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Industry welcomes WA nickel royalty rebate as step in right direction

BHP is planning to shut down its Nickel West operations (pictured), attributing the decision to a significant decline in nickel prices.

BHP is planning to shut down its Nickel West operations (pictured), attributing the decision to a significant decline in nickel prices.

19th February 2024

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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The announcement by the Western Australian government to provide 50% royalty relief over 18 months to nickel producers is welcome news to an industry under pressure, says the Association of Mining and Exploration Companies (Amec).

“There is no doubt this timely assistance from the WA state government is welcomed by the nickel industry. The WA government has stepped up to the plate for the industry in its time of need,” said CEO Warren Pearce on Saturday.

Premier Rodger Cook earlier in the day announced an assistance programme to deliver a rebate when prices are below $20 000/t for a given quarter.  The rebate will be repayable by the companies in equal quarterly instalments over the following 24 months.

The rebate will start from the March quarter.

The move is in a bid to protect local jobs and to support the State’s vision of becoming a global battery minerals processing hub, said Cook.

The nickel industry has experienced challenging global market conditions in recent times, which have prompted mine and processing plant suspensions, and significantly impacted jobs. These conditions have been caused by a significant structural disruption to the global market prompted by a surge in lower cost supply from other countries coming onstream.

"Our nickel miners are competing internationally with mining jurisdictions that have significantly lower environmental, social, and governance standards.

"It is important that they are supported to weather the storm of current market conditions, so they can be part of ongoing and future efforts to decarbonise the globe,” said Mines and Petroleum Minister David Michael.

Federal Resources Minister Madeleine King on Friday placed nickel on the critical minerals list, giving companies in the beleaguered industry an opportunity to access billions of dollars in government funding.

Amec also welcomed comments from Prime Minister Anthony Albanese about an Australian response to the US Inflation Reduction Act (IRA).

“Commonwealth support and incentives are required to safeguard the industry and ensure thousands more jobs are not lost, because if we can’t hold onto our established value adding industries, what chance do we have of developing new value adding projects?” said Pearce.

Amec has been in discussions with the federal government, he said, adding that industry appreciated that introducing new measures required careful consideration.

“We believe the next step, is for the commonwealth to introduce a production tax credit (PTC), based on the IRA programme already operating in the United States, which has been incredibly successful.

“This will make the Australian value adding industry 10% more competitive overnight.

“But also provide the nickel industry the help it needs now and strike the right balance of support to the broader spectrum of new projects essential in expanding our critical minerals capacity.

“If the Prime Minister truly believes in the opportunity that is the energy transition – there is a sensible solution ready to implement,” said Pearce.

"Amec will continue to work with member companies, industry, and both state and federal governments, to find the right mix to guide us through these turbulent times.

“A PTC is the kind of big picture thinking that would send a strong message of support to industry, investors and global markets.

“A strong critical minerals industry is the backbone of the global energy transition. We look forward to further measures to ensure Australia remains competitive on a global scale,” said Pearce.

Meanwhile, commenting on the nickel financial assistance programme, Chamber of Minerals and Energy of Western Australia (CME) CEO Rebecca Tomkinson said it was a positive sign that the weeks of urgent discussions with state and federal Ministers and Parliamentarians on behalf of industry were productive.

“This shows the state’s understanding of the importance of nickel to the critical minerals aspirations of downstream processing,” said Tomkinson.

“CME has made it very clear that targeted and evidence-based government support such as temporary royalty relief makes sense for the nickel sector in the near term, given the significance of the industry to local employment, the economy and our national strategic interests.

“Battery minerals represent a strategically important sector for the state and we need to ensure we have a solution for the short- and mid-term, as well as settings that ensure viability and sustainability in the longer term.

“The state government’s nickel financial assistance programme is one of many measures needed on the path to net zero so I look forward to seeing further strategies and actions that secure longevity in the sector.”

Edited by Creamer Media Reporter

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