WA Mining Club hears, ‘red lights flashing everywhere’
- 27 February 2025
New year, new message, new tone: a huge crowd at the first Western Australia Mining Club members luncheon for 2025 found plenty of voice and was urged to use it more boldly this year by a panel featuring Australian journalist and documentary maker, Chris Uhlmann.
“It is time for the chief executives of mining companies to stand up and be heard,” Uhlmann said about Australia’s “incoherent” energy policies and surging power prices, which he explored in the TV documentary, “The Real Cost of Net Zero”, released late last year. It was also time for engineers and scientists to speak up, he said. “You are practitioners. You know the way the world works. You need to be raising your voices. If you actually believe that we are on a path that is leading us to poverty then people need to speak up now.
“Too many people have been cowed into silence. The one that gets used against me all the time is that, if you don't believe in whatever X it is, you must be a climate-change denier. People want to shout you out of the debate.
“[But] the one thing I would say to this room today is, you have power here in Western Australia; the mining industry is large here in Western Australia … I would raise your voice against the direction that we’re on now to try and stop doing what the east coast is doing, because we are on a pathway to poverty and we are de-industrialising.”
Uhlmann was joined on the WA Mining Club panel by deputy chair of investment firm Argonaut, Liam Twigger, Canaccord Genuity mining analyst Tim McCormack and corporate lawyer and non-executive director of De Grey Mining, Emma Scotney.
The Perth meeting heard about issues dominating Australian mining boardrooms at the start of 2025: US and global politics, trade wars and maybe “something more sinister”, upcoming federal and state elections, industry regulation and compliance, gold and energy prices.
Twigger said Donald Trump loomed large and centrally. “He's … probably looking more like a mafia don in The Godfather than a president and I think the only thing missing from his press conferences is a baseball bat.
“The markets aren't quite sure how to react. They've been very volatile and choppy but the clear winner has been gold … and I think the outlook for gold, which reflects the sum of all fears, couldn't be better.
“The central banks around the world are currently holding about 35,000 tonnes of gold in their reserves and if you counted gold as a currency it would be the second largest reserve holding: US dollars number one … Gold is number two. [Gold’s] buyers of last resort, historically, were the Chinese retail dealers or the Indians. But at the moment it’s central banks. When the price comes off it is the central banks that come in. And I think that's a very strong sign for gold.”
Gold afficionado McCormack agreed with the thesis and said the yellow metal at its core was a safe haven “that you go to in times of uncertainty and I think that's unfolding right in front of our eyes and really compounding what is a very strong structural tailwind”.
McCormack said gold’s typically favourable response to bank interest rate cuts was again evident.
“Other factors that are interesting and positive for gold are certainly around the demand stack,” he said. “We’ve seen a real pivot from central banks and ETFs now as well, coming in on top of the more static demand things that are in that pile, which [include] jewellery demand. So that's definitely helpful. If you layer Donald Trump over the top of what is a positive backdrop it adds kerosene to what is already a pretty good bonfire.”
McCormack maintained gold equities were still failing to catch fire: “A lot of them are trading at all-time highs and people think they're expensive. The reality is they’re not. Australian gold producers are trading, on average, some are more expensive than others, but around a 20% discount on average to my valuations and street valuations. And if you look at some of the majors – Barrick, Newmont, these kinds of names – they’re trading right down at sort of 40% discounts to where the street sees their values.
“And it’s a sector that hasn’t seen, I don't think, a real shift of generalist money into it either. There's been a lot of specialist resource positioning money in it. But that real wave of generalist money is what will be the next leg and push all these things sort of 50-to-100% higher, is our reading of it.”
Lagging stock prices and gold’s tear will also inspire more M&A in the sector, the mining club lunch crowd heard. Scotney, on the boards of De Grey, under a A$4.9 billion takeover bid from Northern Star Resources, and Tim Goyder-led Minerals 260, paying $166 million for Zijin Mining’s Bullabulling gold interests in WA, said “sensible, strategic” M&A had become more prevalent and was likely to continue as producers sought scale, visibility and scarce quality assets.
Another hot topic discussed by the panel was environmental, social and governance (ESG) regulation and compliance. Twigger suggested “significant costs” of ESG compliance for public companies meant “the attractions of being listed are almost now being outweighed by the benefits of going private”.
“We have seen a massive wealth transfer over the last 20 years with companies delisting and going private,” he said. “There's probably been more on the London Stock Exchange and New York Stock Exchange. The ASX hasn't been as bad. But companies give into private equity and this wealth transfer goes from shareholders to the kings of private equity, and they’re making out, I wouldn't say like bandits, but probably like bandits. And the ASX being the best of the worst is a bit like saying, you’re the best chef in a burnt-toast convention. It's not a great accolade.”
Scotney said recent shelving of a revised (fifth) edition of the ASX’s Corporate Governance Principles and Guidelines – “voted against by the ASX itself” – recognised what “seemed to many of us an overreach” on ESG reporting and compliance. “Like anything, the pendulum swings too far and there’s a correction,” she said.
“I think directors have probably reached capacity and just want to get on with actually generating profits and returning those to shareholders.
“ESG has its place and I hope and look forward to the day that it's just an inherent part of what we do … and it’s not this discrete, complex, separate area where we focus our attention. [Rather] it’s integral in our everyday practice to be a sustainable industry for decades [and] centuries to come.”
While company leaders were rediscovering their voices vis-à-vis ESG, and particularly diversity, equity and inclusion (DEI) overreach, the panel also seemed to agree with “The Real Cost of Net Zero” narrative on the need for real interrogation of government energy transition policies of today and their impact on energy prices of tomorrow.
“I sit up here as a financial market commentator and I was embarrassed by how head-in-the-sand I’ve been in the micro-climate of WA about where we are at with this energy crisis and what it could mean for the Australian economy,” McCormack said.
“If you take something away from today it is, go and watch that doco because it will hit you like a lightning bolt like it did to me.”
Uhlmann said: “I love being in Western Australia. I live in Canberra so it's a very different environment and that part of Australia is now so disconnected from its sources of energy, and its sources of food and its sources of wealth that it is actually voting against them.
“Don’t believe what I say. Watch the documentary, sure, but go out and test the facts yourself.
“Look around the world – Germany, UK, California, South Australia – everywhere where they have tried to force large-scale wind and solar into the grid the price of electricity has gone up and reliability of grid has gone down.
“I’ve come back out of retirement because this is a passion for me now. I genuinely believe the red lights are flashing everywhere [and] an environmental movement which is cashed up with money from the wind and solar industry is driving the debate and it's time that other people raised their voices and said, sure, we’ll use wind, we'll use solar, but in amounts that make sense, and for the time being, it makes sense for us to use the resources under our feet to stay rich.
“We didn't talk to politicians [for the documentary] We went to talk to people who actually produce energy and have to run energy systems and the story was the same around the world and it’s the same here.
“If you look at the Australian Energy Market Operator's plan, it’s not a plan to run an electricity grid. It’s a plan to hit a target of 82% renewables by a certain period of time. The electricity system should produce cheap, affordable power. It's not.
“[It is designed] to cut carbon emissions … using wind and solar. Wind and solar can’t form a grid because they intermittent. The sun goes down or the wind drops. So you’ve got to have something that balances it. Whatever you put in to balance it is going to be expensive, particularly if it’s battery storage because battery storage doesn’t last long enough to cover big wind-downs.
“The only thing that can match it – its peaks and its troughs – is gas [nuclear utility power is “illegal” in Australia]. But the people who’ve been building this system are the same people who’ve demonised gas as a fossil fuel.
“So the Victorian government banned the exploration of gas while building a system that needed gas. The New South Wales government essentially did the same thing. Now [we are] building a liquefied natural gas import hub where we’ll pay the international price for gas.
“None of this stuff actually makes any sense.
“In terms of our energy policy a group of six-year-olds with crayons would struggle to come up with something more incoherent.
“So I would just urge the government to look at the world as it is not as they wish it would be. Otherwise we are on the pathway to poverty.”
