Mining companies will hold talks with the Australian government this week amid concerns about lithium and nickel prices amid mine closures.
The two minerals are critical in the manufacture of electric vehicle batteries.
The price falls have occurred due to slower demand for electric vehicles amid higher interest rates and high supply, particularly in Asia. Indonesia is a dominant player in the nickel market, with backing from Beijing.
Mineral Resources Minister Madeleine King said the lithium and nickel markets can “change quickly and fluctuate quickly.”
“And we’ve seen this with lithium certainly in the past, and also with nickel for that matter. And so I’m having—these talks are what we'd ordinarily do when there’s a matter of concern.
Mining Projects Collapse Amid Lower Lithium Prices
On Jan. 22, billionaire Andrew Forrest’s private company Wyloo Metals revealed it would place its Western Australian nickel operation into “care and maintenance” mode on May. 31 amid a dramatic fall in nickel prices.In response, BHP announced it would close its nickel processing plant at Kambalda, Western Australia in June.
Further, lithium miner Liontown Resources announced it would be conducting a review of its planned expansion of the Kathleen Valley lithium project.
In addition, news emerged that a $760 million debt funding package for the project was terminated by lenders amid lower lithium prices.
“As a result, the company has commenced a review of the planned expansion and associated ramp-up of Kathleen Valley to preserve capital and reduce the near-term funding requirements of the project.”
Government Aims to Help the Mining Industry
Ms. King said the federal budget would not be able to sustain millions of dollars worth of subsidies, but indicated there were other ways the government could help.“There have been some suggestions, and I’m bringing these groups together to have a bit more of a deeper dive into how they think government can best help them. And I’m doing that as well with the Western Australian Minister for Mines David Michael. So, look forward to these talks later this week.”
Ms. King noted that Australian producers could mine nickel effectively while following environmental processes and consultation with traditional owners.
She said, “People are well paid in the industry, and that’s not necessarily the case with our competitors.”
In response to questions about the impact of mine closures on the transition to renewables, Ms. King said, “Well, it could have an enormous effect, to be honest, because we need nickel.”
“At the moment there is an oversupply and this is what we see reflected in the prices. And that’s why production is slowing down in Australia, because there’s just not enough buyers or not people willing to pay the higher prices,” she said.
Ms. King said there was plenty of nickel on the market which was putting pressure on prices.
“I think there is a discussion to be had on how some of the advanced the vehicle manufacturers need to perhaps step up and be willing to pay more for ethically sourced nickel to make sure that people can be confident when they buy these vehicles that they are getting a vehicle that has its contents made with good, high ethical standards.
“So, there’s enough nickel, at the moment, that means the batteries will be keeping produced. But you’ve got to ask yourself the question, what’s in those batteries and who’s paid the price for them?”
