Mining and manufacturing

Outlook

The mining industry’s output is expected to increase significantly in 2025-26 as the Darwin LNG plant commences LNG production from the Barossa gas field.

In 2022-23, the mining industry accounted for 28% of GSP, making it the largest contributor to GSP. The manufacturing sector accounted for 3.6% of GSP over the same period. Mining is a capital-intensive industry that employed 4,093 persons in 2022-23, accounting for 3% of total Territory employment, while the manufacturing industry employed 3,272 persons, accounting for 2.4% of the Territory’s employment. In real terms, the gross value-adding activity of both the mining and the manufacturing industry declined in 2022-23 by 17.1% and 1.2%, respectively.

Mining output is dominated by LNG and metallic minerals. The sector contributes to the Territory economy through international trade, private investment and employment. The mining industry also has a significant impact on the Territory’s construction industry, as mining investment often generates significant levels of construction activity.

Production levels from the Ichthys LNG plant are expected to increase slightly in 2024, as production capacity is raised from 8.9 million tonnes to 9.3 million tonnes of LNG per year. Gas produced from the Bayu-Undan field declined in 2023 as it approached the end of its operational life. The last LNG cargo from Bayu-Undan was shipped in November 2023 with remaining reserves supplying the domestic market.

Demand for critical minerals is expected to improve over time given their use in energy-efficient technology and as countries increase efforts to transition to low-carbon energy. There are a number of projects under development that may make final investment decision over the outlook period. If these are realised, they will boost mineral production in the Territory.

Minerals production

The majority of minerals produced in the Territory are metallic, including manganese, gold, zinc and lead, bauxite, iron and lithium (Map 1). The Territory also produces non-metallic minerals, such as crushed rock, sand, quicklime and gravel.

The value of the Territory’s mineral output was $4.4 billion in 2022-23, a 9.9% decrease from the previous year, not adjusted for inflation. This was largely driven by a decrease in the value of manganese and zinc/lead concentrate reflecting lower prices for these commodities. The value of the Territory’s mineral production is expected to increase slightly to $4.5 billion in 2023-24 driven by an increase in the value of production for gold.

Chart 4: Value produced of selected Territory minerals

Chart 4 - Value produced of selected Territory minerals

Source: Department of Industry, Tourism and Trade

Manganese

Manganese is an input to steel manufacturing with production largely driven by global steel demand. In the Territory, manganese is produced at South32’s Groote Eylandt Mining Company (GEMCO) mine, the largest manganese mine in the world.

In 2022-23, the value of manganese produced decreased by 14.1% (Chart 4), driven by a fall in the global price for the commodity and a reduction in the volume of manganese produced. Manganese accounted for 34.8% of the value of all minerals produced by the Territory.

In 2023-24, the value of production is forecast to decline as a result of damage to the GEMCO mine site and the Milner Bay Groote Eylandt Wharf caused by Cyclone Megan (see Chapter 2, Economic growth, NT Economy book). The price of manganese is expected to remain stable, supported by increased global demand for steel.

Read Chapter 2, Economic growth, NT Economy book PDF (2.0 MB).

Gold

The Territory produces gold predominantly from Newmont’s Granites mine in the Tanami region. The value of gold produced declined by 2.4% in 2022-23 and accounted for 27.6% of the value of all minerals produced by the Territory. This was driven by a decrease in the volume of gold produced, partially offset by a strong increase in the price of gold.

In 2023-24, the value of production for gold is expected to increase, driven by elevated prices amid global economic uncertainty.

The completion of expansion activities at the Granites mine will contribute to production levels increasing over 2024-25. Newmont’s Tanami Expansion 2 project is expected to begin commercial production in 2027 with capital costs estimated between $1.7 and $1.8 billion. There are a number of prospective projects in the Tennant Creek and Pine Creek regions that would support the Territory’s gold production, dependent on final investment decisions and obtaining necessary approvals.

Zinc and lead

Zinc and lead are produced at Glencore’s McArthur River mine, located 65 kilometres southwest of Borroloola. The value of zinc and lead produced decreased by 6.8% to $1.1 billion in 2022-23 due to a decline in the price of zinc and a reduction in the volume of zinc/lead concentrate produced.

Heavy rainfall resulting from Cyclone Megan led to a temporary pause in operations at the McArthur River mine on 18 March 2024. However, the impact of this was modest, with the mine beginning the process of safely returning to normal operations on 26 March. In 2023-24, the value of production of zinc and lead is expected to remain relatively stable.

Bauxite

Two bauxite mines operate in the Territory – Rio Tinto’s mine at Gove and Gulkula’s mine on the Dhupuma Plateau.

The value of bauxite produced in the Territory increased by 6.2% to $421.3 million in 2022-23, reflecting an increase in the price. This was driven by strong demand for aluminium, which uses bauxite as an input.

Bauxite prices and the quantity produced in the Territory are expected to increase modestly over the short term due to an expected increase in global demand for aluminium as global economic growth improves.

Iron ore

In 2022-23, the value of iron ore produced in the Territory decreased by 88.6% to $6.9 million. Iron ore in the Territory was produced solely at Elmore’s Peko mine, which exported a shipment of ore in October 2023, before going into administration in early 2024. At least one more shipment is expected to be exported while they are in administration. Value of production is forecast to remain low in 2023-24 with the Nathan River mine having approval to export stockpiles.

Several projects are currently under consideration and are awaiting final investment decisions, including the Warrego tailings project. Favourable market conditions and necessary approvals may result in these becoming operational during the outlook period.

Lithium

Core Lithium’s Finnis mine opened in October 2022, making the Territory an emerging supplier of lithium. Production occurred in two forms, direct shipping ore and spodumene concentrate. Production of spodumene concentrate was below initial projections due to the flooding of the Grants mine pit.

Over 2023, the price of lithium fell steeply due to an oversupply in the market and weak growth in electric vehicle sales in the United States (US) and European Union. Lithium output from the Core Lithium mine will be limited to processing existing stockpiles in the second half of 2023-24, as the steep fall in prices led to the suspension of mining operations in January 2024.

Uranium

Uranium mining ceased in January 2021 when Energy Resources of Australia’s (ERA) Ranger mine closed down, with all inventories sold by June 2022. Rehabilitation of the Ranger mine is currently underway. ERA expects costs to exceed the previously estimated range of $1.6 billion to $2.2 billion. In addition, rehabilitation of the Rum Jungle mine is anticipated to cost an estimated $500 million. Mine rehabilitation will be an ongoing source of activity in the Territory in coming decades as a number of mines are nearing the end of their operating lives.

Other minerals

The value of production of other non-metallic minerals increased by 32.1% to $69.6 million in 2022-23. This was driven by increases in the production of sand and soil.

The value of production is expected to decline slightly in 2023-24 driven by a decrease in the value for crushed rock and sand.

Map 1: Current and pending mineral and onshore petroleum operations in the Territory1

Map 1 - Onshore Mineral and Energy Resources 2024

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency or completeness of the information. To be used as a guide only.

Source: Department of Industry, Tourism and Trade; Department of Treasury and Finance

Oil and gas production

The Territory’s conventional onshore oil and gas is sourced from the Amadeus Basin in Central Australia. Production occurs at the Mereenie, Palm Valley and Dingo fields located close to Alice Springs and operated by Central Petroleum Limited.

In 2022-23 onshore oil production decreased by 14.8% to 0.13 million barrels of oil, and gas production decreased by 7.1% to 13.3 billion cubic feet. This was due to several shutdowns of the Northern Gas Pipeline during the year. Future gas production is expected to be supported by new investment at the Mereenie, Palm Valley and Dingo fields. These include a recompletion plan undertaken to increase field capacity, two new development wells expected to go online in 2024 at Mereenie, and planning for additional wells to be drilled at Palm Valley and Dingo.

The Territory’s offshore gas is currently sourced from the Ichthys, Blacktip and Bayu-Undan fields. Previously, gas from both the Ichthys and Bayu-Undan fields was transported to onshore processing facilities to be exported overseas. However, as the Bayu-Undan field approaches depletion, it no longer produces gas for global markets and instead has shifted supply towards domestic consumption until the end of its field life. Offshore gas from Blacktip is also used by the domestic market, providing gas for electricity generation in the Territory, noting that gas output from this field declined significantly and remained well below historical levels in 2023. The Barossa gas field is set to replace Bayu-Undan and expected to become operational from 2025-26.

Offshore oil production is mainly generated by the Montara field and is exported overseas. The value of the Territory’s offshore oil exports increased from $5.3 million in 2021-22 to $1.3 billion in 2022-23 (caution is advised when interpreting this result, as the large spike in offshore oil exports reflects changes in the ABS’s confidentiality provisions relating to international trade data).

Carbon capture and storage (CCS) is the process of capturing greenhouse gases from industrial and energy-related sources, and injecting it deep underground for storage. Oil and gas reservoirs that have been depleted serve as attractive storage targets as they have been proven to contain good reservoirs and traps. The Territory Government is currently working to develop a low emissions CCS Hub at the Middle Arm Sustainable Development Precinct. In addition, Santos’ proposed Bayu-Undan CCS project is targeting final investment decision in 2025, with the first injection of carbon dioxide expected to take place in 2028.

Map 2: Offshore petroleum activity near the Territory1

Map 2 - Offshore petroleum activity

1 This map is produced from various sources. Department of Treasury and Finance cannot guarantee the accuracy, currency or completeness of the information. To be used as a guide only.

Source: Department of Industry, Tourism and Trade; Department of Treasury and Finance.

Exploration activity

Exploration activity can be a leading indicator of future development, depending on the outcomes of the exploration work undertaken.

Total mineral exploration expenditure in the Territory increased by 14.1% to $228.1 million in 2023, slightly below the highest level seen in 2011 of $228.4 million. This reflects increased expenditure across ‘other’ minerals such as lithium, rare earths and graphite, which accounted for $106.7 million in expenditure. Uranium and gold exploration also increased (Chart 5).

In 2023, gallium and graphite resources were discovered in the Territory, taking the list of critical minerals found in the Territory to 17, and provides a strategic opportunity for the Territory to become a major supplier of critical minerals.

Petroleum exploration activity in the Territory is focused on the Beetaloo Sub-basin and the Amadeus Basin. The main companies exploring in the Beetaloo Sub-basin are Santos, Tamboran Resources, Falcon Oil and Gas, and Empire Energy Group. In 2023, petroleum exploration expenditure in the Territory decreased by 43.9% to $78.8 million. This was likely due to limited exploration work conducted by Empire Energy Group as it performed flow testing on existing wells, as well as no petroleum exploration work undertaken by Santos.

In 2023, Tamboran Resources announced a strategic partnership with a North American energy services firm to import specialised equipment needed for the proposed Shenandoah South gas pilot project. Tamboran Resources have also entered into three formal and binding agreements with APA Group, an energy infrastructure business, to support the development of their assets in the Beetaloo Sub-basin. Additionally, Empire Energy Group have also formed an agreement with APA Group to connect their holdings in the Beetaloo Sub-basin to APA Group’s Amadeus gas pipeline, which supplies gas to Darwin, Alice Springs and regional centres in the Territory. Following the success of Tamboran Resources’ 30-day gas flow testing at their Shenandoah South test well, they are expected to progress development plans for the Shenandoah South gas pilot project, with drilling anticipated to commence in the second half of 2024. This timeline is subject to funding availability and obtaining the required approvals. In April 2024, Empire Energy Group raised over $46 million, enabling them to progress drilling in the Beetaloo Sub-basin. The drilling will comprise a pilot development well for pre-production testing, with commercial production expected by 2025. To secure the Territory’s energy future, in April 2024 the Territory Government signed a nine-year deal with Tamboran Resources for supply of gas from the Beetaloo Sub-basin. Petroleum exploration is expected to increase in 2024, supported by exploration in the Beetaloo Sub-basin.

Chart 5: Value of mineral and petroleum exploration expenditure in the Territory1

Chart 5 - Value of mineral and petroleum exploration expenditure

1 Moving annual total

Source: ABS, Mineral and Petroleum Exploration, Australia, Cat. No. 84120.

Manufacturing

Significant manufacturing industries in the Territory include food products, fabricated metals and transport equipment.

In 2021, the Territory Government entered into a partnership with the Advanced Manufacturing Growth Centre (AMGC) to support the development of advanced manufacturing in the Territory. As part of this partnership, AMGC and the Territory Government have established the Advanced Manufacturing Ecosystem Fund (AMEF) to support local businesses to commercialise products using innovative technology. Since its inception, the AMEF has supported Diverseco, Katherine Joinery, Arctic Installations, Air Tip, Corrosion Instruments, Colemans Printing, Steeline and Warle Construction. The Territory Government has recently co-invested in Warle Construction to build durable and cost-effective modular homes for remote areas, together with supporting Think Water in commercialising a water testing system to enhance water quality testing efficiency. The combined investment of the AMEF is expected to contribute over 160 new jobs and generate over $84 million for the Territory’s economy in its first five years.

To support the Territory’s role as an LNG export hub and fully realise the potential of the manufacturing sector, the Territory Government is working towards establishing the Middle Arm Sustainable Development Precinct. The focus of Middle Arm will be on enhancing downstream activities and it is currently in the planning and concept design phase. Avenira Limited and Aleees have signed a licence and technology transfer agreement granting Avenira the right to use Aleees’ intellectual property for the lithium ferro phosphate battery cathode manufacturing facility to be based at Middle Arm. Avenira’s Wonarah phosphate project is expected to supply the facility, with both projects pending final investment decisions. If these projects proceed, they will support the Territory’s mining industry in addition to advancing the Territory’s manufacturing capabilities.