Australia’s mining industry has always been a land of opportunity and risk. Now, amidst a market storm, fortunes are shifting, and tales of resilience and struggle are unfolding. Gather ’round, prospectors, as we delve into the fates of players you once earmarked for your watchlist:
Lithium
Lithium prices, once riding high like a bucking bronco, have taken a nasty tumble. Motley Fool’s aptly described it as “scorched,” thanks to a slowdown in China’s demand and a flood of new mines entering the scene. The repercussions have been swift and severe, with several mines facing closure.
Core Lithium: A Temporary Truce
Remember Core Lithium, whose share prices soared like a rocket last year? Unfortunately, the lithium downturn has forced them to hit pause on their Finniss mine operations. It’s a temporary setback, but a stark reminder of the volatility inherent in this industry.
Liontown: Undeterred, But Still Feeling the Pinch
Liontown, on the other hand, seems to be taking a bolder approach. They’re celebrating the first blast anniversary at their Kathleen Valley project, signaling their commitment despite the market turbulence. However, delays are inevitable, highlighting the challenges of navigating a shifting landscape. Their gamble hinges on their high-grade resource and community support, but only time will tell if it pays off.
Albermarle: A Strategic Timeout
Global giant Albemarle is opting for a more cautious approach. While IGO’s joint venture, Greenbushes project downsizes and cuts jobs across departments, Albemarle is putting new projects on hold, choosing to focus on existing operations. This strategic pause reflects the need for adaptability in a volatile market. Their upcoming update on February 14th could reveal adjustments to their future plans, potentially impacting investors.
Is it game over for lithium? I’d be tempted to say no and that things will bounce back up eventually. If the demand we are seeing from our mining clients for electric equipment on site is anything to go by, we will need more lithium.
Nickel
Another key component for electric vehicle batteries is also having a hard time. The nickel market is feeling the pressure of a concerned market as we look at a potential global economic downturn.
Cosmos: On Hold
IGO again, this time their Cosmos nickel project, designed to be a major nickel producer, is on care and maintenance after review. Managing Director and CEO, Ivan Vella says he still thinks there is value in Cosmos and will reevaluate when market conditions improve. Not much comfort for the 400 people whose jobs will be impacted. Cheap production from overseas is blamed.
And Twiggy joins the fray and makes a swift move to put his privately owned Wyloo metals Kambalda nickel mines into care and maintenance as prices plummet..
This decision has even hit BHP as it has announced it will pause its Kambalda processing operations in Western Australia that rely on supply from Wyloo.
Wyloo was also working on a feasibility with IGO to create a downstream nickel refinery on land in Kwinana that Wyloo secured last year which is now at a standstill.
IGO is not having a great start to the year as South32 hands them a Tropicana Gold Mine Royalty Claim too.
Even established players like IGO and Andrew Forrest are not immune to market fluctuations and project delays.
The nickel market saga, like lithium, underscores the vigorous nature of the WA mining landscape. Challenges create opportunities for those who navigate wisely, adapt to changing conditions, and leverage innovation.
Iron
It isn’t all bad news. Irn Ore is shining bright as demand from China continues to be strong and the forecast is that it will remain strong in the near term fuelled by infrastructure projects and urbanisation.
Who ill be watching closely:
BHP:
• Pilbara Operations: BHP’s crown jewel, the Pilbara operations in Western Australia, are the world’s largest integrated iron ore mining and processing system. With massive mines like Jimblebar, Mount Whaleback, and South Flank, BHP boasts a production capacity of over 220 million tonnes per annum (Mtpa). They continuously invest in expanding and optimising these operations, like the recent Jimblebar Beneficiation Project aiming for further efficiency.
• Diversification Strategy: Beyond iron ore, BHP holds significant interests in other WA commodities, offering a buffer against potential iron ore market fluctuations.
Rio Tinto:
• Pilbara Mines: Similar to BHP, Rio Tinto’s core iron ore strength lies in their dominant Pilbara presence. Mines like Brockman, Nammuldi, and Robe River contribute to a production capacity exceeding 330 Mtpa. Their focus on automation and digitalisation keeps costs low and operations efficient, as seen in their AutoHaul™ driverless truck program.
• Growth & Sustainability: Rio Tinto prioritises responsible mining practices. Their recently opened Gudai-Darri mine prioritises low emissions and water stewardship, showcasing their commitment to sustainable development.
Fortescue Metals Group (FMG):
• Solomon & Chichester Operations: FMG’s strength lies in its high-grade iron ore deposits in the Pilbara. Mines like Solomon and Chichester boast some of the highest-quality iron ore globally, fetching premium prices. They’re further expanding with the Eliwana project, aiming for additional 54 Mtpa production.
• Focus on Efficiency & Innovation: FMG prioritises efficient operations and technological advancements. Their low-cost mining approach and investments in automation, like autonomous haulage trucks, contribute to their competitive edge.
With a major focus on sustainability, innovation and efficiency from not only the big player in mining but across markets, I don’t think this will be the last we hear of lithium and nickel as they are going to be critical in everyone’s drive to get to net zero.