ONE decision has towered over all others in the Western Australian resources sector in recent months – the final go ahead of the giant Gorgon liquefied natural gas project at Barrow Island.
ONE decision has towered over all others in the Western Australian resources sector in recent months – the final go ahead of the giant Gorgon liquefied natural gas project at Barrow Island.
At more than $43 billion, the Chevron-managed venture is the single largest resources development ever undertaken in Australia and was the biggest resources investment approved anywhere in the world last year.
It also accounts for more than half the total $82 billion value of the 10 largest resources projects currently under way in WA.
So when the green light was finally given to Gorgon in September last year, it delivered a welcome confidence boost for a swag of other investment projects across the state.
One of the interesting features of the post-Gorgon wave of investment has been the renewed enthusiasm for commodities that were virtually untouchable during the downturn.
Nothing typifies that change more than the planned re-opening of the massive Ravensthorpe nickel mine in the state’s south.
The $3 billion Ravensthorpe project became the defining image of the global downturn in Australia when BHP Billiton closed the operation in February last year, barely eight months after it produced its first nickel.
The shock closure resulted in the loss of more than 1,800 jobs, decimating the nearby town of Hopetoun, which had become almost totally reliant on the mine for its livelihood.
Underlining perceptions that the nickel industry was headed for oblivion, BHP also cut 300 jobs at its Leinster and Mt Keith mines, while Russia’s Norilsk Nickel closed its sole surviving WA mine.
But after a year of stronger nickel prices, Ravensthorpe is poised to lead a remarkable bounce-back by the nickel sector.
In December, Canadian miner First Quantum Minerals snapped up the entire project from BHP for just $370 million, and expects to spend just $150 million more to modify the plant and bring it back into production next year.
First Quantum has since begun a concerted campaign to recruit the 600 workers it needs to complete the modifications and plans to start recommissioning the plant by next March.
Meanwhile, rapidly emerging WA nickel miner Western Areas has just completed development of its Spotted Quoll mine, its second mine at the company’s flagship Forrestania nickel project, and is now planning a third mine in the area.
At the same time, Mincor Resources has re-opened its Miitel nickel mine near Kambalda, while Andrew Forrest’s Poseidon Nickel has resumed refurbishment at the historic Windarra nickel project.
Renewed confidence has not only enabled new life to be breathed into stalled nickel developments in recent months.
The ill-fated Windimurra vanadium mine near Mt Magnet is now slated to start production by mid next year, following its acquisition by Michael Minosara’s Atlantic Limited early this year.
The original project was dismantled after just three years in 2004, while a $200 million redevelopment was 85 per cent complete when owner Windimurra Vanadium went bust in the downturn last year. Atlantic now expects to spend $100 million completing construction over the next year.
Similarly, aspiring rare earths producer Lynas Corp is on track to complete development of its $135 million Mt Weld rare earths mine and concentrator late this year, followed by a $300 million metals plant in Malaysia next year.
The project, which will make Lynas one of the biggest Western producers of rare earths, was stalled last year after Chinese financiers cancelled a $500 million funding deal.
Another specialty commodity to burst back onto the radar of project developers has been lithium, an extremely strong, lightweight metal able to withstand extreme heat that is now vital for lightweight lithium ion batteries used in electric vehicles and communication devices.
Perth junior Galaxy Resources will become Australia’s second lithium producer this month when it produces first concentrate at its $130 million Mt Cattlin mine near Ravensthorpe.
Meanwhile, fellow WA lithium miner Talison Minerals is evaluating a possible restart of its Wodgina tantalum mine in the Pilbara, to cash in on resurgent prices for tantalum, which is used in mobile phones and other high-tech electronics.
Created from the wreck of Sons of Gwalia, Talison is already a major lithium miner at Greenbushes.
