Kambalda's Nickel Industry: A "Temporary Pause" in a Rich History
The Foster mine, dormant since 1994, with its headframe standing over a 750-meter-deep shaft in Kambalda, Western Australia, serves as a stark symbol of the region's current nickel industry. Its underground workings, now flooded, reflect a broader sector's temporary halt in activity.
Western Australia's nickel sector experienced a significant downturn in 2024, leading to the closure of three underground mines in Kambalda, located 630 kilometers east of Perth. This downturn also stalled the potential short-term revival of the Foster mine, currently owned by Lunnon Metals. The company had estimated a restart cost of up to $60 million.
Historical Context and Legacy
Lunnon Metals is named after driller Jack Lunnon, who made the pivotal nickel discovery near Kambalda on January 28, 1966. This discovery, made nearly 60 years ago, propelled the rapid development of Australia's nickel industry by Western Mining Corporation (WMC) and led to the establishment of the town of Kambalda.
Over its 60-year history, Kambalda has produced more than 1.6 million tonnes of nickel from 24 mines, valued at over $40 billion at current metal prices. The region has also played a crucial role as a training ground for many geologists.
Current Challenges and Industry Sentiment
Edmund Ainscough, managing director of Lunnon Metals, characterizes the current state of the nickel industry as a "temporary pause," noting its cyclical nature.
He has observed a diminished interest from resource analysts in nickel-focused companies. According to Ainscough, restarting operations does not necessarily require a substantial change in nickel prices, but rather a shift in market sentiment.
He also identified the potential sale of BHP's Kambalda nickel concentrator as a key "trigger point" for the sector. The concentrator was placed on care and maintenance in mid-2024 as BHP suspended its Nickel West business, which is now on the market. Ainscough suggested that various companies in the Kambalda district collectively control approximately 600,000 tonnes of nickel seeking processing facilities.
Local Impact and Economic Diversification
Long-time residents of Kambalda are no strangers to the cyclical nature of mining employment, having experienced multiple retrenchments over the years. The town's population, once about 5,000, is now roughly half, partly due to the increase in fly-in, fly-out (FIFO) workers.
Residents credit record gold prices and the nearby St Ives gold camp with supporting the town's economy during the recent nickel downturn.
Future Investment and Outlook
Mining magnate Andrew Forrest's private company, Wyloo, completed a $760 million acquisition of Kambalda nickel miner Mincor Resources in 2023. However, the mines were subsequently shut down six months later.
Zoran Seat, Wyloo's Kambalda asset president, confirmed that dewatering operations are ongoing to facilitate a future restart, though a specific timeline was not provided. Wyloo is assessing options for the Kambalda concentrator, including potential acquisition or designing a new facility, with a 10 to 15-year outlook for the region. Seat highlighted nickel's increasing demand from batteries, electric vehicles, and the global energy transition as a positive future indicator for the metal.