2019 review of mineral and petroleum industry activity
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.
WA’s mining industry employed a record average of 133,094 people during 2019, up from an average 120,511 the previous year.1
The iron ore sector remained the State’s largest mineral employer, with an average of 64,618 persons, while gold and alumina were the next largest employers with an average of 31,590 and 7,384 persons respectively.
Most of the growth in the average number of employees in the mining sector was due to increases in the iron ore (up 8,269 persons), nickel (up 1,348 persons) and gold (up 909 persons) sectors, while employment in the exploration sector was also up by 582 persons or 20 per cent.
In full-time-equivalent (FTE) terms, there were 104,993 persons employed in the mining sector in 2019.
The difference between the number of individuals (NoI) and FTE employment increased again due to the continued preference for contract employment over full-time employment in the mining sector. The disparity between the two (excluding exploration) stood at an average of 27 per cent in 2019. It was just two per cent in December 2009.
The average number of people employed by the State’s onshore petroleum sector increased to 1,471 in 2019 from 1,290 in 2018.2 In terms of number of FTEs, there were 1,306 in 2019, compared to 1,170 in 2018.
As with the mining sector, the gap between the NoIs and FTEs grew to 13 per cent in 2019 from 10 per cent in 2018.
The Dampier to Bunbury Natural Gas Pipeline was once again one of the State’s largest petroleum employers with an average of 307 people (or 257 FTEs) employed in 2019.
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. Employment data collected and published by the ABS is classified using ANZSIC and is not directly comparable to data collected by DMIRS.
2 This represents the average number of 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.
More than $17.2 billion was invested into the WA mining and petroleum industries in 2019, down from $17.8 billion in 2018.
This was the 7th consecutive calendar year-on-year decline in mining investment in WA. It follows the completion of major multi-billion dollar iron ore and LNG projects in the State in recent years. The scale of investment between 2012 and 2015 is unlikely to be repeated any time soon, however a positive development occurred in the second half of 2019 with the first consecutive year-on-year quarterly growth in WA mining investment since December 2012.
Nationally, $33.9 billion was invested in mining in 2019, down from $34.6 billion in 2018. As a result, WA was responsible for 51 per cent of Australia’s mining investment, equal to its share for 2018 but below its 10-year average of about 56 per cent.
In terms of new capital expenditure (i.e. new buildings and other structures as well as plant and machinery), WA’s share is 20 per cent ($24.5 billion) of the national total ($121.1 billion).
This means that the mineral and petroleum industries were responsible for about 70 per cent of all new capital investment in WA in 2019. This is below the sector’s average share over the last 10 calendar years which has been 79 per cent, with investment in mining having fallen more dramatically than investment in other industries.
In monitoring investment activity in WA, DMIRS also collects information on mineral and petroleum projects to estimate actual and possible investment. Where available, information is collated relating to expected capital expenditure, project timing and employment during both the construction and operation phases.1
As of March 2020, WA had resources projects in the pipeline valued at an estimated $118.4 billion, up from the September 2019 estimate of $107.9 billion.
Recently announced new projects included:
- Santos’ $2.2 billion Dorado Phase 1 oil project
- Rio Tinto’s $1 billion Western Turner Syncline Phase 2 iron ore project
- Lynas Corporation’s $500 million cracking and leaching plant
- Mineral Resources’ $120 million Koolyanobbing iron ore expansion
- Ausgold’s $103 million Katanning gold project.
The value of projects under construction or in the committed stage of development was an estimated $27.2 billion, up from $25.4 billion in September last year. This change is largely attributed projects moving into a construction phase such as Woodside’s $1.3 billion Julimar-Brunello Phase 2 and Rio Tinto’s $1 billion Western Turner Syncline Phase 2 expansion. Other projects were also completed including the MARBL joint venture’s $610 million Wodgina concentrator plant, the first of Tianqi Lithium’s Kwinana lithium processing plants ($400 million), and Talison Lithium’s $500 million Greenbushes CGP 2 expansion.
The value of planned or possible projects increased from $82.4 billion to $91.1 billion between September 2019 and March 2020. The increase is due in part to the announcement of Santos’s $2.2 billion Dorado Phase 1 oil project, and Lynas Corporation’s $500 million leaching and cracking plant to be built in Kalgoorlie. It is also influenced by developments regarding Mineral Resources $1 billion Pilbara Infrastructure Project, as well as Flinders Mines’ $3.7 billion Pilbara Iron Ore Project and BBI Group’s $5.6 billion Balla Balla port and rail project that mean these projects are now reflected in DMIRS estimates.
One of the other key developments over the last six months is that while project developments in most sub-sectors have increased, challenging market conditions in the lithium industry have caused the delay or deferment of several projects including:
- the MARBL joint venture’s Wodgina processing plant
- Stages 3 to 5 of the Kemerton lithium hydroxide facility
- Tianqi Lithium’s second processing plant at Kwinana
- Covalent Lithium’s Mt Holland lithium project
- Talison Lithium’s further expansion at Greenbushes, and
- an expansion of Pilbara Minerals’ Pilgangoora project.
3 Mineral and petroleum projects are categorised as follows:
Projects under construction – those actually under construction.
Committed projects – company has reached a final investment decision (FID)
Planned projects – those undergoing advanced feasibility studies including definitive and bankable feasibility studies and Front End Engineering and Design (FEED).
Possible Projects – those raising capital for or conducting scoping and preliminary development studies.
Consistent investment and access to land for exploration and subsequent development are important to sustain WA’s position as a leading producer of minerals and petroleum.
WA’s mineral exploration expenditure was $1.7 billion in 2019, up by one-quarter from $1.3 billion in 2018.
Mineral exploration spending in WA grew by more than the rest of the country, with its share of Australia’s expenditure rising to 62 per cent in 2019 from 60 per cent in 2018.
Gold (44 per cent), iron ore (20 per cent), copper (15 per cent) and nickel/cobalt (9 per cent) attracted the largest shares of WA’s mineral exploration spend.
Copper recorded the largest increase in exploration expenditure in 2019, likely owing to increased activity in the Paterson Province. It was up by 162% to $235 million in 2019 from $90 million in 2018. Mineral sands (up 79 per cent), nickel/cobalt (up by 20 per cent), iron ore (up 16 per cent), and gold (up 13 per cent) were also increasingly targeted.
The gap in exploration spend between brownfields and greenfields areas in WA also continued to narrow. In 2019, brownfields accounted for 58 per cent of spending, while greenfields areas accounted for 42 per cent. As recently as 2015, brownfields areas accounted for 73 per cent of exploration expenditure in WA, while greenfields areas accounted for 27 per cent.
WA’s petroleum expenditure continued to rebound, recording its second year-on-year increase, rising by 12 per cent to $750 million in 2019 from $672 million in 2018. This growth has been led by activity on the Dorado field and backfill options for Karratha Gas Plant.
Petroleum exploration expenditure on a national level grew even more, increasing by 20 per cent to $1.4 billion in 2019 from $1.2 billion in 2018 due to increased spending in Victoria and the Northern Territory.
As a result, WA’s share of the petroleum exploration spend declined to 54 per cent.
The WA Government received royalty revenue from the State’s mineral and petroleum producers totalling $8.5 billion in 2019, an increase of 41 per cent on 2018 and an all-time high.
Royalty receipts from the iron ore sector grew by 56 per cent on the previous year in line with higher prices. As a result, its share of total revenue collected increased to 82 per cent in 2019, up from 74 per cent in 2018.
Consistent with the strong market conditions seen in the gold sector across the past few years, its contributions rose by 12 per cent to $313 million in 2019.
Conversely, challenging market conditions for the lithium industry saw its royalty payments fall by 8 per cent to $82 million.
Royalty receipts from the petroleum sector grew for the second year in a row, increasing by 27 per cent to $10.6 million.
WA also received $776 million in grants for the North West Shelf project, a decrease of 8 per cent on 2018 owing in part to the impact on sales of an extended maintenance cycle on offshore platforms and Tropical Cyclone Veronica.
4 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 Western Australian 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.
5The 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
Western Australia’s (WA) mining industry consisted of 116 predominantly higher-value and export-oriented mining projects in 2018-19.
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 to 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 total number of principal mining projects has returned to the same level as 2017-18. The decline is predominantly due to the depletion of resources at several, mostly small-scale, gold projects that re-started in a high price environment. The number of gold projects was down to 47 in 2018–19 from 53 in 2017–18. The number of iron ore and nickel projects were also down due a combination of depleted resources, challenging market conditions and operational changes.
WA’s petroleum industry consisted of 23 projects producing oil, gas and condensates from 57 fields.
The total number of petroleum projects is down from 24 in 2017–18, with the end of production at Fletcher-Finucane, Mutineer-Exeter and Red Gully, offsetting the start-up of the Ichyths LNG and Prelude FLNG projects.
However, the number of producing fields has actually increased from 54 fields, largely due to the Greater Western Flank Phase Two expansion of the North West Shelf project coming on stream in October 2018.
For an overview of how Western Australia’s key commodities performed, please see 2019 mineral and petroleum commodity review.