Western Australia's (WA) state government will provide royalty rebates to struggling nickel producers to protect workers, as the industry suffers from falling prices, oversupply and waning demand.
Global nickel prices have plunged to almost half of 2023 levels because of an intensifying supply glut, led by increased volumes from Indonesia, coupled with a slowdown in demand. This has prompted increasingly more Australian mines to halt operations, with other processing facilities being placed on care and maintenance programmes.
The WA government's 17 February announcement was a day after the Australian federal government placed nickel on its critical minerals list, allowing nickel companies access to multi-billion dollar funding.
"Protecting local jobs is a key priority for my government and we recognise retaining our value-add, critical minerals sector is a key part of our plan to diversify WA and set it up for future success," said WA premier Roger Cook.
The government is looking to offer WA nickel producers a 50pc royalty rebate under a new Nickel Financial Assistance Programme, starting from March that will be available over an 18-month period.
The rebate will be provided if the quarter's average price of nickel in concentrate falls below $20,000/t. The repayment will be split into equal quarterly instalments over the following 24 months. Companies will have to apply for financial assistance and provide information to validate their need for support and specify actions taken to adapt to the prices and industry changes.
Benchmark prices for class 1 nickel on the London Metal Exchange have fallen by around 20pc to $16,425/t on 16 February from above $20,000/t in early August.
Participants were largely supportive of the programme. "CME has made it very clear that targeted and evidence-based government support such as temporary royalty relief makes sense for the nickel sector in the near term, given the significance of the industry to local employment, the economy and our national strategic interests," said Chamber of Minerals and Energy (CME) of WA chief executive Rebecca Tomkinson.
Others suggested that further action needs to be taken to safeguard the sustainability of the nickel sector. "The WA government has stepped up to the plate for this industry in its time of need," said the Association of Mining and Exploration Companies chief executive Warren Pearce. "This is absolutely necessary but we also need to support those currently in care and maintenance. This will ensure we do our very best at saving thousands more jobs."
