The Association of Mining and Exploration Companies (AMEC) outlines that the continued fuel supply constraints impacts Australia’s exploration and mining sector, as global demand spikes amid continuing tensions in the Middle East.
Reports from across Australia suggest that fuel continues to enter the country, however, disruptions within the domestic supply chain are preventing it from reaching the customers that need it most.
AMEC says the issue is not supply into the country, but rather a breakdown in the supply chain between major fuel wholesalers and independent distributors, leading to concern particularly for smaller operators.
Major fuel wholesales such as BHP (ASX:BHP), Chevron (NYSE:CVX), Mobil and Viva Energy (ASX:VEA) control the flow of fuel to independent distributors and ensure established supply chains remain functional.
Fuel shortages are already forcing operational decisions, including halting mining activities. This comes after Blue Cap Mining stopped operations in Western Australia due to a lack of reliable fuel supply.
Other smaller mining companies and contractors are also being hit with challenges as they rely on independent fuel distributors.
AMEC Chief Executive Warren Pearce says the current situation creates uncertainty, particularly for small operators in mineral and agricultural sectors.
“We keep being told there is enough fuel supplies to meet demand, it just needs to get to the right places,” Pearce says.
“There is a breakdown occurring within the commercial supply chain between major wholesalers and independent operators, who traditionally ensure fuel is delivered to remote and regional project sites.”
AMEC notes greater transparency across the fuel supply chain is needed to know what fuel is available and can be directed where it is most needed to restore confidence across the sector.
According to the Australian Bureau of Statistics (ABS) data, mining accounted for 35% of diesel used in the nation during the 2023-24 financial year. The Institute for Energy Economics and Financial Analysis reveals that the resources sector consumes almost 10 billion litres of diesel per year.
Write to Aaliyah Rogan at Mining.com.au
Images: AMEC
