Gold and nickel miners will not get a lifeline from West Australian premier Colin Barnett, who said he will not be handing out royalty assistance to those affected by falling commodity prices.
Barnett argued modifying royalties due to price variation was not a good idea, saying the cyclical nature of the mining industry is a well known fact. “I know this is a tough time and some of the high-cost producers struggle. [But] at the end of the day the state government owns the minerals and companies pay the equivalent of 10 per cent of the value of the mineral. I think that’s a pretty good price.”
Miners, small and large, have had to cut the fat from their companies as commodity prices fall. They have been curtailing capital expenditure, cutting jobs and slashing operational costs.
BHP recently slashed 100 jobs across its six Nickel West operations in WA in May. The company said many operational roles will feel the brunt. The company also flagged in July it will move service contracts in-house in the Pilbara as it looks to cut contractors to cut costs.
Peabody Energy announced last month it would slash 400 jobs across its NSW and QLD coal mines. A spokeswoman told Australian Mining the cuts would impact all of the company’s Australia’s operations.
Newmont cut 29 jobs at its Granites gold mine in the Northern Territory while Newcrest said it will slash jobs at its Telfer mine in Western Australia.
Miners are hopeful the falling Australian dollar and a change in government at next month’s election will improve outlook for them.
With Diggers and Dealers starting today, the AFR spoke to miners who were upbeat about the future and revenue as the Australian dollar goes down.
The event will not be as upbeat this year as during boom times, but there may be more discussions and dealing compared to previous years.
“I think the currency still has some way to come down – I mean, people are talking US75c,” nickel miner Panoramic Resources’ CEO Peter Harold said.
“That’s enormous relief there. Every one cent, for us, is about $2.5 million a year extra revenue.”
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