Western Australia’s resources middle tier could be at the heart of $170 billion in GDP growth by 2040, but only if the nation acts on its critical minerals opportunities, according to PwC.
Western Australia’s resources middle tier could be at the heart of $170 billion in GDP growth by 2040, but only if the nation acts on its critical minerals opportunities, according to PwC.
The firm’s annual Aussie Mine report released today found the value of Australia’s middle-tier miners surged 37 per cent last financial year to $155.9 billion, dominated by WA critical minerals.
The report ranks the 50 largest Australia-listed mining companies by market capitalisation, excluding Australia-based global miners.
WA companies comprised 37 of the nation’s mid-tier top 50, including the list’s top seven.
Pilbara Minerals climbed to the top of the list in FY23, above Northern Star Resources and Mineral Resources. IGO and Allkem rounded out the top five.
Pilbara’s ascent highlighted a broader trend across the top 50.
The number of critical minerals companies on the list fell by one year-on-year to 22, but those companies made up 57 per cent of the list’s overall market capitalisation.
PwC said Australia had the chance to generate more than $170 billion in gross domestic product by 2040 if it capitalised on its critical minerals advantage, with WA at the heart of it.
But the report warns more needs to be done to facilitate opportunity.
“In short, we’ll only get this prize if we are bold enough to think differently and act now,” PwC Australia WA energy and mining leader Justin Eve said.
“Given WA’s dominance in the MT50, we believe the state is well placed to contribute to this monumental opportunity and reap the rewards of an industry that could swell by 330,000 jobs by 2040.
“It is a race. And while market movement shows strong growth in the MT50 critical minerals players, more needs to be done to ensure we capitalise on a narrowing window of opportunity.”
The report said while Australia had made some progress in facilitating critical minerals opportunity growth, international jurisdictions were pushing ahead with more significant moves to develop their own industries.
PwC identified exploration funding and incentives; infrastructure support for critical minerals growth; direct market intervention to address potential failure; greater industry and geographical collaboration; regulatory simplification and the prioritisation of talent as areas of need.
The report comes as the state government explores a refresh of its critical minerals strategy, with a view to prioritising in-state downstream processing. A public consultation period is currently open.
It follows the release of a federal critical minerals strategy earlier in the year, which was followed by a $2 billion expansion in financing through the critical minerals loan facility.
PwC said organisations would also need to reconsider their approach to net zero.
“There is undeniable demand for critical mineral production, but mining companies can also play an active role in rethinking their approach to sustainability,” Mr Eve said.
“It all comes down to how we approach climate and ESG regulation and, on that front, organisations across the country face critical choices.”
Making moves
A number of companies left Australian mining’s middle tier during the past financial year, highlighted by the departure of OZ Minerals and Mincor Resources, which were acquired by BHP and Andrew Forrest’s Wyloo Metals, respectively.
PwC said it expected more deals to come, with three significant pending lithium transactions – the merger of Allkem and Livent, the proposed acquisition of Azure Minerals by SQM and Mineral Resources’ move for the Bald Hill mine – setting the scene in the current financial year.
“Miners face an intensely competitive environment for critical minerals assets, as the sector attracts new buyers from other sectors such as industrial companies,” Mr Eve said.
“We expect to see more deals combining traditional mining companies with chemicals companies to unlock value from downstream activities.”
Azure was the shooting star in the top 50, recording a 950 per cent increase in market capitalisation to rank 47th overall at the end of the financial year.
Raleigh Finlayson’s Genesis Minerals was another new entrant, ranking 29th overall.
Latin Resources, Arafura Rare Earths, Develop Global and Argosy Minerals were also represented in the top 50 list for the first time.
Liontown Resources, the lithium developer that was the subject of a scuppered takeover offer from Albemarle earlier in the year, ranked seventh overall behind Lynas Rare Earths.
Operating cash flows were up 29 per cent among the companies featured in the list, to $24.6 billion, while revenue was up 37 per cent to $60.9 billion.
Business News' Data & Insights offers further analysis of public-listed WA resources companies, with ranking by total revenue.
