Royalty relief for nickel miners

The state’s nickel miners will receive a 50 per cent royalty rebate over 18 months, as the government looks to mitigate the disastrous impact of the metal’s recent price collapse.

Premier Roger Cook announced the relief measure this morning, after weeks of talks with industry group and his federal Resources Minister Madeleine King.

The change will deliver a 50 per cent rebate on nickel royalties paid to the government from sales over the next 18 months, starting from the March Quarter.

It will apply when nickel concentrate prices are below $US20,000 per tonne.

Nickel concentrate is currently trading on the London Metals Exchange at $US16,258 per tonne.

The royalty will need to be repaid in quarterly instalments, over the following 24 months.

Companies will need to apply for financial assistance and provide details of their need for support to access the royalty relief.

That includes information on their finances and projected economics, as well as steps taken to adjust to the price environment and structural changes in the sector.

It comes a day after the federal government added nickel to the critical minerals list, giving the industry access to finance under the $4 billion Critical Minerals Facility and other grant programs.

Premier Roger Cook said the government’s Nickel Financial Assistance program would support the industry in its hour of need.

"The nickel industry supported almost 10,000 jobs, and generated sales of more than $5 billion last financial year,” he said.

"It is also an essential component of the state's vision of becoming a global hub for the downstream processing of battery metals.”

The news comes the same week of the revelation that BHP was weighing up closure of its Nickel West operations in WA after a massive write down.

A suite of nickel producers suspended, curtailed or announced closures to their operations over the course of January.

A flood of Indonesian nickel supply led the price to halve over the past year, following a change in policy which requires nickel producers to partially process their output in-country.

The LME also began accepting Indonesian-origin nickel products, which overwhelmed the previous supply environment.

Australian nickel product, produced largely from sulphides – rather than laterites – and to higher environmental standards, is also costlier.

A wide-held belief that the market would be willing to pay a premium for greener product is yet to come to pass.

Prices are expected to stay low for years until the surplus is corrected, according to Ms King.

The state’s Mines and Petroleum Minister David Michael said the nation’s nickel miners needed the royalty support to keep going.

"Our nickel miners are competing internationally with mining jurisdictions that have significantly lower environment, social, and governance standards,” he said.

"It's important that they are supported to weather the storm of current market conditions, so they can be part of ongoing and future efforts to decarbonise the globe.”

Treasurer Rita Saffioti reiterated that the royalty assistance was consistent with programs previously rolled out to help the struggling lithium and junior iron ore sectors when market conditions changed.

Nickel miners generated $140 million worth of royalties for the state in the 2022-23 financial year, a 30 per cent increase on the year prior. 

A report commissioned by the Chamber of Minerals and Energy WA found as many as 10,000 jobs and $1.8 billion worth of investment would be at risk if the state’s nickel industry were to collapse.