Western Australia could miss out on strategic opportunities for global investment in the natural resources sector if it continues to depend on the traditional model of extracting and exporting commodities, according to a new report released by the Bankwest Curtin Economics Centre (BCEC).
The study, titled “WA’s Resources Sector in Transition”, concludes that the resources sector remains the main economic engine of the Australian state, generating about AUD 200 billion per year and supporting jobs, exports and public revenues. However, the researchers warn that the energy transition, decarbonisation of the economy, technological innovation and increasing international competition are rapidly transforming global markets.
According to the authors, the next phase of economic growth will depend less on the volume of resources extracted and more on the capacity to generate added value through processing, innovation, and industrial development.
“For decades, Western Australia’s prosperity has been built on the extraction and export of natural resources. That model has served us well, but the next chapter will be different,” says Alan Duncan, director of the BCEC and co-author of the report.
Iron ore remains the state’s primary wealth, accounting for about AUD 126 billion in economic output and more than 80% of royalty revenues. However, the report projects that its relative weight will decline over the coming decades.
Conversely, strong growth in demand for critical minerals used in batteries, electric vehicles, renewable energy and emerging technologies is expected. According to the study’s projections, sectors linked to critical minerals, industrial processing and other value-added activities could generate more than AUD 100 billion per year by 2050, compared with around AUD 20 billion currently recorded.
At the same time, fossil fuel exports are expected to fall from approximately AUD 39 billion in 2025 to around AUD 11 billion in 2050, in a scenario of accelerated energy transition.
According to Silvia Salazar, also a co-author of the report, Western Australia has a unique opportunity to position itself as a leader in the industries associated with the global energy transition. However, she warns that success will depend on the ability to secure adequate investments in energy, infrastructure, skilled workforce, and innovation.
The report also emphasizes the importance of revenues generated from natural resources for public finances. In the last year, royalties from mining and oil yielded nearly AUD 10 billion to the state government, equivalent to about one fifth of the state’s total revenue.
Given this dependence, the researchers advocate a coordinated strategy among government, industry, and society to ensure that the wealth generated today is converted into lasting benefits for future generations.
The study also analyzes different fiscal policy scenarios, including reforms to royalty regimes, changes in natural resources taxation, and the possibility of public participation in large LNG (liquefied natural gas) projects. The simulations indicate that small changes in fiscal policies could translate into billions of dollars of additional revenue for public coffers over the life of the projects.
Among the recommendations are strengthening local industrialization, investing in strategic infrastructure, increasing productivity and innovation, and developing value chains tied to the energy transition.
For the authors, the major challenge is to transform the wealth generated by current mining into new industries, skilled employment and sustainable economic growth for the future. “Every tonne extracted should help build a stronger future for Western Australia,” concludes Alan Duncan.
