Gold-focused Western Australia companies have shone in 2024, with strong prices driving merger and acquisition (M&A) activity, while prices for some critical minerals, including lithium and rare earths, slumped, taking company fortunes in the same direction, a new Deloitte report reveals.

A special 2024 Diggers and Dealers edition of the Deloitte WA Index reveals Western Australia-based listed companies succumbed to an overweight exposure to lithium and rare earth elements in 2024, with producers among the top 20 with exposure to carbon reduction and battery-associated minerals losing an aggregate of A$23-billion in market capitalisation. 

Deloitte Western Australia audit and assurance partner Dave Andrews said a disappointing final quarter saw the Index finish weaker than other global indices surveyed in the 2024 financial year. 

“We can still trust gold to shine in a world of uncertainty, with silver and platinum also delivering, up 22%, 29% and 13% price growth respectively, and plenty of optimism around uranium, with a rise of 49% in 2024,” he said.

Despite the price challenges facing lithium, rare earths, nickel and cobalt, Deloitte said the fundamentals for critical minerals remained robust, with demand forecasts still expected to rise considerably over the next 20 years.

“After riding the carbon reduction and battery storage wave in recent years, 2024 saw lithium prices fall 74%, with rare earth elements coming off 20%, nickel down 16% and cobalt down 19%, resulting in several mines facing mothballing and others seeking funding to stay the course,” Andrews said.   

“Interestingly, critical minerals associated with a wider range of clean energy initiatives such as copper, zinc and aluminium weathered pricing volatility more favourably. Tech stocks, of which the WA Index is underweighted, led other global market indices to outperform the WA Index this year.”

Traditional energy commodities such as oil and gas and thermal coal were mixed. Brent crude oil rose 15% on global supply concerns yet thermal coal lost 16% as Chinese domestic production and rising stockpile levels kept prices in check.  

“Of course, with price volatility comes opportunity. There was plenty of M&A activity across the mining and metals sector, creating excitement and a potential shakeup for the composition of the future WA Index Top 100,” Andrews said.

“There is a clear linkage between M&A priorities and the energy transition. We can expect it to continue to dominate the M&A landscape, but not in isolation, with the gold industry bringing together regional asset portfolios and building operational scale.

"This year, Red 5 and Silverlake, Ramelius and Musgrave, Emerald and Bullseye, Genesis and Dacian, Westgold and Karora have all announced strategic combinations and, just recently, Ramelius was at it again buying an equity stake in Spartan.”

The Diggers and Dealers special edition recognises the top performing companies in the Deloitte WA Index delivering outstanding market capitalisation growth over the financial year.

During 2024, gold was certainly a positive standout, with recent M&A driving significant growth outcomes for several WA-based organisations.

The top three movers in the WA Index Top 20 in terms of market capitalisation growth for the year ended 30 June 2024 are:  

• Red 5  – increasing its market capitalisation by 273% 
• Emerald Resources – increasing its market capitalisation by 90% 
• Ramelius Resources – increasing its market capitalisation by 76% 

The top three movers in the WA Index Top 100 in terms of market capitalisation growth for the year ended 30 June 2024 are:  

• Spartan Resources – increasing its market capitalisation by 626% 
• FireFly Metals – increasing its market capitalisation by 545% 
• Wildcat Resources  – increasing its market capitalisation by 376% 

The 2024 WA Index report also references a special Deloitte report on Australian critical minerals in the context of the energy transition, and how countries and industries across the world are locking in supply of minerals critical to delivering the transition.

In response to limited diversification of global supply and increasing demands for environment, social and governance value chain transparency, the global trade and investment environment for critical minerals is rapidly changing.

Australia, and particularly Western Australia, is a major player and one with huge potential to supply the world’s mineral needs – particularly in rare earths, high purity alumina, cobalt, lithium, graphite, magnesium, manganese, nickel, palladium, platinum group metals, silicon and vanadium. 

The race is on, and Australian mineral explorers, developers and producers need to understand the implications for their businesses and impact on individual projects of a range of possible scenarios.