WA Mines Minister David Michael is staring down the barrel of either losing more than 1000 jobs or missing out on tens of millions of dollars estimated to be owed by Glencore — the owner of the State’s last major nickel mine.
Mr Michael claimed “green shoots” are emerging in the local nickel industry, but Glencore has stamped out that positive sentiment by stating the market “remains very challenging”.
Sources tell The West Australian that the State Government and the multinational mining giant are locked in negotiations over a looming mining royalty tax debt and the prospect of ongoing royalty relief.
Next quarter, Glencore is on the hook to start reimbursing State taxpayers for royalty rebates that its Murrin Murrin nickel and cobalt mine in the Goldfields has racked up since the start of 2024.
Dozens of jobs are rumoured to have already been given the chop at Murrin Murrin in recent weeks. The operation is struggling to stay afloat amid a flood of low-cost Indonesian nickel supply that shows no sign of receding.
The Indonesian nickel boom caused the price of the battery metal to implode from about $US29,000 a tonne to $US16,500/t during 2023, decimating the economic viability of WA’s mines.
The Government in response deferred half of the 2.5 per cent royalty it rakes in from nickel sales. The royalty rebate started on the first day of 2024 and will finish on June 30 this year.
Come July 1, Glencore will have two years to pay back that rebate in equal quarterly instalments, on top of its regular royalty payments.
Glencore was entitled to about $10.9m of rebates in 2024. The estimate takes into account the 34,300t of nickel laterite pumped out of Murrin Murrin during 2024, calculated with the average realised nickel price and currency exchange rate that year.
The average nickel price so far this year is $US15,580/t, according to Bloomberg data, about $US1235/t below the 2024 figure. Based on this year’s average price and last year’s production run rate, Glencore’s total rebate entitlement is set to end up above $15m.
The projected debt and prospect of going back to the maximum royalty rate could be the difference between life or death for a massive mine running on razor-thin margins.
Murrin Murrin generated $US24m ($36.4m) in earnings before interest and tax on revenue of about $1 billion last year, with the vast majority of that derived from nickel sales. Prices for the battery metal so far in 2025 are more than 7 per cent lower compared to 2024.
A Glencore spokeswoman suggested the bleak nickel environment is not showing signs of improvement, while neither confirming or denying rumours of recent job cuts.
“The nickel market remains very challenging, with prices at similar levels today as they were at the start of the year,” she said on Wednesday.
“(Glencore) is continuing to engage with the WA Government concerning the Murrin Murrin operations.
“Murrin Murrin provides jobs for well over 1000 employees and contractors. Small fluctuations in job numbers are reflective of the normal course of our operations which can include variations specific to contracting requirements.”
Mr Michael on Thursday made comments that seemed to contradict Glencore’s ominous statement.
“This week I’ve met with nickel producers after the election . . . they’re starting to see some green shoots, is what they tell me,” he said.
“We know that the world will need a lot of nickel, a lot of lithium, as we decarbonise the globe. And I know WA is best place to do that.”
BHP, formerly Australia’s number one nickel producer, by February 2027 plans to make a decision on whether to revive its WA Nickel operation or bury it for good.
The division employed more than 3000 people and joined the likes of Andrew Forrest’s Wyloo, Panoramic Resources and First Quantum Minerals to have suspended nickel operations in the State since last year.
IGO is the only company apart from Glencore still flying the nickel mining flag in WA, albeit with dwindling strength.
IGO mothballed its Forrestania nickel mine in the Goldfields, while keeping its Nova operation in the same region online, but Nova’s output is waning and the mineral resource base is set to be depleted next year.
