WA Minister for Mines exclusive interview on battery metals and the future of mining

Bill Johnston, the Minister for Mines and Petroleum joined Small Caps for an exclusive interview to discuss various topics in the industry, including battery metals and the future of mining.

No subject matter was too controversial for Bill to cover as he candidly shared his thoughts on some touchy subjects.

Bill also discusses the highs and lows of serving as the most senior policymaker in Western Australia, considered as one of the world’s best mining jurisdictions.

Filip Karinja (FK): Today we have Bill Johnston, the Minister for Mines and Petroleum joining us on the phone. Welcome Bill.

Bill Johnston (BJ): Thank you, pleased to be here.

FK: You look after mining in Western Australia, which is a booming sector, what excites you in the industry right now?

BJ: One of the things that really excites me is the opportunity in lithium and battery technologies. This is a real opportunity for Western Australia, not just in mining but also in downstream processing.

FK: What is the government doing to help companies in Western Australia?

BJ: We’re very lucky here in Western Australia that we have a good solid regulatory regime. We’re very familiar with the needs of the mining sector. We’ve got good technology companies here that are able to support mining, but also processing, and the further value adding in the battery metals space.

FK: What’s the latest with the gold royalties tax?

BJ: Well, it’s not a tax, it’s a royalty. It’s the price at which we sell the material in the ground to the mining companies. Obviously, the regulation to change the royalty was defeated in the upper house. That’s disappointing because we have a major job to bring the budget back into balance here in Western Australia. The gold sector is doing exceptionally well, the price of gold in Australian dollar terms is the highest it has ever been. We have many successful companies and there is an expectation in the community of Western Australia that everybody share in the responsibility of preparing the budget. I’ll just note that we’ve asked the unions to accept less than they were expecting. We’ve increased the cost of services provided to ordinary families in the state and we’ve reduced the benefits going to senior citizens, so we’ve asked everybody to share in budget repair. So we were obviously disappointed that the gold sector alone did not want to participate in that. But as I say, that matter was rejected by our upper house of Parliament.

FK: How do royalties work in terms of percentage split for mining regions vs state vs federal?

BJ: Taxes go to the Commonwealth predominantly. State governments charge only very small levels of taxes. We charge payroll tax and land tax but predominantly all company tax goes to the Commonwealth government and of course, income tax on individuals working in the industry goes to the Commonwealth. Because wages in the mining sector are on average higher than in other sectors, that means the Commonwealth government proportionately benefits more out of Western Australia. In respect to the goods and services tax, we only get a very small share of our Western Australian goods and services tax back. So, the Commonwealth does very very well out of the resource sector in Western Australia, and we would hope that the Commonwealth would do more to assist Western Australia, because we are not being fairly treated by the Commonwealth, and that’s one of the reasons that our budget repair task here in Western Australia is so difficult. Because we received such a low return of our goods and services tax in Western Australia. And let me make that clear, Western Australia, our exports are what drives Australia’s economy. There is nothing bad about Western Australia’s mining sector, it’s very strong, 800 million tonnes of iron ore exports just as an example. The reason that people on the east coast have a such a high standard of living is directly related to the success of Western Australia’s resource sector. If our resource sector was not as successful as it is, people living on the east coast would have to have a much lower standard of living. To give you an example, just under 3% of Australia’s whole GDP goes out through the port of Port Hedland. So that one channel there we’re exporting lithium, we’re exporting iron ore, we’re exporting manganese and all these other materials. If it wasn’t for that channel there at Port Hedland, Australia as a whole nation would be considerably worse off.

FK: Good point, on behalf of everyone here in Melbourne “thanks WA”, you’re keeping us the number one city in the world for a number of years running…

BJ: …that’s right, exactly true…

FK: Obviously the country benefits from the mining sector, which is why your role in particular is so important.

BJ: I always say that I’ve got the best job in the world because who wouldn’t want to be the Minister for Mines and Petroleum in the world’s number one resources jurisdiction? So I’m very proud of the work done here in Western Australia and it does benefit our state, but it also benefits the entire nation.

FK: The merger between the NUA and the CFMEU has been given the green light. How do you see that impacting the industry, what are the implications do you think?

BJ: I don’t think there’s much implication. The mining sector is not heavily unionised. It doesn’t appear to be a particularly important issue.

FK: Has the Geological Survey of Western Australia recently identified any new hotspots for mining?

BJ: One of the great things here in Western Australia is the work of the Geological Survey, and through the EIS, the Exploration Incentives Scheme, we fund the Survey to do pre-competitive work to expose the geology in Western Australia. The Geological Survey had its open day two weeks ago in Fremantle and I was pleased to go along and look at the work of the Geological Survey and it’s all available online. So, one of Western Australia’s strengths, one of the reasons why we have such a strong resource sector here is because of the work of the Geological Survey in exposing what the mineralisation of the state looks like. I recently, or in the middle of last year, opened the Gruyere gold mine which was found through the application of the Exploration Incentive Scheme, both through pre-competitive work done by the Geological Survey and then through a drill hole that was supported by the co-funded drilling program.

FK: Do you have any inside word for investors on new mining areas in Western Australia?

BJ: Well, what I’d say is that, I’m not here to give investment advice but you can’t go wrong by investing in the Western Australian mining sector, it’s been very successful over a long period of time. The work of the Geological Survey to expose the geological potential of Western Australia is very important. It’s all publicly available and it’s one of the reasons that we are such a well-regarded resource jurisdiction.

FK: There’s some exciting co-payment projects taking place, one of them being Artemis Resources that is about to put a 3km+ drill hole in the Pilbara, are there any others worth mentioning that have been applied for?

BJ: The next round of the EIS is actually the co-funded drilling program, it’s open right now so if people have got a good idea for an exploration project, they should certainly talk to the department about the opportunities to participate in the EIS co-funded drilling program because it’s a great way to look for new opportunities here in Western Australia.

FK: Where can companies apply for this government scheme?

BJ: At the Department of Mines, Industry Regulation and Safety’s website, DMIRS.wa.gov.au; and they can find all the information on the website there including access to the Geological Survey of Western Australia’s information and all the geological information including contact details. The department is very keen to work with potential investors here in Western Australia, to make sure everybody has got the opportunity to find the next big thing.

FK: Is there anything being done to speed up approvals for acquiring leases and drilling applications?

BJ: The department is constantly working to improve its procedures, it’s always interested in feedback. I’m always interested in hearing from potential investors about specific examples of things they think can be improved. And of course, we still are working on the mining amendment that didn’t get proceeded with in 2016 but we are still considering how we can move forward with those amendments to simplify procedures even more.

FK: With regards to current and future trends, what do you see is on the horizon for the mining industry in Western Australia and as a whole?

BJ: The reason that Western Australia’s mining sector is so successful is because it’s about the applied application of technology, it’s about being at the forefront of innovation. The future success of the industry will be about continuing to apply technology. This is not an old industry, this is a modern contemporary industry that’s at the leading edge of technology. The application of driverless vehicles, autonomous machinery, the application of remote sensing, the application of Big Data – they’re all things that are being used in the resource sector, the examination of using mobile phone technology underground. These are all cutting edge technologies being applied to the industry and that’s where the real excitement is. We’re very lucky that we do have great mineralisation in Western Australia, and the reason companies like Tianqi and Albermarle and SQM in the lithium space are coming to Western Australia is because they know we’ve got the technology that they can apply to get their projects underway. They know that we’ve got the skilled workforce that will be able to get their projects happening and that we’ve got the regulatory environment that will allow them to make money out of their investment.

FK: You will be the guest speaker at the upcoming Lithium and Battery Metals Conference in Perth on 21-22 March. Can you give us a teaser on what you’re going to talk about?

BJ: I’ll be talking about the success of our industry and the strength of the opportunities here in Western Australia in the battery space, the fact that we have effectively all the minerals that are needed to create a battery and that we’ve got investments in processing here in Western Australia that’s going to give us the opportunity to build a world-class battery minerals sector. That we can supply the commodities required, we’ve got world competitive port facilities and domestic downstream processing capacity that we can develop to fill with important global need.

FK: Thanks for coming on today Bill. Any final words for our audience?

BJ: I’ll just finish by saying that Western Australia’s success is because of the hard work of the people in the industry, the application of technology, the entrepreneurial spirit and the risk-taking capacity of Western Australia’s industry; and so we welcome more participants to strengthen our industry for the benefit of investors and the whole community.

FK: Well said Bill, thanks for joining us here at Small Caps.

BJ: No worries, thanks Filip.