Ground Breakers: Lithium is becoming very important to the WA economy.
Modern Perth was a city built not on rock and roll (sorry, I actually hate that song) but on iron ore.That is set to continue with higher than anticipated iron ore prices driving WA to its second biggest surplus ever yesterday of $5.7 billion, only a few mill shy of last year’s $5.8b record.
The envy of all, no doubt.
But the WA Treasury’s iron ore budget forecasts have become famously bearish since the boom that will never end, well, ended a few years ago.
While iron ore prices were expected to nosedive this year as usual for the Treasury boffins, they’ve held up well at an average of US$139.50/t CFR China in 2021-22.
That delivered $10.29 billion into the WA Government’s coffers, down from $11.355b in 2020-21.
With prices expected to fall to a long run average of US$66/t by November, the State Government expects that to drop to $5.645b next year with an average price of US$77.5/t.
But other commodities are becoming increasingly important to Australia’s richest resources state.
Most notable is lithium, which only became a line in Premier Mark McGowan’s budget in 2017-18, when the only contributors to State royalty payments were the Greenbushes and Mount Cattlin mines.
Lithium contributed just $15m in 2016-17 and $50m in 2020-21. But WA is now the world’s most prolific lithium producer from hard rock sources, a status it has claimed at a perfect time.
With spodumene prices heading from cyclical lows to record levels of US$5000/t-plus over the past 12 or so months, the State raked in $255m from lithium miners last financial year, a 400% increase.
Next year lithium miners are projected to send $447m into the State’s grateful hands, challenging gold ($481m) for its status as WA’s second biggest royalty earner (excluding $921m in North West Shelf Grants from the Commonwealth).
https://unauthorised investment advice/resources/ground-breakers-lithium-is-becoming-very-important-to-the-wa-economy/
