The COVID-19 pandemic is likely to have a devastating effect on WA’s mining and resources industry for up to 20 years.
The economic downturn coupled with the patchy financial support from the government for junior resources companies will severely impact exploration and the development of future mining operations in WA.
Junior resources companies were already struggling to raise capital in a market dominated by the top end of town, but now they are facing cutbacks, redundancies and imminent collapse which will set the mining and resources industry back by decades.
While the Federal Government’s JobKeeper scheme has been a godsend for business which have experienced a downturn in revenue of 30 per cent or more, it does not provide financial assistance for companies that don’t already have a revenue stream including junior exploration companies.
Then there’s a domino effect as qualifying for JobKeeper is also a condition for relief measures available for commercial tenants.
WA’s mining and resources sector is heavily reliant on junior players raising capital to explore new mining tenements which have the potential to become the mines of the future.
The potential cull of junior miners will be disastrous for the economy in the long term as the current mining operations reach end-of-life and fewer operations come online and feed the world’s need for resources including lithium, cobalt and copper.
With the exception of gold, junior resources stocks and the oil price have tanked during the COVID-19 pandemic and now smaller listed companies are falling through the cracks of the current benefit schemes which are supposed to buoy the economy.
There needs to be legislative changes to allow smaller companies that are yet to make money, get some assistance to stay afloat and keep their staff and tenancies, otherwise the State and Federal Governments will experience declining royalties from the nation’s largest contributing sector.
A major mine can take up to 12 years to develop from the moment the deposit is found to the time the operations are up and running and WA cannot afford to lose any time getting our economy back on track.