No state is an island

The WA Premier’s threatened permanent border closure with NSW would be a disaster for mining and jobs. By Kristy McSweeney.

There were two words missing from Premier McGowan’s threatening statement to us all where he raised the strong possibility of a permanent hard border with NSW: Capital markets – or in other words, where the money comes from, where the bankers come from, where the investment comes from.  There isn’t enough money or bankers in St George’s Terrace to fill a corner of the Superpit, let alone support the future of our mining industry from the bottom up.

I’m a woman who has sat in a few deal rooms over the years, and I haven’t ever met a banker who wants to invest in a mine he or she couldn’t see. Imagine how many deals wouldn’t get done in Western Australia if Diggers and Dealers was a webinar? Probably only the ones where money was literally hitting people in the face or a few junior explorers managed to blackmail investors with incriminating photos of Hannan Street shenanigans. May the 80s rest in peace.

Our Premier’s narrative of constantly telling the people that hold our economic fortunes in their hands that they are not wanted means that, even in a boom market where the investment proposition is extremely solid, it is still making junior explorers and those that depend on their ability to raise capital to keep drilling until the next stage, beg for money with one hand tied behind their back.

For these little guys, the future of our industry, the men and women who are having a go and creating jobs and continuing our great WA tradition of entrepreneurialism, not having people get here on a plane means that investment into them is, at best, deferred. At worst, it means investors will run out of time to place their cash and put it somewhere else - say, the Hunter region in NSW, or into tech start-ups, or healthcare stock. Make no mistake, three of the top-10 IPO listings on the ASX last year were non-mining - there are other sectors that compete for money that we need.

As for the oft heard retort of not needing the East Coast because our economy is so integrated with Asia, well, right now, no-one from Asia is coming either so we have to deal with what is within our borders.

There is a geographic and economic reality of Western Australia that we need people to come here, and we need them to come here safely. Economic zones have been in place in other parts of Australia from time to time – our junior explorers need one now – some economic pragmatism where vaccinated investors can be welcomed into WA to support our industry, and that includes them being at the front of the queue when Australia opens a travel bubble with Singapore – our closest capital markets hub,  hopefully by the end of this year.

The Premier will tell you that last year over $20 billion was invested into WA’s mining and petroleum sector, during COVID, and that this is still increasing. He’ll then tell you that at March this year, WA had resources projects in the development pipeline of $140 billion.

These investments were made into our large miners, and our small cap companies that had already commercialised. The development projects are from companies like Chevron, Mitsui and Northern Star. Our success stories just keep being successful and our small cap cohort is above expectations.

But he won’t tell you that investment in Greenfields mining was down 17 per cent last year. That’s what we call the sort of mining investment where a foreign or interstate company comes into WA and sets up from the ground up. This continues to fall. The investment share of Greenfields compared to Brownfields, where a company buys a mining operation that is already set up, was just 33%, down a whole 11 per cent from 2019.

He won’t tell you that last August, at the height of COVID, that the Association of Mining and Exploration Companies told Josh Frydenberg that “the most vulnerable in the Australian mining community are the small mineral exploration companies who are entirely dependent on the ASX for raising capital and are finding it increasingly difficult to raise needed funds.” That was because they were worried about people not being able to come into Australia, and into the state, because it was hurting investment.

He also won’t tell you that AMEC’s survey of a sample of WAs 242 exploration companies, taken as COVID hit the industry, found that 74% of them had ceased all of their operations, 97% had planned or actual redundancies, 75% had reduced wages and 69% believed it would be impossible to raise capital over the following six months because of the investment climate.

He won’t tell you that the exploration cohort of the mining industry begged the Federal Government to extend JobKeeper to them, as an exception to the rule that companies in receipt of the subsidy had to have revenue to qualify, arguing that they depend solely on being able to raise capital and that this was difficult in the COVID environment, putting the exploration of mining at risk. What they got in the Federal budget instead was an extension of the Junior Mining Exploration Incentive, a recognition that times were tough here in WA for juniors.

The men and women of WA who have ploughed their life savings, superannuation, risked the family home and sought to create something that was economically supported have been sold a dud by Premier McGowan.

Ironically, these are also the men and women who make up the voters of the electorates of Nedlands, South Perth and Bateman who voted Labor at the state election, many of them for the first time, because they thought McGowan backed mining and backed small business and backed having a go. They thought he backed them.

His deft John-Howard lite impersonation of ‘we decide who comes to this country and the circumstances in which they come’ fooled people scared at the height of the pandemic, and let’s face it, miners didn’t really have a choice with the Opposition outing themselves as a Greens party franchise.

But, now, the dust, the red dust, the gold dust, the black dust, or whatever dust you are trying to mine in this magnificent state of ours has settled, the workforce shortages are biting, the drills have stopped and the bankers won’t come.

And we are the poorer for it in many more ways than we realise.

Kristy McSweeney is the Principal of the PR Counsel , a Director of The Menzies Research Centre, Sky News and ABC regular and an adviser to several private equity and listed companies.