Western Australia delays border reopening

The Western Australia (WA) government has delayed plans to reopen its borders indefinitely, easing concerns that widespread transmission of Covid-19 would cut Australian iron ore exports in the short term but exacerbating the skills shortages in the state.

The WA government had planned to ease border restrictions on 5 February, prompting major Australian iron ore exporter BHP to warn that workforce shortages could drag on output during January-July. It also contributed to rival producer Rio Tinto setting an unambitious iron ore sales target for 2022.

WA premier Mark McGowan has not set a new date for reopening the border. The extended closure is likely to defer increased rates of absenteeism and give WA time to give more people a booster Covid-19 vaccination.

The state's health minister Amber-Jade Sanderson warned that the Omicron variant of Covid-19 has already arrived in the state capital Perth with 24 new infections confirmed on 23 January. She said the state is not going to eliminate Omicron but that the border closure will help slow its spread, making it easier to manage.

The state has been struggling with significant skills shortages because of the border closure, which the chairman of iron ore producer Fortescue Metals Andrew Forrest warned may be worsened by the extension of the border closure. BHP and Rio Tinto, which both have experience running mining operations in east Australia where Covid-19 infections have escalated since borders were opened in October, seemed more preoccupied about the prospect of widespread worker absenteeism than WA skills shortages when they reported their October-December production figures.

Fortescue and WA iron ore producer Mineral Resources are due to report their latest quarterly production figures on 25 January.

Argus assessed the ICX iron ore price on 21 January at $136.75/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis, up from $90.70/dmt on 17 November but down from a high of $235.55/dmt on 12 May. Argus assessed 58pc Fe at $113.45/dmt cfr Qingdao, up from $64.30/dmt on 17 November but down from a high of $207.10/dmt on 12 May.

By Jo Clarke