Western Australia’s onshore petroleum sector is taking longer likely due to the oil price crash immediately preceding and exacerbated by COVID-19. Average employment numbers have recovered but still remain below March 2020 levels, while average FTEs only reached pre-COVID-19 levels in the June quarter 2021 suggesting many of the employees in the onshore petroleum sector are working longer.
Almost $21 billion was invested into Western Australia’s mining and petroleum sector, up from $19 billion in 2019-20. This was a five-year high.
This was largely achieved on the back of ongoing investments by Rio Tinto, BHP and Fortescue Metals Group (FMG) in large-scale iron ore production sustaining projects, as well as FMG’s Iron Bridge magnetite project.
Western Australia’s share of national mining and petroleum investment increased to 58 per cent due to higher levels of investment growth in Western Australia compared to the rest of the country. The State’s share is now slightly above its 10-year average share of 56 per cent.
The resources sector was a key contributor (68 per cent) to growth in total new capital expenditure in Western Australia, which at $29 billion was up from $27 billion in 2019-20.
The increase in resources sector investment spending also helped Western Australia increase its total share of Australia’s new capital expenditure to 23 per cent in 2020-21, compared to 21 per cent in 2019-20.
COVID-19 has not had much immediate or residual impact on levels of mining and petroleum investment in Western Australia. In fact, resources sector investment in Western Australia has increased for the last eight quarters after adjusting for seasonal variability.
DMIRS also monitors and collects information on mineral and petroleum projects under development in Western Australia to estimate the capital cost of projects. 
As of September 2021, the total estimated value of resources projects under development in Western Australia was $127 billion. This was down from the March 2021 estimate of $140 billion.
2 Mineral and petroleum projects are categorised as follows:
- Under construction – those actually under construction.
- Committed – company has reached a positive final investment decision (FID).
- 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.
Newly announced significant projects included:
- BHP’s Western Ridge iron ore project;
- Newcrest Mining’s Telfer West Dome Stage 5 gold project;
- King River Resources Limited’s Kwinana high purity alumina plant; and
- Talison Lithum’s Greenbushes tailings retreatment plant.
The value of projects under construction or in the committed stage of development was an estimated $36 billion, down by approximately $500 million from March 2021.
This fall was the result of a balance of factors that included:
- the start of production at BHP’s South Flank iron ore project and Capricorn Metals’ Karlawinda gold project;
- several projects moving into the construction phase including Lynas Corporation’s Kalgoorlie Cracking and Leaching plant, Strandline’s Resources’ Coburn mineral sands project, Red 5’s King of the Hills expansion, Bellevue Gold’s namesake gold project, Newcrest Mining’s early works program at Havieron; and
- revisions to capital expenditure estimates on several projects, most notably Covalent Lithium’s Mt Holland lithium project, FMG’s Iron Bridge magnetite project and the expansion of Talison Lithium’s Greenbushes lithium project.
The value of medium to longer-term planned or possible projects decreased from $103 billion to $91 billion between March 2021 and September 2021.
This decrease was largely the result of changes in development plans for longer-term investment projects including West Pilbara iron ore, the Equus gas project off the North West Shelf, Southdown magnetite, and expansion plans for the former Altura Mining lithium project. Several more advanced projects progressed through development stages into a final investment decision or construction.
Outside of these changes, there were a host of new diamonds, gold, iron ore, silica sand projects, as well as upward revisions in capital expenditure estimates across a range of commodities following the release of updated development studies.
Mineral exploration expenditure in Western Australia was $2.1 billion in 2020-21, an increase of 21 per cent from $1.7 billion in 2019-20 and its highest level since 2012.
Growth in mineral exploration expenditure was mainly due to increased spending on gold (up $286 million), supported by record high prices. The other notable increases in spending were for iron ore (up $106 million) and nickel-cobalt (up $36 million), again reflecting higher prices for these commodities.
These commodities also represented the main targets of mineral exploration in Western Australia: gold (52 per cent), iron ore (22 per cent), and nickel-cobalt (9 per cent).
Spending on gold exploration in Western Australia surpassed $1 billion for the first time in history, while iron ore exploration ($455 million was at its highest level since 2013-14 and nickel-cobalt exploration ($185 million) recorded a nine-year high.
The State’s share of national mineral exploration expenditure increased to 65 per cent, highlighting that overall growth in exploration expenditure for the country as a whole was overwhelmingly due to Western Australia.
The impact of COVID-19 on overall exploration activity in Western Australia appears to have been relatively muted and largely restricted to the June quarter 2020, which recorded a $3 million fall in exploration expenditure compared to the same period a year earlier.
This was at the height of COVID-19 restrictions in Western Australia including regional travel restrictions, plus the cancellation and scaling back of exploration programs across the State.
Any overall negative effect of COVID-19 on mineral exploration expenditure in Western Australia was short-lived with the September and December 2020 quarters representing a return to growth. This growth continued into the March and June 2021 quarters, with year-on-year increases in exploration spending of 31 per cent and 44 per cent respectively.
The effect of COVID-19 on the location of expenditure was perhaps more pronounced and lasting. Spending in greenfields areas declined year-on-year by 28 per cent in the June 2020 quarter, 21 per cent in the September 2020 quarter, and 17 per cent in December 2020 quarter. However, it began to recover through the first half of 2021 and even surpassed pre-COVID-19 levels.
This resulted in an overall increase in spending of five per cent on new deposits in 2020-21. However, by comparison, for the same period, spending on existing deposits rose by 31 per cent.
As a result, the share of expenditure in greenfields areas compared to brownfields areas was 33 per cent in 2020-21, down from 38 per cent in 2019-20.
Petroleum exploration expenditure in Western Australia was down to $442 million, its lowest level since 1996-97, reflecting cuts to exploration budgets amid ongoing overall weak oil prices.
Lower petroleum exploration spending in Western Australia, combined with increased expenditure in Queensland, resulted in Western Australia’s share of the national spend declining to a new single year average low of 44 per cent.
The Western Australian Government received royalty revenue from the State’s minerals and petroleum producers totalling $11 billion in 2020-21. This was a record total, surpassing the previous record of $9.3 billion received in 2019-20 by $1.7 billion.
This result was due to an increase in royalty receipts from the iron ore industry amid higher iron ore prices. Royalty receipts from the iron ore industry alone were $9.8 billion, half a billion dollar more than the previous record single year State Government royalty paid for all commodities. The industry’s share of total royalty revenue also increased to 89 per cent from 84 per cent the previous financial year.
Consistent with the strong market conditions seen in the gold industry, its royalty payments rose by 15 per cent to a record $416 million. Likewise, royalties collected from the nickel and base metals industries rose 10 per cent (to $84 million) and 4 per cent (to $71 million) respectively.
These increases were offset by Western Australia’s grants from the North West Shelf project falling by $304 million or 44 per cent amid lower oil prices.
Challenging market conditions for the alumina, lithium, and petroleum industries also resulted in royalty payments falling by 19 per cent, 35 per cent, and 65 per cent respectively.
3 Refers to royalties for all minerals and petroleum produced on State land and in State waters paid into the Government’s Consolidated Revenue Fund rather than accrued during 2020-21. Included in the royalty receipts for petroleum is the Commonwealth's share of royalties collected under the Petroleum (Submerged Lands) Act 1967. Included in the State’s royalty receipts for iron ore is an additional lease rental amount which is currently applied under Iron Ore State Agreement Acts and the Mining Act.
4 The State receives about 65 per cent of the royalties from the petroleum produced by the North West Shelf Project, in the form of Commonwealth grants, in accordance with an agreement between the Western Australian and Australian Governments.
Principal resource projects
WA’s mining industry consisted of 125 predominantly higher-value and export-oriented mining projects in 2020-21, up from 124 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 53, which was the same number as 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, five 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 2020-21.