Nickel collapse made worse by China, Indonesia: Forrest

Feb 18, 2024 – 11.51am, first published at Feb 17, 2024 – 7.52pm

Andrew Forrest at the Munich Security Conference. none

London/Perth | Andrew Forrest says the collapse in nickel prices reflects an unfair playing field between countries like Australia and Canada, which cleave to high standards, and the likes of Indonesia and China.

“If we are just pricing nickel at an economic cost alone then what will happen is if we ignore the environment and don’t apply environmental responsibility to critical minerals,” the mining billionaire said during a panel appearance at the Munich Security Conference.

Andrew Forrest at the Munich Security Conference. none

“You’re going to find that, say, Indonesia will only deal with China because Chinese-backed companies will come straight in and they will do what is happening in Indonesia right now, which is wiping out terrestrial ecosystems, dumping all the waste into the ocean, wiping out marine ecosystems, wiping out the sustainability of communities which have been there for centuries and, ‘oh, that’s all OK because we’re just going to pay a dollar-price for it’.

“That’s actually making the playing field very uneven for countries like Australia, Canada and others who will apply environmental laws to our activities.”

The Albanese government on Friday put nickel on the government’s official critical minerals list to bolster Western Australia’s nickel miners being smashed by a glut of the critical battery metalfrom Indonesia. The WA government announced a 50 per cent royalty discount over 18 months.

Nickel industry leaders are grateful but underwhelmed with the government response so far as they try to compete with rivals in Indonesia, allowed to operate tax-free for up to 20 years.

“If we [all] apply the human rights laws ... environmental laws, then China wouldn’t be allowed to dump nickel onto the market right now, which is sending the rest of the world’s nickel industry out of business because we have to apply standards to ourselves,” Mr Forrest said.

[But we should] apply environmental standards, apply human rights standards, apply green-energy standards, and you’ll find that you will diversify your supply chains very fast.”

Tax break under consideration

Forrest-owned nickel miner Wyloo on Saturday said, “courageous, big-thinking policy” is needed to save the industry in Australia.

The Perth-based company and other big players are pushing hard for a production tax credit of at least 10 per cent to reduce costs and spur investment in downstream processing of battery and strategically important minerals.

Federal Resources Minister Madeline King said on Saturday that the tax break was under consideration.

Prime Minister Anthony Albanese was due to arrive in Perth on Sunday with more announcements around nickel expected during his visit.

Miners are frustrated the federal and WA governments took so long to act, finally spurred into action when BHP confirmed to the market that its nickel operations and thousands of jobs were on the chopping block.

Wyloo chief executive Luca Giacovazzi welcomed the moves but indicated they fell short of the policy vision needed to save a nickel sector being crushed by a supply glut from Chinese-backed producers in Indonesia.

“Now is the time for courageous, big-thinking policy that will create the secured jobs and economic benefit for generations to come,” he said.

“We can be more than a dig-and-ship economy, and we shouldn’t let this once-in-a-generation opportunity pass us by.”

Speaking after crisis meetings with nickel and lithium producers in Perth on January 24, Ms King said she would accelerate talks with Treasury officials about a production tax credit and how it would apply.

Shut-down looming

Wyloo is scheduled, on May 31, to shut down nickel mines in WA acquired in its $760 million takeover of Mincor Resources in July last year. A string of other mines have shut down, with about 1600 job losses announced since December and warnings the number could grow to 10,000.

Mr Giacovazzi said it was good to see the WA and federal governments coming together to support the nickel sector and acknowledge “its critical importance to our economic security”.

“We will continue to collaborate with both levels of government to develop policies that will help rebuild Australia’s nickel sector and incentivise the development of a resilient, value-additive downstream industry,” he said.

Canadian company First Quantum welcomed the royalty relief that will apply to nickel produced at its Ravensthorpe mine in WA.

First Quantum announced in January that it would cease mining but continue to make sales from stockpiles at Ravensthorpe under a cost-cutting strategy that involved shedding more than 300 jobs.

The company said the mine continued to employ about 350 people, many from the nearby coastal community of Hopetoun.

“The WA government’s support will now make an important contribution to maintaining workforce skills at both the site and in the WA nickel sector more broadly,” it said.