Madeleine King outlines steps to save Australian nickel miners

Resources Minister Madeleine King will ramp up talks to establish a new premium market for ‘cleaner’ nickel to try and save the local industry.

Nickel will be added to the government’s list of critical minerals.

Resources Minister Madeleine King will step up discussions with counterparts in the US and Canada to establish a new premium market for “cleaner” nickel and stave off Chinese efforts to undercut Nickel West’s production.

Ms King on Friday announced that nickel would be added to the government’s list of critical minerals, opening the door for nickel miners to seek a slice of $4bn of low-cost finance available through the commonwealth’s critical minerals facility.

The plan to buttress the local industry came as Coalition MPs wrote to Ms King on Friday asking for all Australian nickel operations to be exempted from the safeguard mechanism, warning that BHP’s Nickel West could “easily be liable for tens of millions of dollars of extra costs.”

Signed by WA Liberal Rick Wilson, whose electorate of O’Connor represents the heart of Australia’s nickel industry, and former resources minister Matt Canavan, the letter warned the nickel expansion in Indonesia was being “fuelled by coal-fired power.”

“We believe that every effort should be made to prevent the closure of Nickel West which would be personal tragedy for the workers who lose their jobs and a national tragedy because it will, in effect, wipe out an entire Australian industry,” the letter said.

Australia’s nickel miners have lamented the failure of current nickel market pricing mechanisms to differentiate adequately between higher quality nickel produced by Australia and others and the lower quality material coming out of Indonesia.

The Indonesian material, producers say, has a far higher carbon footprint than Australian production, but that is not reflected in current market prices.

Ms King cautioned that the critical minerals facility alone would not be enough to resolve the nickel industry’s woes, with BHP warning this week it was weighing up putting its Nickel West business – which employs 3000 workers – into care and maintenance.

She told The Weekend Australian a host of measures, including royalty relief flagged by the WA government and ongoing efforts to create new markets that offered a price premium for cleaner, higher quality Australian nickel would have to play a part.

Ms King said that opening up a price premium for cleaner nickel was difficult but not impossible.

Australia’s ambassador to the US, former prime minister Kevin Rudd, was working on trying to explore markets that would pay an ESG premium.

Ms King said she planned to raise the issue when she met with counterparts in Canada and the US next month.

“We are in the hands of international markets and our friends and allies as well, and we need to keep that work going,” she said.

Resources Minister Madeleine King. Picture: NCA NewsWire / Gary Ramage

While adding nickel to the critical minerals list opens up one path to funding for nickel miners, Ms King said the government would not be propping up mining giants.

“BHP make a lot of money out of Australian iron ore and coal, and it’s not really the government’s place to bail out companies of that magnitude,” she said.

“But they are facing enormous financial pressures as well, they have their own commercial pressures, and they are competing against international operations that have been established with tens of billions of state funding.”

Three BHP Nickel West facilities are subject to the safeguard mechanism, with emissions just over the 100,000 tonne coverage threshold. These include BHP Nickel West facilities in Kwinana, Mount Keith and Kalgoorlie.

But Ms King told The Weekend Australian the government’s safeguard mechanism had not been raised in any of her discussions with nickel miners and industry bodies.

“They can say that, but the opposition always put these false arguments up,” she said.

While the critical minerals facility has been earmarked to help finance new projects and initiatives, Association of Mining and Exploration Companies chief executive Warren Pearce said the current state of the nickel industry was such that the funding should be made available to help sustain existing operations.

“We’re in danger of losing a key component of our value-adding strategy here in Australia,” he said. “The industry hasn’t usually expected this type of assistance. That said, we’re now in a scenario where we are seeking support for those companies, because we’re concerned that if they go into care and maintenance, we might not be able to get some of these projects back out.”

He said the Australian nickel industry was being hit on multiple fronts. Beyond the Chinese-funded expansion of Indonesia’s nickel industry, he said the US government’s trillion-dollar Inflation Reduction Act was making it harder for Australian nickel processing projects to secure funding. That processing was instead heading to the US.

“We’ve seen intense international competition and over 1500 market interventions by different nations, all of which have removed a level playing field for Australia,” he said.