Why WA’s border decision might hurt mining giants

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Why WA’s border decision might hurt mining giants

WA Mining
Image source: © Grybaz | Megapixl.com

Highlights

  • Western Australia has indefinitely shut its borders due to rising cases of the Omicron variant of coronavirus.
  • The state’s decision to shut the borders may worsen the challenges faced by the country’s mining industry.
  • Various miners have squeezed their production forecast due to the ongoing labour crisis.

Australia’s resource players are warning that Western Australia’s decision to shut its borders indefinitely might intensify the ongoing labour shortage in the mining industry. Additionally, the decision is also expected to dent the country’s reputation as a mineral powerhouse of the world. The decision by Australia’s largest state has taken the Association of Mining and Exploration Companies by surprise.

RELATED ARTICLE: Five hot trends likely to dominate mining industry in 2022 

Western Australia’s state borders have been closed for interstate travel since June 2021, primarily due to rising infection cases. Previously, the state government had planned the reopening of its borders from 5 February 2022.

Skilled labour shortage

The state’s decision to not open its borders may worsen the challenges faced by the country’s mining industry. The decision may further delay the ability of the mining industry to attract much-needed workers to boost the ongoing mining projects or start new projects.

Labour Shortage

Source: © Iofotoo | Megapixl.com

Various mining giants including Rio Tinto (ASX:RIO) and BHP Group (ASX:BHP) are already facing an acute shortage of skilled labourers and have pointed it as one of the root causes for lower production at their sites in their quarterly production reports. The state’s earlier plan of reopening of borders in February was expected to ease these challenges.

Must Read: Rio Tinto (ASX:RIO) targets to increase Pilbara iron ore exports in 2022

Miners downgrade their forecasts

Whitehaven Coal (ASX:WHC), Australia's one of the biggest independent coal miners, has reduced its 2022 managed run-of-mine coal production forecast, primarily due to the pandemic-led labour shortage.

Furthermore, Rio Tinto and BHP have squeezed their iron ore and copper forecasts for 2022, partly due to labour constraints from COVID-19. South32 (ASX:S32), another diversified metals and mining company has cut its annual manganese output forecast due to labour crisis and ongoing COVID-19 restrictions in NSW.

Another Iron ore miner, Mount Gibson Iron (ASX:MGX) has also stated that travel restrictions, particularly within interstate borders coupled with quarantine restrictions have limited the availability of skilled labourers, affecting overall mining operations.

Good Read: Why Regis (ASX:REG) lowered its full-year production guidance

Bottom Line

Various Australian miners are facing challenges due to the ongoing labour crisis in the country amid rising cases of the Omicron variant of coronavirus and cross-boundary travel restrictions.

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