W Australia commodity firms see skills, heritage issues

Operating conditions are becoming more complex in the mineral rich Australian state of Western Australia (WA), with Covid-19 causing skills shortages, Rio Tinto's destruction of the Juukan gorge rock caves increasing heritage oversight, and questions raised over the sanctity of state agreements.

WA is home to much of Australia's iron ore, petroleum and non-ferrous metals industries, and is currently free of Covid-19. The state government has implemented a strict 14-day hotel quarantine policy for all arrivals from overseas and interstate, meaning that many workers have been forced to temporarily relocate into WA.

Five months into the border closures, WA premier Mark McGowan has warned that closures could last for another year, making it increasingly difficult for interstate and overseas workers many of whom have families outside of WA. Some are moving their families into WA and others are accepting the cost and inconvenience of quarantining after a visit home, but quite a few are thinking of quitting and returning home.

The pool of skilled workers in WA is small at the best of times and the pandemic could shrink it further, leaving mining and energy firms facing skills shortages and wage inflation pressures. This will be exacerbated by several major projects in the Pilbara iron ore industry, including BHP's South Flank and Fortescue's Eliwana mines, and maintenance issues at the 15.6mn t/yr Gorgon LNG plant operated by Chevron.

A prolonged period of skill shortages, compounded by difficulties in securing equipment and consumables because of Covid-19 disruption to supply chains, could delay projects, disrupt maintenance plans and curtail shipments of key WA commodities.

The WA state government and Canberra are also looking to rewrite Aboriginal heritage laws, following the destruction of ancient rock shelters by UK-Australian mining firm Rio Tinto. The review could alter land use agreements, increasing the bureaucratic process and possibly requiring a rethink on some projects.

The WA government is also under fire for introducing emergency legislation to try to stop mining entrepreneur Clive Palmer and his Mineralogy firm from claiming up to A$30bn ($21.5bn) in damages against the state relating to its state agreement for the Balmoral South iron ore project. State agreements underpin many resources projects in WA and mining firms are anxious of the precedent that could be set if the government can legislate to weaken them.

WA resources and energy firms escaped the worst of the initial stage of the pandemic but are increasingly concerned about operating conditions in the medium to long term.

By Jo Clarke