An overview of the latest key information on the performance of the State's resources industry.
Mineral and petroleum review 2021
Western Australia’s resources sector continued to operate largely without interruption in 2021 as the State remained sheltered from the most severe impacts of the global COVID-19 pandemic.
This helped the sector to deliver another mineral and petroleum sales record of $230 billion.
This surpasses the previous record for a single calendar or financial year of $211 billion set in 2020-21, and is more than $50 billion greater than the $177 billion in sales for 2020.
The iron ore industry remained the bedrock of the sector’s success with sales valued at $157 billion as the price of benchmark grades peaked at all-time highs of more than US$200 per tonne in the middle of the year.
The result was also supported by strength in several other commodities:
- The recovery in oil prices from 20-year lows translated into LNG production valued at $28 billion, up 44 per cent from 2020, while the value of condensate production almost doubled to $6.8 billion.
- While gold sales were down from previous record levels, they were still valued at more than $16 billion in an environment of economic and geopolitical uncertainty.
- Market conditions in the lithium sector were very buoyant with record spot prices and local sales volumes driving a three-fold increase in the value of sales to an all-time high of $2.6 billion.
- Copper (a record $1.8 billion), nickel ($3.7 billion and the highest level since 2012), alumina ($5.9 billion), mineral sands (a record $979 million), salt (a record $600 million), and rare earths ($569 million) had higher sales on the back of increased prices.
These results were achieved despite an overall stronger Australian dollar, which averaged 75 US cents for the calendar year from higher bulk commodity prices and weakness in the US dollar, particularly in the first half of the year.
The mining of minerals again dominated activity in the State’s resources sector with $191 billion in sales. It accounted for 83 per cent of all sales, which was down from 89 per cent in 2020-21 and 85 per cent in 2020 due to a recovery in oil and gas commodities.
Iron ore remained by far the most valuable mined commodity in Western Australia. It accounted for 82 per cent of the value of all mineral sales and 68 per cent of all minerals and petroleum sales in 2021. While iron ore remained the State’s dominant commodity, its share was down from previous record levels of 83 per cent and 74 per cent in 2020-21.
It achieved record sales valued at $157 billion, up marginally from the previous record of $156 billion set in 2020-21 and by 33 per cent on the previous calendar year, due to the price of benchmark grades reaching more than US$200 per tonne in the middle of 2021 and peaking at all-time high of US$235 per tonne ($364 per tonne) in May 2021. Overall higher prices were a response to ongoing tight supply, including a slow recovery in production from operations in Brazil, and stronger demand in China’s steel industry stemming from increased construction sector activity in the recovery effort from COVID-19.
Iron ore sales volumes declined by nine million tonnes (Mt) to 838 Mt from 847 Mt in 2020, largely due to Rio Tinto’s Pilbara operations being impacted by above average rainfall in the first half of 2021, cultural heritage management, as well as delays in growth and production sustaining projects.
Gold sales were valued at $16 billion. This was down from previous record levels ($17.3 billion in 2020), but still the third highest all-time level. The price of gold in US dollar terms achieved record levels again in an environment of ongoing economic uncertainty and weak growth created by the COVID-19 pandemic, as well as trade and geopolitical tensions. However, for local producers, the price gains were offset by a stronger Australian dollar. There was 6.7 million ounces of gold produced in the State, the lowest level since 2016-17. This fall was not due to any single operation but rather represented a general decrease in production across the industry associated with worker shortages and the processing of lower-grade ores.
The value of alumina sales increased (to $5.9 billion) on the back of higher prices supported by improved downstream aluminium demand from increased infrastructure spending in China and elsewhere, as well as price arbitrage which favoured imports (i.e. import prices were lower than domestic prices in China) in the second half of the year. This was despite a marginal fall in sales volumes from previous records levels due largely to impacts on output from the Worsley operations including adverse weather, delays to shipping schedules, and planned maintenance.
The local nickel industry marked a fifth consecutive calendar year of growth, achieving $3.7 billion in sales – its highest sales value since 2012. Despite higher output from the Ravensthorpe operations as it ramped-up production and the Shoemaker-Levy deposit came online, overall sales volumes for nickel decreased. This was mainly due to maintenance at the State’s two largest nickel operations – Nickel West and Murrin Murrin.
Lithium market conditions were very strong with the spot price of spodumene concentrate topping out at more than A$3,000 per tonne by the end of the year. This was greater than any prior period including the boom times of 2018 that incentivised the expansion of the industry in Western Australia. Sales volumes were the second highest level on record at 1.99 Mt. Higher prices and volumes resulted in record lithium sales of $2.6 billion and the industry replacing the copper-lead-zinc group as the fifth most valuable minerals industry in Western Australia by value.
Combined copper, lead and zinc sales passed $2 billion for the first time. Copper recorded sales of $1.8 billion as prices for the red metal topped US$10,000 per tonne amid improved demand from COVID-19 recovery measures and global supply concerns, particularly in the first half of 2021. Sales volumes for copper remained stable at almost 149,000 tonnes. Copper sales quantities have been around this level since the suspension of the Nifty operations in late 2019. Lead and zinc prices also shifted higher, supporting a sales value increase.
The remaining minerals sales included:
- Mineral sands – $979 million (the highest on record).
- Salt – $600 million (the highest on record).
- Rare earths – $569 million.
- Cobalt – $380 million
- Coal – $318 million
- Manganese – $303 million.
The petroleum sector, comprising LNG, condensate, crude oil, domestic gas and LPG, recovered to achieve overall sales of $39 billion, up from $27 billion in 2020 and $23 billion in 2020-21.
The result was more in keeping with pre-COVID-19 pandemic levels.
With the increase in the value of oil and gas sales, the sector’s share of total mineral and petroleum sales increased to 17 per cent. This was up from 11 per cent in 2020-21, but still below previous levels due to the remarkable strength of the iron ore industry.
LNG was the most valuable petroleum product produced in Western Australia at $28 billion or 71 per cent of all petroleum sales, followed by condensate at $6.8 billion (17 per cent) and crude oil at $2.6 billion (seven per cent).
The value of LNG sales was up from $19 billion on a combination of factors:
rising prices due to increased LNG demand from economic recovery and a severe 2020-21 winter in North Asia (a key market for Western Australian LNG) which has outpaced growth in supply; and the resolution of operational issues at Gorgon, and return to production of Prelude before it was suspended again in December 2021 over safety concerns.
Oil and condensate sales were also up as prices were higher overall on increased demand supported by growth in transportation activity following the mass rollout of COVID-19 vaccines and end of movement restrictions, while a lid remained on global supply.
Oil production was down on reduced output from Enfield due to lower reliability, and Pyrenees after cyclone activity shutdown production early in 2021. They offset the return to production of the Van Gogh project fields in March.
Condensate production increased to its second highest level on record (12.2 Gigalitres or GL compared to the record 12.59 GL in 2019), supported by record output from the Ichthys floating production, storage and offloading facility, Wheatstone, and Prelude, as well as increased production from Gorgon.
The overall performance of the sector also improved across the calendar year as prices gathered steam and issues at production facilities were resolved.
For an overview of the overall performance of the resources sector against key indicators, please see the mineral and petroleum industry activity review 2021.
For more information on Statistics Digest
For more information on the Annual Report