There is an under-reported and avoidable economic tragedy occurring in our nation’s west.
Already 1000 nickel miners have lost their jobs and another 3000 face the same sad fate after BHP announced this week it may mothball its entire Nickel West operations. Many more small businesses and workers in the town of Kambalda (600km east of Perth) face economic ruin too.
These hardworking Australians should not be losing their jobs or businesses. But thanks to the ineptitude, naivety and cowardice of our mining and political leaders we risk losing an entire Australian industry to Indonesia.
Nickel West is one of the crowning achievements of our nation’s pioneers. In the 1960s, an Estonian migrant to Australia, Sir Arvi Parbo, achieved a superhuman feat. In just 18 months he and his team at the Western Mining Corporation built a mine, a refinery, a rail line and a town, and delivered nickel concentrate to Japan. Parbo’s team had to work fast because the ’60s boom in nickel prices was short-lived as nickel supplies from around the world competed to meet booming demand for stainless steel.
Under our Byzantine mining regulations we would not have finished counting the trees for the compulsory environmental survey in 18 months. Indeed, in later life Parbo said he would never have built his nickel mine under today’s regulatory conditions.
As in the ’60s, there has been a boom in nickel prices in the past few years, this time driven by electric vehicles (nickel is used in the batteries). BHP chief executive Mike Henry told the Financial Times in 2021 he wanted to weight “the portfolio towards future-facing commodities like potash, copper and nickel”.
Australia and Indonesia have the largest nickel reserves. BHP backed Australian nickel because Indonesia’s laterite reserves have lower nickel content and hence take more energy to extract. In BHP’s imagined brave new green world, climate-conscious customers were going to prefer to drive an EV – filled with Australian clean, green nickel – to their next Extinction Rebellion protest. BHP’s assessment looked safe when Indonesia signed up to net-zero emissions at the Glasgow climate conference in late 2021.
Indonesia then increased its use of coal by an astounding 32 per cent the year after Glasgow, enough coal to power five large coal-fired power stations. The International Energy Agency recently noted Indonesian “nickel production has become an important driver of coal demand”. Indonesia increased nickel production at an annual rate of more than 50 per cent last year. Prabowo Subianto, who claimed victory in Indonesia’s presidential election this week, has promised to continue the nickel policies of Joko Widodo’s government, and even expand them to bauxite and copper.
It is embarrassing that our corporate leaders could be so hoodwinked by the cheap talk at a climate conference. Thousands of Australians will lose their jobs because Indonesia builds coal-fired power stations and we do not.
That makes our political leaders complicit in this shambles too. Our state and federal governments sit back and let other countries take us for mugs. Other countries go nowhere near meeting their climate commitments while we honour them to the letter. We are losing our manufacturing industry thanks to the net-zero mind virus that deludes people into acting as if Australia alone can change the globe’s temperature.
To rub salt into this wound, the Labor government imposed a carbon tax on Australian nickel in July last year (the so-called safeguard mechanism). It may be too late to save Australian nickel jobs but the least Labor could do would be to belatedly exempt the Australian nickel industry from its carbon tax. I, and some of my Liberal and Nationals colleagues, have written to the Resources Minister asking her to do this immediately.
On coming to government, the Labor Party focused its mining policy on so-called critical (or strategic) minerals, which includes nickel. Labor has done nothing to attract new coal, oil or gas investment (even though these make up more than half of our mining exports). The (now broken) Labor promise to workers in fossil fuel industries was that it was OK if you lost your jobs because there would be lots of other jobs in nickel and other critical mineral industries.
As resources minister in 2019, I developed the nation’s first critical minerals strategy and signed the first agreement with the US on critical minerals. We should develop these industries, but we should not develop them at the expense of our coal, oil and gas sectors. And we won’t develop critical minerals, in any case, if we do not have affordable and reliable energy supplies. Mining (especially critical minerals mining) requires a lot of energy.
There is a reason BHP is not proposing to keep Nickel West open by converting all of its power needs to wind, solar and batteries. That is because renewable energy is not cheaper than coal-fired power. All the spin that “renewable energy is the cheapest form of power” just had a real-world test and it failed miserably.
The Labor government’s “all eggs in one basket” mining policy has been an abject failure. Even the Biden administration ignores its climate promises. Last year the US hit a record level of oil production and it is doubling its liquefied natural gas capacity across the next five years. Last year the US overtook Australia as the largest LNG exporter. The US was smart enough to take advantage of high oil and gas prices post the Ukraine war to attract investment. This Labor government has pushed away gas investors by imposing draconian price controls and red tape.
If the Australian government instead had rolled out the red carpet for gas, at least the retrenched nickel miners might have some other jobs to go to in Western Australia. Unfortunately, as gas prices fall we have missed the (LNG) boat. Lithium, the other great critical minerals hope, is also facing a slump in prices.
The worst sin that has caused this mess is cowardice. Many of our corporate and political elite know how mad our net-zero goal is. But few will say so publicly. They are worried they will lose their jobs, even though their cowardice will cost the jobs of many others.
The least the bosses could do would be to go at the same time as they lay off thousands of their workers. That would be the honourable thing to do rather than making their own workers pay the price for their errors. That would also deliver some accountability to ensure that our next leaders are more Arvi Parbo than Anthony Albanese.
