In 2020, Elon Musk issued a plea, ‘Please mine more nickel. Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.’

It was understandable. About 50 kilograms of nickel goes into each Tesla battery, and electric vehicle demand was expected to sky-rocket.

But at a time when nickel prices are tumbling, and miners are threatening to mothball their operations due to a massive oversupply, Musk’s sentiment seems a lifetime away.

The landscape has shifted dramatically with the advent of new technology that favours Indonesian nickel.

The development of a method to convert nickel pig iron into nickel matte – a purer form of metal that can be refined into battery-grade material at significantly lower costs than those incurred by Australian operations – has tilted the scales.

Indonesian miners, leveraging this technological edge, are now poised to benefit the most from global efforts to decarbonise.

The response from both federal and state governments has been to offer financial lifelines to an industry that sits at the heart of Australia’s ambitions for a green future.

WA Premier Roger Cook has announced a 50 per cent royalty deferral for 18 months.

Federal Resources Minister Madeline King says she will put nickel on the critical minerals list, allowing nickel miners to apply to access loans from a $4 billion fund.

And Prime Minister Anthony Albanese says his Cabinet is considering a range of measures to help the industry.

It is understandable that the government wants to be seen to be doing something in the face of the price downturn, but throwing untethered subsidies at the industry is unfair to taxpayers.

Large companies have bet big on nickel.

The industry, once on the brink of a boom due to soaring demand for decarbonisation technologies, saw significant investments flow into operations, anticipating a lucrative return.

Yet now, these corporations expect a governmental rescue, posing a model where public funds cushion private losses, imposing a burden on taxpayers, only for mining executives to reap hefty bonuses should profitability return.

This approach not only raises questions of fairness but also overlooks the broader implications for the workforce and the environment.

Approximately 6,000 workers in Western Australia’s nickel sector face uncertainty, yet the silver lining is the region’s desperate need for their skills, with over 11,500 vacancies in the mining industry.

This suggests a resilience and adaptability among the workforce that belies the need for financial bailouts.

Furthermore, while the government champions the environmental superiority of Australian nickel as a competitive edge, the Chinese experience underscores a stark reality: lower costs often eclipse greener credentials.

Despite the availability of more eco-friendly options, battery manufacturers gravitate towards the allure of cheaper nickel sources.

The government would be better off demonstrating it has the interests of taxpayers at heart while throwing a lifeline to the nickel industry.

It can do this by tying any financial assistance – be it royalty relief, loans, or subsidies – to the stipulation of higher repayments once market conditions improve and profitability returns.

This approach embodies fairness: if the nickel industry seeks to draw from the public purse, it stands to reason they agree to reciprocate the Australian people’s support.

This is exactly what business leaders would expect if they were investing in another company’s distressed assets.

By enacting this type of policy, both the resources sector and taxpayers can emerge stronger, more sustainable, and ready to meet the demands of the future.

Richard Wilson is the Managing Director of Transformation Partners, a management consultancy that helps Australian resources, energy and utilities companies improve their efficiency and effectiveness. 

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