Industry activity indicators

Mineral and petroleum industry activity review 2019-20

Key indicators of the overall performance of the resources sector include the number of people employed, the level of investment and exploration activity, royalties received by the State Government and the number of principal mining projects.

Employment

Mining and petroleum employment

WA’s mining and petroleum sector employed a record average of 135,001 people (107,457 in full-time-equivalent terms) during 2019-20, up from an average of 128,374 people (102,392 FTEs) in 2018-19.[1]

The mining industry (including exploration) was responsible for the lion’s share of employment, with an average of 133,713 people (106,291 FTEs) working in the industry during the year.

Most of the growth employment was due to increases in construction activities in the iron ore (up 5,385 persons or 5,637 FTEs) and nickel (up 1,275 persons or 1,325 FTEs) industries, while employment in exploration was also up 382 persons (417 FTEs) or 12 per cent.

[1]     This 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 ABS is classified using ANZSIC and is not directly comparable to data collected by DMIRS.
Mining and petroleum eployment by commodity 2019-20

The largest number of people were employed in the mining of iron ore (65,466 persons or 50,753 FTEs), while gold and alumina-bauxite mining and refining were the next highest with average employment of 31,567 (26,414 FTEs) and 8,434 persons (6,765 FTEs) respectively.

Total mining employment

Despite overall growth in mining sector employment, the COVID-19 pandemic had an impact through changes to workforce practices, including limits on the total number of workers on site at any one time and changes to fly-in, fly-out shift schedules due to State-based restrictions and social distancing measures.

The impact of these restrictions and measures became evident in April with average employment numbers and FTE employment (excluding exploration) declining by 19 and 13 per cent respectively compared to March.  Average employment numbers and FTEs increased in May and June.

However, while FTE employment had largely returned to pre COVID-19 levels by the end of the financial year, the average employment numbers remained down, likely due to ongoing efforts to curb the spread of COVID-19.

This impact of COVID-19 in mining employment was also evident in the difference between average employment numbers and FTEs falling to its lowest levels in five years within the same period.

A fall in average employment numbers and FTEs in the exploration sector was also evident in April, reflecting cuts to exploration programs and spending during the height of WA’s COVID-19 restrictions, including limits on regional travel.  However, by June, average employment numbers and FTEs in the exploration sector had largely returned to pre-COVID-19 levels.

Investment

Almost $19 billion was invested into the WA mining and petroleum sector, up from $17 billion in 2018-19.

This represents the first year-on-year increase in mining and petroleum investment in WA since the peak of the iron ore and LNG investment boom in 2012-13.

While the scale of investment is still well below the boom time peak, this is a positive development and was largely on the back of investments by major iron ore producers Rio Tinto, BHP and Fortescue Metals Group (FMG) in large-scale production sustaining projects, as well as FMG’s Iron Bridge magnetite project.

WA’s share of national mining and petroleum investment increased to 54 per cent due to a combination of greater levels of investment in WA and weaker investment across the rest of the country.  The State’s share still remains below its 10-year average of 56 per cent.

MIning investment Last 10 financial years

The resources sector was primarily responsible for growth in total new capital expenditure in WA to $26 billion, up from $24 billion in 2018-19.  The sector’s share of total new capital expenditure in WA increased to 73 per cent but remains below its 10-year average of 79 per cent.

COVID-19 did not have much immediate impact on levels of mining investment in WA in the June quarter 2020, with investment up 14 per cent compared to March quarter and up 20 per cent compared to the same period in 2019.  However, the impact of more than $60 billion in delayed investment decisions that coincided with COVID-19 is expected to become more apparent in the medium to long-term. The projects deferred included:

  • the Scarborough, Pluto Train 2 and Browse developments;
  • the Crux gas field development;
  • expansions of the Wagerup and Pinjarra alumina refineries; and
  • the Mt Holland lithium mine and concentrator and Kwinana lithium hydroxide refinery.

DMIRS also monitors and collects information on mineral and petroleum development projects in WA to estimate levels of investment in the future.[2]

 

[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 undergoing advanced feasibility studies including definitive and bankable feasibility studies and Front End Engineering and Design (FEED).
- Possible – those at an early stage of development including exploration and/or initial scoping and pre-feasibility studies.
Mineral Resources’ iron ore development plans in the West Pilbara and Strike Energy’s West Erregulla gas project

As of September 2020, WA had resources projects in the development pipeline valued at an estimated $129 billion, up from the March 2020 estimate of $118 billion.

Recently announced significant new projects included Mineral Resources’ iron ore development plans in the West Pilbara and Strike Energy’s West Erregulla gas project.

There were also a large number of gold projects announced and updated amid favorable market conditions including:

  • Norton Gold Fields Paddington mill expansion and Binduli heap leaching project
  • Bardoc Gold’s namesake gold project
  • Newcrest Mining’s and Greatland Gold’s Havieron gold project
  • Growth options at KCGM’s Superpit including Oroya Brownhill and Fimiston South
  • Vango Mining’s Marymia project
  • ACH Minerals’ Ravensthorpe gold project
  • Poseidon Nickel’s Windarra gold tailings project
  • Ora Banda Mining’s Davyhurst re-start
  • Ramelius Resources’ Penny Gold and Eridanus underground projects.

The value of projects under construction or in the committed stage of development was an estimated $28.4 billion, up from $27.2 billion in March 2020.

This increase reflects, in part, a decision by DMIRS to capture in investment figures those power generation projects built for the exclusive purpose of providing energy and/or transmission infrastructure to resource projects, specifically:

  • FMG’s Pilbara Generation and Pilbara Transmission projects
  • Alinta Energy’s Chichester solar gas hybrid project

It was also due to several gold projects and Mineral Resources’ Parker Range iron ore project moving into the construction phase, as well as revisions to capital expenditure estimates.  Some projects were also completed and entered production including St Barbara’s Gwalia extension and Silver Lake Resources’ Santa underground mine.

The value of planned or possible projects increased from $91.1 billion to $100.5 billion between March 2020 and September 2020.

This increase was the result of the capturing of new gold projects, Mineral Resources’ iron ore development plans in the West Pilbara, Rio Tinto’s Koodaideri solar project, the re-activation of Grange Resources’ Southdown Magnetite project following positive approvals developments, as well as a slew of upward revisions in capital expenditure estimates across a range of commodities following the release of updated development studies.

Exploration

Mineral exploration expenditure in WA was $1.7 billion, an increase of 17 per cent from $1.4 billion in 2018-19.

Growth in mineral exploration expenditure was mainly due to increased spending on gold (up $110 million), supported by record high prices.  The next largest increases in spending were for copper (up $66 million), likely owing to increased activity in the Paterson Province, iron ore (up $38 million), and nickel/cobalt (up $32 million).

The main targets of mineral exploration in WA were gold (46 per cent), iron ore
(21 per cent), copper (13 per cent) and other minerals (9 per cent).

The State’s share of national expenditure was fairly stable at 61 per cent, suggesting increased spending in WA was matched in the rest of the country.

Mineral exploration expenditure

While mineral exploration expenditure in WA increased overall, spending in the June quarter declined compared to the same period in 2019.  This was due, in part, to the impact of COVID-19 restrictions in WA including regional travel restrictions, and resultant cancellation and scaling back of exploration programs across the State.

Exploration programs in greenfields areas were most affected by the restrictions, which contributed to a fall in the share of exploration on new deposits for the first time since 2014-15. Its share declined to 38 per cent in 2019-20 from 42 per cent in 2018-19.

After showing positive growth in 2018-19, petroleum exploration expenditure was down by 19 per cent to $596 million.

Petroleum exploration expenditure

This was largely the result of the lowest June quarter spend since 1996, as exploration budgets were cut in response to the fall in oil prices to a 20-year low as well as COVID-19 restrictions.

WA’s share of petroleum exploration spend declined to 47 per cent, due to increased spending in Victoria and Queensland.

Royalties

The WA Government received royalty revenue from the State’s minerals and petroleum producers totalling $9.3 billion in 2019-20, an increase of 42 per cent on 2018-19 and a new record high.[3]

Royalty receipts from the iron ore industry grew by 60 per cent on the previous year due to higher volumes and prices. The industry’s share of total royalty revenue also increased to 84 per cent from 75 per cent the previous year.

Consistent with the strong market conditions seen in the gold industry, its royalty payments rose by 24 per cent to a record $361 million.

Conversely, challenging market conditions for the lithium and petroleum industries resulted in royalty payments falling by 20 per cent and 41 per cent respectively.

WA also received $690 million in grants for the North West Shelf project,[4] a decrease of 22 per cent on 2018-19 amid lower prices.

[3]    Refers to royalties for all minerals and petroleum produced on State land and in State waters are paid into the Government’s Consolidated Revenue Fund.  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 WA and Australian Governments.

Principal resource projects

WA's mining industry consists of 123 predominantly higher-value and export-oriented mining projects.

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 dore 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.

The number of gold projects was up to 52 in 2019–20 from 47 in 2018–19. The increase is predominantly due to the high price environment providing an incentive for the restart of small-scale gold mines. The number of iron ore and nickel projects was also up with the re-commencement of mining operations at Kimberley Metals Group's Ridges iron ore project and First Quantum Minerals' Ravensthorpe nickel project amid more favourable market conditions.

There were 22 principal petroleum projects producing oil, gas and condensates from 53 fields onshore and in the Commonwealth waters around WA. These projects had 13 processing plants, predominantly for LNG exports and domestic gas sales.

The total number of petroleum projects was down from 23 in 2018–19 with the end of production at Mitsui and Co's Dongara gas project. The number of producing fields also decreased from 57 fields, largely due to a change in fields at the North West Shelf, Varanus Island, Waitsia and Enfield projects.

For an overview of how Western Australia's key commodities performed, please see 2019-20 mineral and petroleum commodity review.

Western Australia’s Principal Resource Projects

Western Australia’s principal resource projects (2019-20) - 430 Kb

Western Australia’s principal resource projects (2019-20)

Western Australia’s principal resource projects (2018-19) - 272 Kb

Western Australia’s principal resource projects (2018-19)

Western Australias principal mining projects (2017-18) - 143 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2016-17) - 116 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2015-16) - 115 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2014-15) - 119 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.