2004 Cabinet papers: How John Howard canned plea for $23m in funding to help BHP ramp up Ravensthorpe nickel

The Howard government feared providing more than $20 million of taxpayer funding to BHP’s ill-fated Ravensthorpe nickel mine on WA’s south coast would set an “undesirable precedent”, according to newly released 20-year-old Cabinet papers. The government said at the time that BHP was wealthy enough to pay for its own mine, but the March 2004 Cabinet papers disclose that prime minister John Howard’s advisers were worried about Canberra being hit up by other miners and State governments if it agreed Federal assistance for Ravensthorpe. “We are concerned that the provision of Australian Government assistance, in an area that is principally of State governments, is likely to set an undesirable precedent with other project proponents and State Governments,” the Department of Premier and Cabinet said in response to a submission later rejected by Mr Howard and his senior ministers. It proved a fortuitous decision for taxpayers. Opened in 2008 at a cost of $2.2 billion, Ravensthorpe operated for just eight months before it was stunningly shuttered by BHP because of a plunge in nickel prices. The decision cost 1800 jobs and devastated the local community, including hundreds of families who had relocated to Ravensthorpe to take up jobs at the mine. The 2004 request for Federal funding was spearheaded by federal resources minister Ian Macfarlane, who sought $22.8m for the WA government to upgrade local public roads affected by the new mine and build a new crane at the Port of Esperance to handle Ravensthorpe’s nickel exports. Mr Macfarlane, who proved a popular minister with the resources industry during his tenure, argued in his recommendation to Cabinet that while infrastructure funding was usually the responsibility of State governments, “the short-term infrastructure needs at Ravensthorpe are beyond the capacity of either State or local governments to fund to the level required”. “An Australian Government contribution will ensure the project proceeds in the near future and in a way that accelerates the benefits to the local region,” he said in his submission. However, it fell on deaf ears. Treasury, together with the departments of Prime Minister and Cabinet, Finance and Administration, and Employment and Workplace Relations, opposed the assistance. “We consider that given the substantial size of the project, the strategic and financial benefits of the project to BHP and the degree of commitment already demonstrated by BHP, the future of the project is not dependent on the provision of Australian Government assistance,” the Department of Prime Minister and Cabinet said. Ravensthorpe was revived by Canada’s First Quantum Minerals in 2011 with a fly-in, fly-out workforce, only to be put back on care and maintenance six years later. It was cranked up a third time in 2020 as nickel companies ramped up to support the energy transition and an expected rush of demand from electric car makers. However, it was mothballed yet again earlier this year after nickel prices failed to shake off another protracted downturn.