Western Australia converts idle nickel plants to gold processing amid price surge

Western Australia's mining sector is witnessing a dramatic shift as surging gold prices prompt the conversion of three idle nickel processing plants into gold production facilities. This strategic repurposing of infrastructure represents a significant turnaround for an industry that has faced considerable challenges, particularly the near-total collapse of WA's nickel industry in 2024.

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Every man and his dog is putting through every stone that's got gold in it, so all the mills are full with the high gold prices

The economic landscape has changed dramatically, with the Australian dollar gold price experiencing a historic run. It has climbed from approximately $4,000 per ounce to surpass $7,000 per ounce earlier this year. Currently trading at $6,375 per ounce, gold's high value is making previously uneconomical ventures profitable. This has led new owners to acquire and refurbish mothballed nickel concentrators like Black Swan, Cosmic Boy, and Lake Johnston, aiming to capitalize on the gold rush.

Grant Haywood, managing director of Maritana Minerals, which owns the Black Swan plant, highlighted the current market dynamics: "Every man and his dog is putting through every stone that's got gold in it, so all the mills are full with the high gold prices." This statement vividly illustrates the intense activity and demand driven by the lucrative gold market. The refurbishment of these plants, such as Black Swan for an estimated $101 million, is seen as a cost-effective and faster way to commence production compared to building new facilities, leveraging existing infrastructure and approvals.

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You fast-track your approvals by getting a brownfields site because a lot of the approvals are already in place. It's probably half the cost of a new plant … a great opportunity to repurpose existing infrastructure and save on capital costs to get things up and running quicker.

From an Australian perspective, particularly in Western Australia, this development is a welcome sign of economic diversification and resilience. Gold has long been a cornerstone of the state's economy, second only to iron ore. The projected increase in gold royalty income for the WA treasury, expected to reach $1.1 billion this financial year and $1.3 billion in 2026–27, underscores the significant financial benefit. This repurposing also demonstrates the adaptability of the mining industry, turning challenges into opportunities and showcasing the potential for multi-purpose facilities that can adapt to fluctuating commodity prices, potentially producing both gold and nickel in the future.

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It gives you great versatility in the future as well. It's probably a matter of when, not if, the nickel price turns, and you can then use it as a multi-purpose plant, not only producing gold but nickel as well.