future development of the pilbara june 2013

FUTURE DEVELOPMENT

OF THE

PILBARA

June 2013

“The Catalyst for Regional Growth and Development.”

OUR MISSION

COMMISSION’S

ROLE

ROLE

Leader, Advocate, Broker, Innovator

OBJECTIVES Diversity - Economic, Community and Social Development Development - Land Supply, Accommodation and Key Infrastructure

The Pilbara is the economic powerhouse of the nation with an economy dominated by the extraction, processing and export of minerals and hydrocarbons. The 2011/12 value of Pilbara minerals and petroleum exports was AU$84b, increased from AU$4.1b in 1999/2000. The Pilbara accounts for 80% of WA’s mineral and petroleum production value. The Pilbara services the offshore Carnarvon Basin, Australia’s largest known oil and gas reserve that earned AU$23b (22% WA total mineral's and petroleum value) in 2011/12.

RESOURCE

SECTOR

RESOURCE

SECTOR

In 2011/12 the Pilbara (on and off shore) was responsible for AU$84b of minerals and petroleum production, 80% of total WA production value.

80%

5%

2% 2% 9%

2%

Pilbara

Peel

Mid West

Wheatbelt

Goldfields-Esperance

Other

RESOURCE

SECTOR

The value of earnings from the Pilbara can be compared to many Nation State’s Gross Domestic Product. $84b represents: • 5.5% of Australia's total GDP • 50% of New Zealand’s GDP • Greater than the individual GDP of 123 of the worlds 185

nation states. (2012 International Monetary Funds list of GDP )

RESOURCE

SECTOR

Major Australian exports: • Iron ore is Australia’s largest export earner with an estimated

value of AU$62b* in 2011/2012. • Coal is the next most valuable earner at AU$48.b. • Crude oil and LNG are third at AU$25.1b (BREE Resource and Energy Statistics March 2013quarter page 17)

In Australia the Pilbara produces approximately: • 90% of Australia’s iron ore • 85% Australia’s LNG • 80% of Australia’s crude oil and condensate (Western Australian Department for Mineral and Petroleum)

Pi lba ra Por ts

The Pilbara has world class Ports. By tonnage Port Hedland is the largest in Australia and ranked 11thlargest in the world. Dampier Port Authority is ranked second in Australia and ranked 19th in the world.

2011/2012 Total Throughput

(Mass Tonnes)

Imports Exports Total

Port Hedland Port Authority 1,656,203 245,015,856 246,672,059

Dampier Port Authority 910,155 170,933,467 171,843,622

Newcastle Port Corporation 3,616,363 125,666,880 129,283,243

Port Walcott 0 84,000,000 84,000,000

Hay Point (NQBP) 0 82,853,893 82,853,893

Gladstone (Gladstone Ports) 17,545,941 66,243,655 83,789,596

Weipa (NQBP) 102,077 24,989,956 25,092,033

Port Kembla Port Corporation 6,893,451 20,927,227 27,820,678

Port of Brisbane Pty Ltd 17,825,006 19,385,738 37,210,744

Melbourne Port Corporation 19,948,801 15,928,296 35,877,097

Fremantle Ports 13,632,851 14,578,970 28,211,821

www.portsaustralia.com.au

IRON ORE

The demand for iron ore is expected to grow; one of the biggest drivers of demand is the growth of China.

0% 5% 10%

2013

2014

2015

2016

2017

2018

GDP growth estimates

OECD

China

World

( Resources and Energy Quarterly March 2013 p5 BREE)

IRON ORE

The Bureau of Resources and Energy Economics forecasts that iron ore world demand will continue to grow up to nearly 1500 mtpa by 2018.

0

200

400

600

800

1000

1200

1400

1600

2012 2013 2014 2015 2016 2017 2018

Projected iron ore imports

other Countries

Korea

China

Japan

EU

mill

ion

to

nn

es p

er a

nn

um

(m

tpa)

( Resources and Energy Quarterly March 2013 p59 BREE)

IRON ORE

In 2011/12 approximately 435 million tonnes of iron ore was exported from the Pilbara at a value of AU$58b, approximately 45% of world iron ore exports. Source: DMP Statistics for 2011/2012

0

200

400

600

800

1000

1200

1400

1600

2012 2013 2014 2015 2016 2017

World Iron Ore Trade

Other Countries

South Africa

Canada

India

Brazil

Australia

( Resources and Energy Quarterly March 2013 p 59 BREE)

IRON ORE

The following Iron ore projects are committed or under construction. Iron ore production capacity from the Pilbara will increase, port export capacity will increase by over 230 million tonnes per annum by 2015. (source BREE major project listing April 2013)

Project Company Location Project Type Estimated Start Up

Estimated New Capacity Resource

Indicative Cost Estimate $m

Construction Employment Estimate

Operating Employment Estimate

Horizon 1 (Phase A) Atlas Iron Pilbara New project 2013 4500 Hematite $ 252

Jimblebar mine and rail (WAIO) BHP Billiton Pilbara New project 2014 35000 Hematite $ 5,180

Marandoo Rio Tinto Pilbara Expansion 2014 n/a Hematite $ 1,070 700

Nammuldi expansion Rio Tinto Pilbara Expansion 2014 26000 Hematite $ 2,140

Sino Iron Project CITIC Pacific Mining Cape Preston New project 2012 28000 Magnetite $ 7,570 4500 800

Solomon Hub (stage I) Fortescue Metals Group Pilbara New project 2013 60000 Hematite $ 3,100 7000 6000

Yandicoogina Rio Tinto/Hammersley Pilbara Expansion 2013 4000 Hematite $ 1,700 800 200

Cape Lambert port and rail expansion Rio Tinto / Robe River 40 km N of Karratha Expansion 2013 53000 Iron Ore $ 5,166 600

Port (55 - 155 Mtpa) Fortescue Metals Group Port Hedland Expansion 2013 100000 Iron Ore $ 2,430 1200 1600

Rail (55 - 155 Mtpa) Fortescue Metals Group Pilbara Expansion 2013 100000 Iron Ore $ 2,330 1500 1600

Utah Point Expansion Atlas Iron Port Hedland Expansion 2013 2000 Iron Ore $ 58

WAIO optimisation (port blending and rail yards) BHP Billiton Port Hedland Expansion 2014 n/a Iron Ore $ 2,500

IRON ORE

There are a number of new proposed iron ore projects currently undertaking feasibility studies or awaiting government approvals. These projects would potentially lift the iron ore export capacity again by 400 Million Tonnes per annum. (source

BREE major project listing and DSD Prospect Magazine)






Anketell Point port Fortescue Metals Group / MCC / Aquila Pilbara New project 2015 350000 Iron Ore $ 4,000

Balla Balla project (phase I) Forge Resources 90 km E of Karratha New project 2015 6000 Magnetite $ 1,000

Balla Balla project (phase II) Forge Resources / Todd Capital 90 km E of Karratha New project 2017+ 4000 Magnetite $ 750

Balla Balla slurry pipe and port infrastructure Forge Resources Port Hedland New project na 6000 Iron Ore $ 310

Balmoral South magnetite project (stage 1) Australasian Resources 100 km NE of Onslow New project 2017 12000 Magnetite $ 3,300

Balmoral South magnetite project (stage 2) Australasian Resources 100 km NE of Onslow Expansion 2017+ 12000 Magnetite $ 3,250

Buckland Project Iron Ore Holdings Pilbara New project 2014 8000 Hematite $ 325

Cape Lambert port expansion Rio Tinto / Robe River 40 km N of Karratha Expansion 2015 70000 Iron Ore $ 3,100

Hardey Aquila Resources 180 km SW of Pannawonica New project 2016 10000 Hematite $ 2,000

Horizon 2 Atlas Iron Pilbara New project 2017 31000 Hematite $ 2,000

Iron Valley Project Iron Ore Holdings/FMG Pilbara New project 2014 15000 Hematite $ 375

Jinidi BHP Billiton Pilbara New project 2015 60000 Hematite $ 5,000

Koodaideri Project Rio Tinto Pilbara New project 2016 70000 Hematite $ 7000

Marillana Brockman Resources 100 km NW of Newman New project 2016 18500 Hematite $ 1,900

Mt Webber Atlas Iron Pilbara New project 2014 6000 Hematite $ 420

Nyidinghu Fortescue Metals Group Pilbara New project n/a 30000 Hematite $ 2000

Nyidinghu Rail Spur Fortescue Metals Group Pilbara New Project n/a n/a Hematite $ 750

Pilbara Independent Rail QR National / Atlas Iron Pilbara New project 2015 n/a Iron Ore $ 3,750

Pilbara Project Flinders Mines 70 km NW of Tom Price New project 2015 15000 Hematite $ 1,100

Ridley Magnetite project Atlas Iron 75 km E of Port Hedland New project 2017+ 15000 Magnetite $ 3,750 1100 750

Roy Hill Hancock Prospecting Pilbara New project 2015 55000 Hematite $ 9,500 3600 2000 Solomon Hub (stage II) Fortescue Metals Group Pilbara Expansion na 50000 Hematite $ 3,750 South West Creek Development North West Infrastructure Port Hedland Expansion 2017 50000 Iron Ore $ 3,750

West Pilbara Aquila Resources / AMCI Pilbara New project 2014 30000 Hematite $ 7,400 3500 1000

IRON ORE

Workforce requirements are estimated in terms of construction and operational jobs. Not all projects as yet have accurate predictions of the numbers they will require. Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara before 2020 are: • 25,050 construction jobs • 15,040 operational jobs.

IRON ORE

Primary risks to the growth of the Pilbara iron ore industry are: • Change in the Chinese economic outlook • Cost pressures ie taxes and wage increase • Lack of skilled workers • International competition from Brazil and West Africa

• Infrastructure constraints, ports, roads, housing, power, water

L IQUEFIED NATURAL GAS

Australia’s largest known conventional oil and gas reserve, the

Carnarvon Basin, is located off the Pilbara coast and had a

production value of AU$23.7b in 2011/2012.

These reserves are owned by the Australian Government

although onshore processing and servicing occurs from Pilbara

located facilities and towns.

The Pilbara LNG industry is experiencing major growth

simultaneously with the iron ore industry and looking to expand

to 30 mtpa by 2015 and 60 mtpa by 2020.

(Pilbara Infrastructure and Planning Framework Jan 2012)


In 2012 the world LNG production capacity measured 288 million tonnes. Due to location, the growth in

the Asia pacific region is most important to the Pilbara and this trade in 2012 is expected to be 185 million

tonnes annually. Demand for LNG in the region is then expected to grow at a 7% yearly average. (Resource and

Energy Quarterly March 2013 p31 BREE)

Forecast demand for LNG in million tonnes per year in the Asia-Pacific

0 100 200 300

2012

2014

2016

2018

(Resource and Energy Quarterly March 2013 p 31 BREE)


Forecast world supply of LNG in million tonnes per year

0 100 200 300 400

2011

2013

2015

2017

(Resource and Energy Quarterly March 2012 p 42 BREE)


Investment on committed Oil and Gas projects in the Pilbara is approximately AU$90b, these projects will raise LNG production in the Pilbara from 17 million tonnes in 2011/2012, by approximately 30 Mtpa. (source BREE major project listing and DSD Prospect Magazine)






Balnaves Development Project Apache Energy / KUFPEC 180 km NW of Dampier new project 2014 30 Oil $ 429

Coniston Oil Field Project Apache Energy / Inpex 50 km N of Exmouth expansion 2014 22 Oil $ 526

Gorgon LNG Chevron / Shell / ExxonMobil Barrow Island new project 2015 15 LNG $ 52,000 10000 3500

Greater Western Flank - Phase 1 Woodside Energy / BHP Billiton / BP / Chevron / Shell / Japan Australia LNG Carnarvon Basin expansion 2016 n/a Gas $ 2,300

Julimar Development Project Apache / KUFPEC 180 km NW of Dampier new project 2016 1.65 Gas $ 1,200

NWS North Rankin B Woodside Energy / BHP Billiton / BP / Chevron / Shell / Japan Australia LNG

150 km NW of Dampier expansion 2013 967 Gas $ 5,000

Spar 2 Apache Energy / Santos 120 km N of Onslow new project 2013 18 Gas $ 117

Wheatstone LNG Chevron / Apache / KUFPEK / Shell 145 km NW of Dampier new project 2016 8.9 LNG $ 29,000 5000 400


Proposed Pilbara LNG Projects are detailed below; increasing production approximately 5 Mtpa. (source BREE major project listing and DSD Prospect Magazine)






Equus Hess 300 km W of Dampier new project 2018+ n/a Gas/LNG $ 2,000

Gorgon (train 4) Chevron / Shell / ExxonMobil Barrow Island expansion 2017+ 5.2 LNG $ 12,000

Scarborough Gas ExxonMobil / BHP Billiton 280 km NW of Onslow new project 2017+ 3+ Gas/LNG $ 12,000


Workforce requirements are estimated in terms of construction and operational jobs. Not all projects as yet have accurate predictions of the numbers they will require. Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara before 2020 are: • 15,000 Construction jobs • 750 Operational jobs.


Primary risks to the growth of the Pilbara liquefied natural gas industry are: • Demand for skilled labour will outstrip supply

• Increase in capital and labour costs

• Development of alternative fuel sources

• Competition from other suppliers

OTHER MINERALS

The Pilbara also produces a range of other minerals having a

total 2011/12 value of AU$2.3b.

This is led by:

• gold and silver at $1 billion

• copper at $576 million,

• manganese and salt at $487 million and

• other minerals at $167 million.

OTHER MINERALS

Investment committed on new and proposed projects in other minerals in the Pilbara is AU$1.95b, indicating future growth across these commodities. (source BREE major project listing and DSD Prospect Magazine)

Proposed projects

Committed projects

Project Company Location Status Expected Startup

New Capacity Indicative cost

$M

Employment Construction

Employment Operational

Burrup ammonium nitrate plant

Orica / Yarra / Apache Burrup Peninsula New project 2015 330 775 600 65

Project Company Location Status Expected Startup

New Capacity Indicative cost

$M

Employment Construction

Employment Operational

Big Hill Tungsten Project Hazelwood Resources 220 km NW of Newman, WA

New project, feasibility study under way

2013 6 kt W $112m

Butcherbird Manganese Montezuma Mining Company 120km S of Newman New Project n/a 0.75 250

Kintyre Cameco / Mitsuibishi 90 km south of Telfer, WA New project, prefeasibility study under way

na 2.7-3.6 kt U3O8 600 600 250

Nullagine (Blue Spec) Northwest Resources 26 km NE of Nullagine, WA New project, prefeasibility study under way

2013 45 000 - 50 000oz 34 120

Pilbara VMS Province Project Venturex Resources 120 km SW of Port Hedland, WA

New project, feasibility study under way

2014 20 kt of Cu, 40 kt of Zn, 3.5 kt Pb, 700 koz Ag

234

Pilgangoora - lithium Altura Mining 85km SSE of Port Hedland New Project n/a 150kt 96

Sherlock Bay Australasian Resources / Metals Australia

100 km E of Karratha, WA New project, prefeasibility study under way

na 9 kt Ni $250m

Spinifex Ridge molybdenum/copper project

Moly Mines 50 km NE of Marble Bar, WA

New project, on hold na 4.7 kt Mo, 5.9 kt Cu (in concentrates)

375 400 375

OTHER MINERALS

Workforce requirements are estimated in terms of construction and operational jobs. Not all projects as yet have accurate predictions of the numbers they will require. Based on data provided from the Bureau of Resources and Energy Economics and the WA Department of State Development, the current identified figures for additional jobs required in the Pilbara before 2020 are: • 1951 construction jobs • 1000 operational jobs.

TOTAL SKILL REQUIREMENTS

Given the current investment detailed across all categories of

minerals and petroleum in the Pilbara it can be estimated that

an additional workforce of approximately:

• 40,000 construction workers and,

• 18,000 operational workers;

will be needed before 2020.

This is a conservative estimate due to incomplete employment

data being available at this time.

PILBARA POPULATION FORECASTS

The Australian Bureau of Statistics estimated the residential population for the Pilbara in 2012 at 62,736 people. The Western Australia Government ‘s Pilbara Cities vision has a goal of increasing the residential population of the Pilbara to 140,000 by 2035. To achieve this Pilbara Cities is embarking on projects that increase the availability of land, affordable housing and renewal of community infrastructure. Employment to support these population targets will have to come from diversification of the economy as well as resource sector demands.

PILBARA POPULATION FORECASTS

Based on nothing more than the additional 18,000 operational staff required for new and proposed resource projects, a percentage for fly in fly out and how many residential workers can be estimated. Using key assumptions (see footnote) it can be forecast that 18,000 operational staff will lead to an additional 21,189 people living in the Pilbara. For every industry job it can be assumed that service jobs will be created in the community, via the multiplier effect. For this example it is assumed one additional local job will be created in the Pilbara per every new industry worker. Using the same assumptions this would then attract another 21,189 people. This leads to a total increase in the residential population of the Pilbara of 40,000 by 2020. Key assumptions 1. Fly in Fly out operational workforce will be 57% (as predicted by PICC for 2015) 2. 65% bring their partner, 2.2 children per family, 69% of couples have children (sourced from Australian Bureau

of Statistic 2011 Census Basic Community Profile - Pilbara)

DEMAND FOR KEY COMMUNITY

SERVICES

Anticipated demand for key community service is primarily dependent upon the number of operational staff who are not fly in fly out. It needs to be recognised that fly in fly out staff are located in and around all Pilbara towns do use community resources and infrastructure such as health, police, water, parks and roads. The calculations below do not include this factor.

Using multipliers provided by Dr Don Burnside, Principal Natural Resource Scientist URS, a resident population increase of 40,000 needs the following additional resources: • 582 child care places • 83 child care workers • 2730 primary school places • 195 primary school staff • 496 secondary school children • 62 secondary school staff • 131 police • 34 doctors • 373 nurses An increase of 40,000 people means that 6,747 houses are needed for families, 12,013 for single and couples equating to 18,760 dwellings in total by 2020.

GDP REVISITED

By 2015, and committed iron ore and LNG projects are completed. Export of iron ore in the Pilbara would now reach 665mtpa and LNG exports reach 30mtpa. At todays prices, value of production would exceed 120b $120b represents: • 7.8% of Australia's total GDP • 70% of New Zealand’s GDP • Greater than the individual GDP of 125 of the worlds 185

nation states. (2012 International Monetary Funds list of GDP )

www.pdc.gov.au : Email [email protected]

KARRATHA OFFICE Head Office

Suite 49 / 5 Sharp Avenue PO Box 294

Karratha, WA, 6714 Tel: (08) 9185 0600 Fax: (08) 9185 0189

PORT HEDLAND OFFICE Shop 2, 6 Wedge Street

PO Box 544 Port Hedland, WA 6721

Tel: (08) 9173 8400 Fax: (08) 9173 1881

As publishers of this presentation the Pilbara Development Commission makes every reasonable effort to ensure the accuracy of all information in the report. Nevertheless, we are unable to guarantee the accuracy of all information contained. We take no responsibility and will not be liable either in contract for negligence or in any other way for any errors, acts or omissions, which may occur in relation

to the report.

PERTH OFFICE Level 2 / 140 William Street, Perth

PO Box 1143, West Perth 6872 Tel: (08) 6552 4476 Fax: (08) 6552 4417

http://www.pdc.gov.au/

future development of the pilbara june 2013

Documents