Western Australia’s Minister for Mines and Petroleum Bill Johnston has dismissed suggestions that trade relations between his economic powerhouse state and China may take a hit in the wake of the deadly coronavirus.
In a wide-ranging interview with Small Caps, Mr Johnston said after a record year for sales in the resource sector, to the tune of $166 billion, trade between WA and China remained a top priority.
“China is a key economic partner for the Western Australian resources industry so if they come back strongly then that will obviously benefit us.”
There’s mounting speculation China will recover from the ravages of coronavirus by July and Mr Johnston said the benefits for his state were enormous.
“We’ve been lucky, iron ore volumes have remained fairly steady even at the height of the health problems in China and that means there has been some strength in the iron ore price and we’re very pleased with that,” he said.
“We have a strong trading relationship with China because it’s in our mutual interests. China needs resources and we are a great low-cost provider of resources.”
On top the of the best sales for the sector the industry also employed 133,094 workers in WA, another record, up from 120,511 in 2018.
Creating new business markets
While China’s appetite for Australian resources is unlikely to slow down, Mr Johnston admitted the effects of COVID-19 demonstrated the need to have “strong multiple logistics chains”.
He said the battery space was a new window to grow in Western Australia.
“We’re very strongly of the view that further processing of raw materials here in Western Australia is a good business case and one of those reasons is that it would allow the users of those materials to have a security of supply rather than relying one logistics chain,” he said.
“So, we do think there is a strong reason for a continued chemical processing of battery materials, and we’ve been talking to a range of investors globally and we think that COVID-19 has strongly endorsed the challenges of relying on one logistics partner.”
“There is a real opportunity for investment for further processing of battery materials here in Western Australia for the supply of potential domestic users but also for partnering with a whole range of countries for their electric vehicle responses.”
Quarantine for miners
With WA’s hard border in place, the state government is determined to limit the spread of COVID-19 particularly in regional and remote areas.
Under WA Premier Mark McGowan’s strict lock-out measures, no-one can cross the border into WA unless it’s an essential service.”
Fly-in fly-out workers have been given access to come from inter-state, but they must serve the mandatory 14-day quarantine before being allowed on site.
According to Mr Johnston, mining companies are doing their bit to comply with the law of the land.
“People are moving to longer swings for FIFO work to reduce the number of transport movements. They’re introducing very strict social distancing policies at work camps and are working very hard on their pandemic plans to make sure the virus won’t spread among work groups.”
“We are of course exempting workers from the internal Western Australia borders that we’ve established, but again the reduction in movement is very important to our management of the pandemic.”
Mr Johnston stopped short, however, in saying he’d shut down an operation if a worker tested positive to COVID-19.
“We’ll always respond to any development if there was a worker to be caught with the affliction on site … there are actions to be taken by the company, but the first thing would be to evacuate the worker to hospital or to other care and then isolate the workgroup,” he said.
“We’d then have to see what we’d do with the worksite but clearly the first effort is to prevent COVID-19 getting into a work camp.”
FIFO versus residential
Meanwhile, there’s growing scepticism about the future of FIFO workforces once the COVID-19 threat wanes with Australian Government Resources Minister Keith Pitt throwing doubt over its practicality.
Mr Pitt told a national newspaper this week he felt more and more companies would lean towards establishing residential workforces.
It’s a philosophy Mr Johnston partially agrees with but noted WA’s mining operations were often on a different scale compared to those on Australia’s east coast.
“Many operations are extremely remote, and there is not really a practical way to do anything other than fly-in fly-out,” he said.
“On the other hand for those mines that are closer to established communities we have always called for companies to give people more choice so that if people want to live residentially they can and those who choose a FIFO lifestyle can choose that.”
“I’m concerned when I hear about mining companies insisting on workers doing fly-in fly-out from Perth rather than allowing drive-in drive-out say from Port Hedland if that’s a closer community.”
“There shouldn’t be an inflexibility from employers to prevent people from living in regional communities if that’s their choice.”