Mines and Petroleum Minister Norman Moore says the strength of the state's iron ore industry masked the warning signs from the nickel sector where the outlook is "not promising".
Mines and Petroleum Minister Norman Moore says the strength of the state's iron ore industry masked the warning signs from the nickel sector where the outlook is "not promising".
Addressing delegates at a nickel conference in Perth today, Norman Moore said despite the previous financial year being regarded as the peak of the mining boom, "storm clouds were already appearing on the horizon".
The clouds reflected in the quantity of sales from WA, which fell by around 2 per cent to 171,000 tonnes while the value of sales plunged 34 per cent compared to the previous year.
"As a result, the royalties to government from nickel fell by 14 per cent," Mr Moore said.
"These were not good signs for what was supposed to be the peak of the mining boom. There is much that has been hidden by the strength of iron ore."
The price of nickel has fallen from a peak of around $US51,000 per tonne early last year to its current price of $US10, 502/t, according to the London Metal Exchange.
Considering these figures and the current economic climate, Mr Moore said the immediate outlook is not looking to good for the sector, which has also been affected by the Varanus Island gas explosion that cut the state's gas supply by a third.
Mr Moore said the result of the explosion has forced the suspension of production at the Cawse nickel mine and the closure of the Kalgoorlie nickel smelter for maintenance.
"The full impact of this on Western Australia's resources industry generally, and nickel in particular, is unclear but the immediate outlook is not promising," he said.
The nickel industry is the state's third largest resources sector in terms of value of production, recording $5.3 billion in 2007-08. The industry is surpassed by the iron ore and petroleum sector.
Mr Moore also re-iterated his pledge to overhaul the approvals process to increase certainty and confidence in the resource sector.
"ABS data shows that in 2007-2008, the sector spent $280 million on exploration for nickel/cobalt in Western Australia - equivalent to 22 per cent of the total mineral exploration effort in WA. This is up from the $158 million and 19 per cent of the total in the previous year," Mr Moore said.
"However, over recent years, despite boom conditions, expenditure on exploration in WA has not kept pace with the growth in the rest of Australia nor internationally.
"There is acceptance that State Government approvals processes present a significant deterrent to exploration and development activity.
"We will reform the system to ensure that there is a consistent, co-ordinated and responsible approach that will allow developers to get on with contributing to the economy as quickly and as positively as they can."
