Industry activity indicators

2018 review of mineral and petroleum industry activity

Key indicators of the overall performance of the resources sector include the number of people employed, the level of investment and exploration activity, royalties received by the State Government and the number of principal mining projects.

Employment

According to data collected by DMIRS, the average number of individuals employed in the WA minerals sector in 2018 was 120,4371. This compares with the number of full time equivalents (FTEs) which was 96,844 in 20182. The eight and nine per cent respective increases represent the second year in a row of employment growth for the sector.

The iron ore and gold sectors together account for 70 per cent of mineral sector FTE employment with the third largest being the alumina sector at just seven per cent.

The average number of people employed by the State’s onshore petroleum sector also improved for the second year running, up slightly from 1362 to 1391 people. However, the number of FTEs dropped from 1427 to 12763.

[1]  Total Number of Individuals (NoI): The number of individual people who have performed at least one hour’s work on a mine site or for a mining company.
[2] Full-Time Equivalent (FTE): The total number of positions that would be available within the mining industry if all work was performed by standardised full-time employees.
[3] This figure comprises only operations subject to State petroleum legislation, and excludes LNG operations and land based service operations.  

Investment activity

Almost $18 billion was invested in WA’s mining industry in 2018, representing 52 per cent of national expenditure.

Decreasing investment is not just a local issue. A study by PwC found that capital expenditure by the world’s 40 largest miners is at 10-year lows. This is despite revenue surging 23 per cent and profit rising 126 per cent in the last year.

Nationally, mining investment has fallen for the sixth consecutive year, down almost $60 billion (63 per cent) in just six years. The decline has been slightly more severe for WA, with mining investment falling 65 per cent over the same period.

The substantial decline in investment is largely the result of the completion of major, multi-billion dollar projects committed to during the iron ore and LNG investment boom. While the scale of investment seen between 2011 and 2014 is unlikely to be repeated soon, investment interest remains, albeit at a smaller scale. Lithium and other battery material related sectors have attracted substantial investment, while the more traditional gold and iron ore sectors continue to be a target for mergers and acquisitions as well as new and expanded projects.

 

In monitoring investment activity in WA, DMIRS also collects information on mineral and petroleum projects to estimate actual and possible investment. Where possible, information is collated relating to expected capital expenditure, project timing and employment during both the construction and operation phases4.

As at March 2019, WA has an estimated $113 billion worth of resource projects in the pipeline, up almost $5 billion on the September 2018 estimate largely on the back of possible and planned LNG projects.

The value of projects under construction or in the committed stage of development is an estimated $25 billion, while the value of planned or possible projects is estimated to have increased to $88 billion. The increase follows proposed investment in the $9.5 billion Clio-Acme LNG project.

Notable announcements over the period included:

  • In November 2018, the North West Shelf Joint Venture signed a non-binding preliminary agreement with the Browse Joint Venture and Chevron to process respective gas resources through an expansion of the North West Shelf facilities. The proposal includes expanding and connecting the Pluto LNG facility to the Karratha LNG plant to enable the processing of additional gas and fluids from Scarborough, Browse, and the Clio-Acme fields. A final investment decision on the project is expected in 2020.
  • The development of Woodside’s Scarborough project is estimated at $14.3 billion and is expected to employ around 2400 people during construction, with 500 ongoing roles once the project reaches production around 2023.
  • Rio approved the $3.5 billion development of its Koodaideri iron ore project, incorporating a 43 mtpa mine, processing plant and infrastructure, and a 166 kilometre rail line. Construction was announced to start in 2019 with first production in late 2021. A $44 million pre-feasibility study into a second stage development of Koodaideri was also approved.
  • Western Areas approved development of the $299 million Odysseus underground nickel mine in Leinster. First production is expected in 2022 and will produce 130,000 – 140,000 tpa of contained nickel for 10 years.
  • A $127 million refurbishment of the Windimurra vanadium plant. Construction is expected in April and the plant is planned to produce 7750 tonnes for 25 years.
  • Covalent Minerals (the SQM and Kidman Resources joint venture) expects to go ahead with the US$601 million Mount Holland lithium mine and concentrator and Kwinana refinery in the first half of next year.

A number of resource projects were completed since the September 2018 update including:

  • Rio Tinto’s West Angelas expansion ($120 million)
  • Stage 2 at Newcrest’s Telfer gold project ($93 million)
  • Mineral Resources’ Wodgina concentrator plant ($610 million)
  • Image Resources Boonarring mineral sands project ($52 million)

Around 11 resource projects, accounting for around $5 billion in investment, are expected to reach production in 2019 including Gold Fields and Gold Road Resources’ Gruyere gold project, Tianqi’s lithium hydroxide plant, BHP’s nickel sulphate project and Woodside’s Greater Enfield oil project.

[4] Mineral and petroleum projects are categorised as follows:

  • Projects under construction – those actually under construction.
  • Committed projects – company has reached a final investment decision (FID)
  • Planned projects – those undergoing advanced feasibility studies including definitive and bankable feasibility studies and Front End Engineering and Design (FEED).
  • Possible Projects – comprise those raising capital but not yet conducting definitive and bankable feasibility studies.

Exploration activity

WA accounted for 61 per cent ($1.3 billion) of Australia’s total mineral exploration expenditure ($2.2 billion), meaning its share of national expenditure actually fell despite a 19 per cent increase in the dollars spent.

Gold exploration continued to drive the bulk of increased investment spend with $642 million in 2018 compared with $550 million in 2017.

Petroleum exploration expenditure in WA increased for the first time since 2013, from $493 million in 2017 to $672 million in 2018. WA’s share of national petroleum exploration expenditure was also up to 58 per cent from 41 per cent. National petroleum exploration expenditure continues to decline dramatically, having fallen 76 per cent ($3.6 billion) since 2014.

Royalty receipts
Includes the Commonwealth's share of royalties collected under the Western Australian Petroleum Submerged Land Act (PSLA).

Royalties

The WA Government received royalty revenue from the State’s mineral and petroleum producers totalling $6.1 billion in 2018, a decrease of $7.4 million (less than one per cent) on 2017.

Iron ore provided the bulk of collections (74 per cent) for 2018, however this was down by 7.5 per cent ($362 million) on last year’s receipts. Consistent with the better market conditions seen in the gold sector, gold royalties rose more than four per cent to $279 million in 2018. Royalty receipts from the alumina sector increased 38 per cent to $120 million.

Petroleum royalty receipts more than doubled to $8.3 million, following a 21 per cent increase in 2017. The State also received $832 million in grants for North West Shelf (NWS) project which helped to offset the decrease in iron ore receipts. The 34 per cent increase in NWS grants followed the start-up of significant LNG projects.                                              

For an overview of how Western Australia’s key commodities performed, please see 2018 mineral and petroleum commodity review.

 

Principal mining projects

Western Australia’s mining industry consists of 127 predominantly higher-value and export-oriented mining projects, hundreds of quarries and small mines producing clays, construction materials, dimension stone, gypsum, limestone, limesand, spongolite, gems and semi-precious stones, as well as major mineral processing projects that produce alumina, refined gold, nickel matte, silicon metal and titanium dioxide.

The principal mining projects accounted for 99 per cent of the State’s $88 billion in mineral sales in 2017-18.

The total number of principal mining projects is up almost 10 per cent from 116 in 2016-17.

The increase in the number of principal mining projects is largely due to the start-up and re-opening of several gold projects.The number of principal gold projects numbered 53 in 2017-18, up from 43 in 2016-17.

At the same time, continuing its growth from 2016-17 amid anticipated demand for battery technologies, the lithium sector saw the start-up of another two new projects at Bald Hill and Pilgangoora.

In the iron ore sector, for the first time in several years, the Phil’s Creek project produced low grade ore that was used to supplement feed from the Iron Valley project. Mining operations at Iron Hill commenced, replacing production from the depleted Extension Hill mine, while sales from the Wodgina and Tallering Peak projects both ceased. As a result, there were 28 principal iron ore projects in 2017-18, down from 29 in 2016-17and 36 in 2014-15.

While the numbers of principal mining projects for most other commodities were fairly stable, there were some exceptions:

  • There were three silica sand projects in 2017-18, up from two in 2016-17, following an increase in sales from the Moora project that resulted in it qualifying as a principal project.
  • There were nine nickel projects in 2017-18, down from 10 in 2016-17 with the Savannah project ceasing sales of stockpiled materials after it was suspended in May 2016 amid challenging market conditions.
  • The Yoogarillup mineral sands mine commenced operations in the December 2017 quarter, replacing output from the depleted Dardanup mine.
  • Campaign manganese mining operations commenced at Horseshoe Range, while ad-hoc sales from Nicholas Downs were completed.

In the past year, there were also several sales and acquisitions in the State’s minerals sector, with the following projects changing owners:

  • Darlot gold project
  • Edna May gold project
  • Eureka gold project
  • Jaguar base metals project
  • King of the Hills gold project
  • Koolyanobbing iron ore project
  • South Kalgoorlie gold project

For a listing by financial year of Western Australia’s principal mining projects,as well as the principal producers of basic raw materials and the State’s major mineral processing projects, please see the series of files below.

Western Australias principal mining projects

Western Australias principal mining projects (2017-18) - 143 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2016-17) - 116 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2015-16) - 115 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Western Australias principal mining projects (2014-15) - 119 Kb

A list of Western Australia’s principal mining operations by commodity and financial year.

Each principal mining project produced commodities valued at over $5 million (or more than 2500oz of gold). Projects on private land, for which production values are not required to be reported, are included where employee numbers were greater than 50.