By Peter Milne
Mining billionaire Chris Ellison’s Mineral Resources is chasing a five-year exemption from a Western Australian government ban on the export of onshore gas, similar to a controversial 2020 deal that benefited fellow WA magnate Kerry Stokes.
The push comes just three months after the Cook government removed the prospect of exemptions for all gas, except from the remote Kimberley region, as Australia’s most gas-dependent state faces a supply crunch.
Mineral Resources’ Wodgina lithium processing plant.
Ellison, who founded the $12 billion company, said development of its Lockyer Deep field could go two ways: a small 30 terajoules a day plant equal to about 3 per cent of the market, or a larger 250 terajoules a day facility bankrolled by mainly supplying the more lucrative export market for five years.
The exemption request from Mineral Resources is similar to the one granted by former premier Mark McGowan in 2020 to the Waitsia field, half owned by the Stokes-controlled Beach Energy. McGowan had to defend the decision after the Australian Energy Market Operator (AEMO) predicted a gas shortage for the next few years, just when Waitsia will start exporting gas through Woodside’s North West Shelf facility.
McGowan, who left politics in May, is now a consultant to Mineral Resources as well as BHP.
Ellison on Thursday said that if allowed to export gas for five years, the company could fund the billon-dollar investment in greater production. He added that the gas would become available to the WA market at the end of the decade, when AEMO expects the gas shortage to worsen significantly.
“We’re not lobbying the government, we’re putting a commercial proposal in front of WA,” he said.
“We’re saying that we can help you solve your gas shortage problem in 2030, but we need to be able to fund it.”
Ellison thinks “common sense” will prevail and he will get his deal.
“I mean, the reason that they locked it up is that they were under pressure by these tier one multinationals that want juniors like us to subsidise their gas,” he said.
In September, WA’s biggest gas consumer, US alumina producer Alcoa, told a state parliamentary inquiry it rejected the argument that allowing gas exports would boost investment in local projects and result in more local supply.
Ellison, speaking after the annual meeting of his diversified resources company, said McGowan was not involved in negotiations to export gas.
He added that he saw no problem in holding a high-priced Labor fundraiser, featuring McGowan, at his headquarters later this month, while pushing the state government for an export ban exemption.
“We like to show off our building, and we support all political parties across the board,” he said.
“Someone has to, they’re going to get funds from somewhere to do what they do.”
Mineral Resources is a five-pronged enterprise – gas, lithium, iron ore, mining services and engineering.
Ellison, long a proponent of making battery ingredient lithium hydroxide in Australia rather than just exporting the ore, now says company studies are showing it would be too expensive and offers low returns.
His view is significant government incentives would be required, and he saw no prospect of that happening.
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