CME WA chief executive Rebecca Tomkinson.

Nickel pain spelled out in dire report

Wednesday, 7 February, 2024 - 15:06

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About 10,000 jobs and $1.8 billion worth of investment is at risk if Australia’s nickel industry collapses, fresh figures unveiled today reveal.

The data, contained in a Chamber of Minerals and Energy WA-commissioned report written by Madala released on Wednesday, backed mounting concerns the nation’s industry was on the brink of collapse due to a flood of cheap Chinese-backed Indonesian product.

Headwinds identified included a 28 per cent cost disadvantage compared to Indonesia, which has led to the closure of five nickel mines since September 2023.

Those closures have wiped out 33 per cent of domestic production, and a further 31 per cent is said to be at risk.

CME WA chief executive Rebecca Tomkinson said the research was a further wake-up call for state and federal governments to take urgent action to ensure the sector’s viability.

“If Australia is to compete in a market where other countries have significantly lower costs and substantially more competitive policy settings, we need urgent and immediate action from government for all critical and battery minerals,” she said.

“With no domestic nickel industry, Australia’s battery ambitions go out the window, along with downstream processing and our value-add place in the global supply chain.

“The situation is serious for lithium and other critical minerals but is acute for nickel.”

Madala's report estimated production costs for Indonesian nickel at $US13,300 per tonne, nearly $US4,000/t cheaper than what Australia can currently manage.

As production costs plummet in Indonesia, production has also increased, up 54 per cent between 2021 and 2022.

All of this has come at a time where demand for electric vehicles has eased and input costs have grown.

Ms Tomkinson said the federal critical minerals strategy, which nickel, lithium and copper are not on, needed to be revisited and measures discussed at the recent industry crisis meetings in Perth had to be actioned.

“As we outlined at the industry roundtables, temporary and targeted royalty relief is an immediate action the Western Australian government should be considering, in addition to action on low-emissions energy supply, turnkey strategic industrial areas and streamlining end-to-end approvals processes,” she said.

While ominous in its warnings about the dire state of the industry today, the report detailed opportunities for Australian nickel including 9 per cent annual demand growth, and generating lower emissions compared to Indonesia, China and Brazil.

Australia, which holds 18 per cent of the world's known nickel reserves, was found to be the only jurisdiction with large quantity and a low-risk operating environment.

Indonesia, which holds 42 per cent of reserves, produces substantially higher emissions from its operations, and many of its mines will be ineligible for US Inflation Reduction Act support due to Chinese investment.

It wasn't all good news on the IRA front, however, with the report noting the IRA would undercut Australia's downstream processing due to its focus on advanced manufacturing production credits.

Resources Minister Catherine King last month committed to investigating a similar measure following crisis talks.

Mining and Energy Minister David Michael has undertaken to consider royalty relief, among other measures.

Battery mineral woes