Workforce focus amid battery metal woes

January was a challenging month for many in the state’s mining and mineral processing sectors, as project operators grappled with a reality far different from that forecast a few years ago.

Depressed nickel prices affected by a market flooded by scaled-up Indonesian supply claimed five nickel projects in three weeks, to some degree.

It was only a few years ago that nickel was forecast for strong price growth, particularly that produced to greener standards (as per Australia’s nickel sulphide deposits).

For years, producers and developers have highlighted the green credentials of Australia’s nickel compared with what they say is dirtier product from abroad, specifically Indonesia, which accounts for about 50 per cent of the world’s production.

Compared with sulphides, nickel laterites are typically harder and more costly to process, but account for around 60 per cent of the world’s resources, including Indonesia’s abundant deposits.

Following a ban on raw nickel exports in 2020, which was designed to foster downstream processing growth, Indonesia imposed export tariffs on lower-grade nickel pig iron and nickel matte in 2023; a move that further incentivised Australian industry to make investments in local processing to battery standards.

The supply of competing nickel products has grown as a result, although the widely held expectation that battery material users will pay a premium for green product has yet to become a reality.

Indonesian projects can produce material cheaper and were less affected by the 45 per cent decline in the price of the metal on the London Metals Exchange over the course of 2023.

Conversely, Australian projects have felt pain.

The first to go was Panoramic Resources’ Savannah nickel project near Halls Creek, where production was suspended as the nickel price came off further after the appointment of administrators FTI Consulting in mid-December.

About 140 direct redundancies were announced at Savannah.

A week later, Canada-listed First Quantum Minerals announced a suspension of mining at its Ravensthorpe nickel operations as part of a three-year plan for the asset.

Redundancy will affect about 125 of the 420 direct employees at Ravensthorpe as the company transitions to process its existing stockpiles through a less-intensive circuit for 18 months.

Five days after the Ravensthorpe news, Wyloo Metals – the privately owned nickel arm of Andrew Forrest’s business empire – announced it would place its Kambalda nickel operations on care and maintenance.

Wyloo said 44 direct jobs would be affected by the announcement. A further 220 contractors would be affected.

BHP revealed it would suspend processing of third-party ore at its Nickel West processing operations as a result, given Wyloo was its major customer, with 20 jobs to go.

Then, on January 31, IGO revealed it would mothball the Cosmos project it acquired in its $1.3 billion move for Western Areas in 2022.

The jobs impact of the Cosmos move was less than clear at time of writing, but Business News understands 200 staff are directly employed at the project.

Between the nickel closures came announcements in lithium, a commodity with its own significant challenges of late.

Perth-headquartered Core Lithium made the call to suspend its Finniss lithium mine in the Northern Territory days ahead of the Panoramic announcement, citing an 85 per cent plummet in the price of spodumene during the past 12 months.

The closure of Finniss would come at a cost of around 150 jobs.

South of Perth, US-listed chemical giant Albemarle revealed it would scale back plans at the Kemerton lithium hydroxide plant, pausing work on a fourth processing train in a move expected to impact fewer than 30 jobs.

By far the biggest announcement of the lot was that of Alcoa of Australia, which revealed it would cease production at its 61-year-old Kwinana alumina refinery, which by the end of 2023 was a marginal asset, according to the management of its US parent company.

Around 750 jobs will be lost as part of the scaled closure of Kwinana’s processing operation, where production will cease in the September quarter. The closure will also affect 250 contractors.

Through sheer size, the refinery decision will have an employment impact on a different scale.

Measuring impact

February 15 will be a date circled in the calendars of those in positions of economic influence, as they await the Australian Bureau of Statistics’ publication of the nation’s most recent jobs data.

A record 1.59 million people were employed in Western Australia at the end of December, according to trend data from the ABS, representing a 15th consecutive month-on-month increase since September 2022.

The employment-to-population ratio, which factors in the impacts of population growth on job numbers, sat at 66.9 per cent in December. (The record high 67.4 per cent ratio was recorded around the time the state’s borders reopened in March 2022.)

The February 15 data will reveal whether WA will continue its employment growth trajectory to 16 months in January.

It is unlikely to tell the full story, however.

The jobs data won’t be immediately affected by decisions made in the mining and minerals processing sectors, with most scaling down their operations over the months to come.

Even then, the headline jobs figures are not always an accurate reflection of the on-ground impact.

At Wyloo’s Kambalda operations, work is being done to find potential job opportunities for affected direct staff within other areas of the business, and the broader Forrest empire.

All employees have been offered retention packages, and the company is exploring opportunities at Fortescue and in other underground mining companies for those who might lose their roles.

Around 220 contractors are engaged by Wyloo at Kambalda through Pit N Portal, a business currently being sold by Emeco Holdings to Macmahon under a surprise deal announced late last year.

Wyloo said it was working with Pit N Portal to mitigate the impact of the closure on contractor jobs.

“Our priority is to support our people through this transition, and we will work with our contractor partner and Fortescue to explore potential job opportunities for impacted employees,” Wyloo chief executive Luca Giacovazzi said.

For First Quantum, the decision made at Ravensthorpe had the added element of the company’s impact on nearby Hopetoun, where it has established a significant community of drive-in, drive-out workers among its 420-strong direct staff.

About 125 jobs at Ravensthorpe will be made redundant, and contractors engaged at the site are expected to be redeployed to other projects.

“We will retain most of our residential and FIFO workforce, thereby supporting the communities of Hopetoun and Ravensthorpe and providing income for the region and WA,” Ravensthorpe project general manager Scott Whitehead said when the move was announced.

Thiess-owned MACA was awarded the contract for open-pit mining at Ravensthorpe in 2019, estimating at the time the work would generate 230 jobs.

Shire of Ravensthorpe president Tom Major said despite mitigation efforts, the shift at the nickel project would have a significant impact on the local community, which has a population of just over 2,000.

“This will undoubtedly affect many members of our community and we must unite in facing these challenges,” he said.

“Our community has demonstrated resilience in the past and we can overcome this together.”

Community impact is less pronounced at Panoramic’s Savannah project, where the vast majority of employees are fly-in, fly-out, but the implications for the staff made redundant with entitlements outstanding could be more complex given the company is in administration.

Employees seeking payment for their entitlements will become creditors, ranked above the claims of unsecured creditors.

They may also have avenue to tap the Commonwealth Fair Entitlements Guarantee scheme in the event of a shortfall, according to FTI Consulting.

Over at Cosmos, IGO said it expected to be able to offer some of its 200 staff redeployment opportunities, though some jobs would be made redundant.

Perenti subsidiary Barminco was contracted for underground mining services and production work at the Odysseus development within Cosmos, with a further 179 staff onsite.

The contractor plans to transfer all staff to other sites across its portfolio and no redundancies are expected on its part.

Albemarle and BHP Nickel West’s decisions were also moderate in terms of job impact.

However, both broader operations will be watched with intent if the immediate-term frailty of the markets they supply persists. That’s particularly the case at Nickel West, which is “evaluating options to mitigate the impacts of the sharp fall in nickel prices”, according to BHP chief executive Mike Henry last month.

So, too, will Glencore, owner of the Murrin Murrin nickel project in the north-eastern Goldfields, which produced 13 per cent less nickel in 2023 than it did a year earlier as a result of maintenance works.

Alcoa’s refinery closure, which accounts for around half of the job losses announced in the sector in January, is a much larger employment story.

At the time of the announcement, the state government announced a dedicated team would be placed on standby at South Metropolitan TAFE to support workers looking to transition into other industries.

Mobilised teams from the state’s 19 Jobs and Skills Centres have been engaged to support the Alcoa workforce, with a potential career pivot a reality facing workers settled in the Kwinana area.

The Property Council of Australia’s WA branch and the Housing Industry Association were quick to issue a statement on behalf of the building sector, where more than 6,000 jobs were advertised in January.

“The property and construction industries … are ready to welcome these workers with open arms,” Property Council WA interim executive director Emily Young said.

“The skills and experience these workers have are highly sought after by the property and construction industries, which can offer diverse, exciting careers and a strong pipeline of work.

“From electricians and welders to boilermakers and industrial painters, there are thousands of jobs currently on offer in Perth’s property and construction industries.”

HIA estimated 1,000 extra workers could help deliver 1,000 extra houses each year in a market seeking to clear a significant bottleneck of residential builds.

Ongoing theme?

Training and Workforce Development Minister Simone McGurk said recent job losses reflected the sector’s economic reliance on external forces.

“Recent project closures are a reminder that the mining industry is subject to cyclical commodity price fluctuations and other market forces,” she said.

Ms McGurk said other factors had affected Alcoa’s phased decision at Kwinana, which remained a strong employer operating two other refineries in the state.

The minister said she was confident the state’s economy could absorb the impact of the job losses.

“Strong feedback from the mining industry is that most impacted workers will either be redeployed by their existing employers or taken on by other companies looking to fill vacancies,” Ms McGurk said.

“WA’s booming economy means the skills that impacted workers have acquired will be in demand, not only in mining but across a range of sectors including clean energy and defence.

“However, I recognise that for many of us, jobs are more than a pay cheque, they’re a part of our identity.”

Chamber of Minerals and Energy of Western Australia chief executive Rebecca Tomkinson said recent price declines in nickel and lithium highlighted the importance of Australia maintaining a competitive cost position in all commodities.

“Swings in commodity prices are not uncommon in the sector and unfortunately those swings can be both significant and sudden,” she said.

“Like businesses in other industries, worsening market conditions can require resources firms to reduce expenditure to remain viable.”

The CME was front and centre in crisis talks held between state and federal government and nickel and lithium industry representatives in Perth late in January.

Ms Tomkinson said well-informed industry support from government was critical to protect the sector in the short term.

“We’ve made it very clear that targeted and evidence-based government support makes sense for the nickel and lithium sectors in the near term, given the significance of the battery and critical minerals sector to local employment, the economy and our national strategic interests,” she said.

“A successful and growing resources sector helps support a whole range of jobs, including jobs in affiliated businesses that rely on the minerals and energy industry, and governments can assist directly and indirectly.

“Competitive fiscal settings, infrastructure funding, and regulatory reforms that deliver higher productivity are within the control of government, so there are many areas it could actively work to address.”