Kalgoorlie There are so many great stories on the mining front with operating mines across many commodities publishing increased mining reserves, long mine lives and new projects coming online and soon to be in production.
The Gold price is hitting new highs at over US$1500 an oz, with producers building up huge cash reserves and many looking overseas for new projects to broaden their economic base.
Nickel has at last broken out of its down market with the LME price hovering above US$7.00 per lb for the last week peaking at US$7.22 per lb, which equates to AUS$10.68 per lb or AUS$23,924 a tonne. The lowest cost producer to present was Independence Group NL from their Nova operations at AUS$2.07 a lb, so a margin of over $8.00 per lb mined!!! Others, like Mincor south of Kambalda, are gearing up to get back into production, having recently reported reaching an agreement with BHP Nickel West to put their ore through the Kambalda Concentrator prior to it going to the Kalgoorlie Nickel Smelter. This will see the Concentrator reopen and new jobs created in Kambalda.
Probably the best news for Kalgoorlie-Boulder is that Nickel West has been withdrawn from sale by BHP and is again part of the group’s revenue generating assets as a valued division. Most do not know how close the Smelter came to being shut down just four years ago. A change of management with an innovative new worksite approach brought it back from the brink.
We are on the edge of a new growth path for the nickel industry with Nickel West focusing on nickel sales into the Electric Vehicle (EV) battery market with little of their product now going into stainless steel. The EV market needs high purity nickel sulphate, which the nickel sulphide ores from the Eastern Goldfields provide. Nickel West is moving down the ‘value added’ path with the aim to become a complete supply chain from mine to finished customer product, with the benefits of much higher returns accordingly.
Independence Group in their presentation noted that more than 50 kg of nickel is used in every Tesla S car. The EV market is still in its infancy so with that amount of nickel going into each vehicle it will certainly have a very positive impact on the high grade nickel mines in this area. This should insulate the Eastern Goldfields from the fluctuations in price that has been nickel’s history when largely reliant on sales into the stainless steel market, where lower grade nickel is very competitive. Whilst the EV battery market was highlighted as a growth market, PV solar system back up batteries will be just as big nickel consumers.
A new product for the area is the production of Sulphate of Potash, which is the K in NPK fertilizer, widely used in agriculture, market gardens and parks and home gardens. There are two projects focused on the lakes area near Wiluna. The resource is potash rich salts in the salt lakes of this region and the process uses the abundant and free sun and wind to do much of the work. The potash produced is Potassium Sulphate as opposed to the cheaper and more commonly available Potassium Hydroxide. The Sulphate of Potash is a better form of potassium for many types of plants, so the business has a strong future.
The other big news concerns Lynas Corporation whose Mt Weld mine near Laverton is the world’s largest rare earths producer outside China. Up to now the ore has been shipped to Malaysia where it is refined. The first stage of the process removes some of the low-level radioactive material which the Malaysian Government has said it will no longer permit to be extracted and stored in Malaysia. As a result Lynas has announced that it will build an upstream processing plant at a cost of $500,000,000 in WA, either at the Laverton mine or near Kalgoorlie. Either way the Eastern Goldfields will reap the benefit of this further diversification to its economic base.
Along with moves now started on road infrastructure projects that will benefit the freight and tourism industries and the move to amend the FBT regulations to promote living in the regions as opposed to FIFO, the picture for the City of Kalgoorlie-Boulder has never been brighter.
Chris Fyson FAICD, Director – Professionals Platinum
