“It’s pretty hard to be unhappy”.
In a year marred by droughts, bushfires, a global pandemic and the resulting economic downturn, Australia hasn’t had a lot to be optimistic about in 2020.
But De Grey Mining managing director Glenn Jardine captured the mood at this week’s Diggers and Dealers mining forum in Kalgoorlie when he told reporters it was hard to have anything to complain about.
The West Australian mining sector has been one of the few bright spots in an otherwise bleak year, with the industry continuing to thrive in the midst of the COVID-19 pandemic. Western Australia’s hard border has allowed operations to continue, sustaining thousands of jobs and minting millions of dollars for the national economy as commodity prices increased.
Sentiment was strong in Kalgoorlie as 1950 delegates descended on the historic gold mining town for the annual love in, with a further 1300 or so joining online each day from around the world.
Here are the five key themes mining’s movers and shakers were speaking about over the three day event:
Western Australia’s hard border
Diggers and Dealers harked back to its early days as a local affair this year, with the West Australian border restrictions keeping out the usual contingent of east coast bankers and analysts.
Conference-goers lamented their absence, particularly when it came to dealmaking, but noted that the functions that followed the forum each evening were a highly collegiate affair. However, the border restrictions appear to be losing favour among mining industry executives, with several company bosses suggesting the hard border should be lifted or eased to relieve mounting pressure on the local labour market. Executives said it was becoming hard to find talent in exploration, engineering and other roles and that exploration drilling rigs were in hot demand.
“Borders need to be reopened and there needs to be a relaxation [of restrictions] because there is a massive pool of people who could fill these voids in the eastern states in particular,” Legend Mining managing director Mark Wilson said.
Gold glittered wherever you went. Just days before the conference, mid-tier players Northern Star Resources and Saracen Mineral Holdings announced a mega $16 billion merger. The friendly deal will unify Kalgoorlie’s famous Golden Mile under one owner for the first time since Paddy Hannan, Dan Shea and Tom Flanagan struck gold in the mining Mecca in 1893. In the context of booming gold prices, the deal sparked chatter at Diggers about the potential for further consolidation in the sector as its remaining mid-tier producers look for deals to achieve scale.
While nothing eventuated during the three-day conference, industry sources said deals were being discussed and it was likely companies would tie-up or gold projects would change hands in the near future. Northern Star Resources executive chairman Bill Beament denied the company’s Paulsens Pilbara gold mine was on the market but despite this, several well-placed industry sources speculated the project could be one of the first dominoes to go.
Additionally, exploration activity has increased on the back of increased cash inflows to junior companies, boosting discoveries and confidence at the small end of town.
Engagement with Indigenous communities
Rio Tinto’s controversial destruction of the culturally significant Juukan Gorge caves in the Pilbara put cultural heritage matters and community engagement firmly on the radar for the conference. Companies at the conference generally acknowledged the importance of thorough engagement and communication with traditional owners and said they believed the issue warranted the increased attention it was receiving. Most said they had reviewed their practices in the wake of the controversy and would continue to do so as the West Australian government replaces its outdated Aboriginal Heritage Act with a new Bill.
However Peter Bradford, managing director of gold and nickel producer IGO and the president of the Association of Mining and Exploration Companies, raised concerns the new rules could add to red tape, delay projects and damage Western Australia’s reputation as the premier destination for global mining investment.
Western Australian Mines Minister Bill Johnston rejected the claim.
“I strongly believe the updated legislation will continue to allow WA to be a strong jurisdiction for mining and resource exploration,” he said on the margins of the final day of the conference.
Almost all of the 53 companies that presented made prominent statements on environmental, social and governance (ESG) matters. After reputational issues in recent years, including the Samarco tailings dam tragedy and the Juukan Gorge cultural heritage scandal, companies were keen to demonstrate to analysts and investors the industry is serious about ESG issues, including safety, community engagement and climate change. Fortescue Metals Group chief executive officer addressed gender diversity in her presentation, highlighting that she was one of just three women on the presenting programme. Gaines called for the industry to renew its focus on gender diversity and highlighted the links between diverse leadership and company performance. Around the conference’s booths and meeting rooms, gender diversity was higher, with women making up about 19 per cent of the delegates at the Forum, the same percentage as the number of women in Fortescue’s workforce.
WestGold Resources executive chairman Peter Cook also referenced the issue, declaring an analysis of 17300 job applications the miner received revealed only 3.9 per cent of applicants were women.
“When only 3.9 per cent of people that apply are female it is very hard to achieve any sort of gender diversity,” Cook told the conference.
Australia’s relationship with China
Australia’s bilateral relationship with China made headlines on day one of the conference when West Australian Premier Mark McGowan said it wasn’t in Australia’s interests to be “reckless” with the important trading relationship.
“Australia needs to have a good relationship with China,” McGowan said. “It is not beyond us as Australians to do that. In these difficult and uncertain times it is essential to keep trade relationships strong rather than letting them fall because of disputes.”
The next day reports China had moved to curb Australian coal imports were confirmed, sparking fears iron ore, Australia’s largest source of export revenue, could be affected.
However West Australian miners Mount Gibson Iron and Fortescue Metals Group said their iron ore trade remained strong and constructive and they expected it to stay that way.
The importance of the relationship with China was referenced across most commodities.
“If you were to ask me how I feel about the fractious relationship I would say, let’s be constructive and find solutions rather than grabbing the megaphone and yell and scream in the papers,” Ken Brinsden, boss of lithium producer Pilbara Minerals, said. “I don’t think that really helps. They are our largest trading partner, we should be prepared to invest deeply in that relationship.”
By Tess Ingram and Josh Chiat