Western Australia’s Esperance Port is expected to suffer dozens of job losses following a series of blows that have threatened to upend the state’s mining sector.
Located 700km southeast of Perth, the port is owned and operated by Southern Ports, a government trading enterprise responsible for the three ports in Albany, Esperance, and Bunbury.
According to the ABC, expressions of interest for voluntary redundancies are being sought at Esperance Port, where staff are waiting for further clarity. While Southern Ports has said it is too early to speculate on the number of redundancies, it’s thought that roughly 30 full-time positions could be wiped out.
“It is clear that our labour demand in operations and maintenance will need to reduce in line with our adjusted trade volumes as we prepare for a new trade outlook in 2025,” Southern Ports CEO Keith Wilks says.
“We will continue to work closely with our workforce and union over the coming months to plan a way forward.”
The port authority has held urgent meetings this week with the Maritime Union of Australia regarding the redundancy process.
Falling commodity prices take hold
The situation at Esperance Port comes after two of its biggest customers — First Quantum Minerals’ (TSX:FM) Ravensthorpe Nickel Project and Mineral Resources’ (ASX:MIN) Yilgarn Iron Ore Project — were shut down.
At the end of April this year, Vancouver-based First Quantum said that despite moving to a new operating strategy, the project was incurring “significant current and projected losses.”
“The company’s decision reflects the difficulty that it has experienced in achieving a sustainable financial model for (Ravensthorpe) with lower nickel prices projected for the next few years and higher operating costs,” First Quantum said in a statement.
The price of nickel has fallen from a 2024 high of more than US$21,000 ($31,440) in May, to around US$16,000 now.
In June, MinRes announced the shutdown of its Yilgarn iron ore operations following “a comprehensive viability assessment.”
“This outcome has been influenced by several factors, including the limited remaining mine life across five operating mines in the Yilgarn and the significant capital cost and lead time required to develop new resources to ensure continuity of supply,” MinRes said at the time.
“Yilgarn Hub operations will safely ramp down in a staged approach over the next six months, with up to four million wet metric tonnes expected to be shipped by the end of the calendar year. Mining operations will then transition into care and maintenance from early 2025.”
MinRes noted that around 1,000 employees would be affected, and that it would seek to redeploy as many as possible.
Over a six-and-a-half-year period, the company exported almost 45 million tonnes of iron ore through the Esperance Port, and spent $4.2 billion running its Yilgarn operations.
In response, Southern Ports said it was “extremely disappointed” to hear of the Yilgarn closure.
“There’s no doubt that this will have a major effect on Esperance community and the wider region which, like our port, have enjoyed a strong connection to iron ore for decades,” Wilks said.
“We’ll be working over the coming period to assess the situation more fully, however, given Mineral Resources is a major customer for Southern Ports and Port of Esperance it is reasonable to assume this will have a significant impact on our operations.”
More recently, Arcadium Lithium (ASX:LTM) said earlier this month that it would forgo proposed expansion investments at its Mt Cattlin spodumene operation, and instead transition the project to care and maintenance, although it would not be formally closed.
“Unfortunately, production at Mt Cattlin beyond the current stage of the open pit cannot be justified in the current price environment for spodumene,” CEO Paul Graves says.
“We will maintain open and transparent dialogue with all of our stakeholders while supporting our employees and communities in Western Australia during this transition period.”
Not surprisingly, there’s been a scramble to fill the rail and loading capacity.
Other players step in
Earlier this week, Perth-based Gold Valley signed a deal with Arc Infrastructure for the transport of iron ore to the Esperance Port. From 30 September, Arc’s network is anticipated to move 1.2 million tonnes per year, with three return trains paths scheduled each week.
“The move onto rail represents a significant step in the growth of the Gold Valley Group and toward securing the long-term resilience of the Wiluna West Iron Ore Project operations,” Gold Valley CEO Scott Meacock says.
“We are excited by this first step and the opportunity to expand our presence in the Wiluna to Esperance corridor by working closely with all stakeholders, including Arc Infrastructure.”
Gold Valley had previously secured access to critical iron ore infrastructure at the port, including rail receival facilities, conveyors, shed space, and the ship loader. It was the first time a second exporter had been given access to the port’s iron ore circuit, where MinRes was already operating.
“Opening up Port of Esperance infrastructure to a second exporter will see iron ore trade capacity maximised, resulting in a positive boost to the Western Australian economy,” WA’s Port Minister David Michael said in June.
“The Cook Government is investing strongly in Southern Ports’ growth, with $116 million of funding announced in the recent State Budget for infrastructure upgrades and initiatives.”
Getting on with the job
According to Southern Ports’ 2023 Annual Report, Esperance Port employs roughly 150 staff and is the region’s second-largest employer.
During the 2023 financial year, the trading hub saw imports of 924,763 tonnes, while exports measured a whopping 12.6 million tonnes. Of that export amount, iron ore accounted for roughly 7.6 million tonnes, while grain shipments came in at around 3.7 million tonnes.
The port features three berths, two of which saw their utilisation drop compared to 2022. Utilisation at Berth 1 rose from 52% to 60% due to increased grain throughputs, while Berth 2 saw a marginal decline but held largely steady, and Berth 3 dropped from 55% to 48% as iron ore shipments dried up.
Speaking to the ABC, assistant secretary of the Maritime Union’s WA branch, Jeff Cassar, says that while the feeling at Esperance Port is far from a “party atmosphere”, workers are getting on with the job.
“I’ve watched these workers push through enormous difficulty during the COVID pandemic to ensure trade continued, as requested by the (former) premier,” Cassar says.
“There’s a toughness amongst these workers that inspires.”
Write to Oliver Gray at Mining.com.au
Images: Southern Ports, Mineral Resources
