WA vanadium miners get royalty relief

Australia’s economic outlook has shifted following escalation of conflict in the Middle East as rising energy costs are expected to push inflation higher than previously forecast, according to Commonwealth Bank economists.The Organisation for Economic Co-operation and Development (OECD) lifted its inflation forecast for Australia in 2026 to 4.1%, citing higher oil prices and renewed disruption to global energy markets.Commonwealth Bank Australia (CBA) expects inflation to rise further in the near term while economic growth slows as households and businesses face higher costs and tighter financial conditions.Commonwealth Bank Australian economics head Belinda Allen says the energy shock has complicated an already delicate economic balance.“Prior to the conflict, the Australian economy was operating above its supply capacity and inflation was proving stubborn,” she said.“The latest energy shock adds a new layer of complexity, lifting inflation further while also weighing on growth.“There is a wide range of possible outcomes from here.“What is clear is that higher energy prices are a headwind for the economy and both households and policymakers will need to navigate a more challenging environment.”Under CBA’s central oil price scenario, headline inflation is now expected to rise to about 5.4% by mid 2026 and trimmed mean inflation, the Reserve Bank of Australia’s preferred underlying measure, is forecast to peak at 3.8% before easing gradually as economic growth slows and labour market conditions soften.The most immediate impact is expected to come through fuel prices as retail petrol and diesel prices have already risen sharply and could increase further in coming months as global oil prices remain elevated.Beyond fuel, higher energy costs are expected to flow through to a wide range of goods and services, including transport and freight, as supply chain disruptions linked to shipping routes through the Middle East are also adding to pricing pressures.While inflation in Australia is expected to remain elevated in the near term, CBA economists expect it to moderate in 2027 as demand slows and unemployment rises.Business investment growth is also expected to be softer, though CBA assesses that the pipeline for business investment is less sensitive to these headwinds than households.However, softer economic conditions and higher oil prices are still expected to impact the profitability of many businesses, which will reduce the cashflow available for investment.Another risk is financial market stress increasing globally, which would make funding conditions in Australia for large projects more challenging and slow the rollout of projects, including within the resources sector.However, this outlook remains highly uncertain and will depend heavily on how the conflict evolves and how long energy prices remain high, CBA economists say.

PLS lands lithium price floor deal  PLS (ASX: PLS) has secured an offtake deal with Canmax through mid-CY28 that includes a price floor of $1400/t (US$1000/t) for spodumene from the Pilgangoora operation. Subject to receipt of a $140m (US$100m) prepayment, the supply of 150ktpa of spodumene concentrate will commence in CY26.The price floor bodes well for lithium, which has seen a sharp rebound to more than $2800/t (US$2000/t) of spodumene after sinking to lows of around $800/t (US$600/t) in mid-2025. A price floor mechanism has been recognised by government and private enterprise alike, especially as more details of Australia’s Critical Minerals Strategic Reserve have come to light. Federal Resources Minister Madeleine King has previously flagged the government’s consideration of a price floor as the reserve has been taking shape. As recently as early February, Minister King confirmed that Australia would build a pricing mechanism within the Critical Minerals Strategic Reserve."We will work to make sure Export Finance Australia has the right financial tools to be able to introduce price floors, and that may be through offtake agreements, for instance,” she said. "The reason for it is we need to be able to set a price that makes projects competitive and, quite frankly, investable. “The government has that financial backing that provides the heft at the start of a project and then as that investment comes in, which we expect it will... the government can then move out of that space.” Price floors have also been used in the US, with rare earths producer MP Materials entering a public-private partnership with the US Government. Notably, the package included a price floor commitment of $154/kg (US$110/kg) for the company’s neodymium-praseodymium products stockpiled or sold with the goal of reducing vulnerability to non-market forces. While details of Australia’s price floor for critical minerals have yet to eventuate, PLS has taken it into its own hands with the Canmax deal. Under the agreement, PLS has the option to extend the agreement for an additional 12 months, beyond the initial two-year term, and supply a further 150kt. PLS can meet the commitment from its Pilgangoora operation, including either the Pilgan plant or Ngungaju plant or a combination of both. The miner says the floor price mechanism provides downside protection against market volatility while preserving full exposure to price upside. “This agreement builds on our established relationship with Canmax and reflects both the quality and consistency of Pilgangoora’s spodumene and PLS’ proven capability as a reliable, large-scale operator,” PLS managing director and chief executive Dale Henderson said. “The US$100m interest-free prepayment and floor price structure demonstrate strong commercial confidence in our product and performance, while preserving full exposure to price upside. “The agreement strengthens our near-term liquidity and preserves operational flexibility through optional volumes, supporting disciplined production and sales decisions as lithium market fundamentals continue to improve.” 

A new report has found gold projects accounted for $12.6b of the $18.7b in mining deals completed in Australia in FY25. 

The ongoing conflict in the Middle East is introducing new upside risks to the global aluminium market, extending the fallout beyond the existing impacts to oil and gas.Given the concentration of export-oriented smelting capacity in the Gulf and the reliance on shipping routes through the blockaded Strait of Hormuz, disruptions to regional trade flows could remove up to 3.5mt of aluminium output from the global market in 2026, according to Wood Mackenzie.Though Iran itself only produces about .6mtpa of aluminium, ING analysts say the greater market risk stems from potential disruptions to the Middle East Gulf region aluminium exports as well as alumina and bauxite imports passing through the Strait of Hormuz.Wood Mackenzie principal analyst Charvi Trivedi says the Strait of Hormuz is effectively a chokepoint for the global aluminium market.“Disruptions here could cut off up to 60% of alumina supply to Middle Eastern smelters, rapidly deepening the market deficit,” she said.“The longer the conflict persists, the more difficult it becomes for producers to sustain operations, with risks increasingly skewed toward further supply losses and higher prices.”ING analysts say aluminium smelters in the Gulf are heavily reliant on continuous imports of raw materials, such as alumina, leaving production vulnerable to shipping disruptions.In a direct response to alumina supply issues, Qatalum has reduced the operational capacity of its smelter in Qatar to 60% and Ma’aden, a Saudi Arabian producer, is supplying emergency alumina to neighbouring smelters, according to Wood Mackenzie.Direct attacks on aluminium sites have also forced producers into emergency responses across the region. On March 28, Iran struck major industrial infrastructure at two major aluminium production facilities, the Emirates Global Aluminium’s (EGA) Al Taweelah smelter in Abu Dhabi and Aluminium Bahrain’s (Alba) smelter in Bahrain.Following the attacks, EGA entered emergency shutdown at its 1.6mtpa facility and Alba expects to operate at an estimated utilisation of about 30% until damages are repaired, according to Wood MacKenzie.With the majority of Middle Eastern aluminium production exported to key markets —about 80 – 85% according to Wood Mackenzie — including Europe, the US, Japan, South Korea, Turkey and Mexico, the disruption poses significant risks to global manufacturing supply chains.Wood Mackenzie principal analyst Uday Patel says the disruption highlights how concentrated and fragile aluminium supply chains have become.“With so much production and export infrastructure tied to a single trade route, even short-term disruptions can have outsized and immediate global consequences,” he said.Prior to the escalation of the Middle East conflict, ING said the aluminium market was already under major pressure from China’s 45mt production cap, trade dislocation and the imminent shutdowns of South 32’s (ASX: S32) Mozal aluminium smelter in Mozambique.Wood Mackenzie expects aluminium prices to rise to about $5000/t in 2026, with outcomes highly sensitive to the duration and severity of the conflict. ING analysts predict that, in a sever disruption scenario, aluminium prices could briefly move above $4,000/t, but demand destruction would likely limit further upside.