NEW BOOM FOR BOOM TOWN

Transcription

1 ISSUE 10 Moranbah: NEW BOOM FOR BOOM TOWN Page 1

2 Introduction Crawford Property Group Crawford Property Group are your positively geared property experts, specialising in cash flow earning property Australia-wide. Positive Property is now the investment vehicle of choice and offers many benefits including; passive income, high rental returns and the ability to build a successful portfolio much quicker! Crawford Property Group is your positive property destination and can help with market knowledge, education, property selection and management of your new investment property. What are you waiting for, explore our site and start your investment journey today. Search our positive properties, accurate market information, market updates, success stories, best financial options and the right advice. Page 2

3 Contents Moranbah Queensland s Number One Boom Town...4 Key report findings...5 Queensland s leading boom town...5 Macroeconomic investment story...6 Queensland s Premier Mining Boom Town...7 $15.4bn in major infrastructure projects...11 One of Australia s strongest economies and lowest sustained unemployment rates...12 Queensland s Leading Boom Town...14 Floods, strikes and rental freezes are over...16 Population level is 30 years ahead of its time...19 The Great Chinese Urbanisation...21 Three phases of the commodities boom...25 Rising demand for coking and thermal coal...27 Miners - Australia s Wealthiest Workforce...29 Queensland Boom Continues...31 Queensland coal production could triple by Page 3

4 Moranbah Queensland s Number One Boom Town This report details the greatest boom town in Queensland Moranbah which has been supercharged by its proximity to the largest number of active coal mines in Australia and is posed for the biggest property boom in its history, with $15bn in infrastructure projects planned (with $7.4bn of this approved or under construction) within a 60km radius of the township. Straining under a massive population explosion, led by an army of highly paid fly-in/fly-out ( FIFO ) workers, Moranbah has seen median rents rise a staggering 91% and median house values soar 34% over the last year according to Residex. While recently battered by industrial strikes and a unique rental freeze by a major employer, the tide is turning as union action ends, three major projects have been approved, and a population growth tsunami begins to hit this boom town. Page 4

5 Key report findings: Queensland s leading boom town 1. Moranbah is the number one boom town of the Bowen Basin, directly servicing 14 mines within 60km of the township (more mines than any town in Australia) and has one of the largest number of fly-in/fly-out ( FIFO ) mining workers in Queensland; 2. $15bn in approved and proposed infrastructure projects assure the long term future of Moranbah, with over $7bn in approved coking coal projects; 3. Moranbah has one of the strongest economies in Australia, with a median household income more than double the national average and one of the lowest sustained unemployment rates in Australia s history, a three year low of a mere 1.1% (vs 5.6% for Queensland) and only 150 unemployed people in the entire local council region; Property prices have risen by an amazing 23% per annum on average over the last 10 years and rents have risen by over 1,000%, rivaling the gains of WA boom towns such as Port Hedland and Newman. 4. Union strikes, a flood of rentals and a rental freeze have created havoc in the town s property market but these forces are beginning to unwind, paving the way for the next major boom for Moranbah; 5. A population 30-years ahead of its time and forecast to boom by 47% by 2018 is likely to assure the continued prosperity of the Moranbah property market, with some 265 dwellings required each and every year over the five years to Page 5

6 Macroeconomic investment story 1. Global demand for coal is underpinned by the greatest economic event in the world s history the urbanisation of China and the emerging world, which will drive unprecedented demand for coking coal (for steel production); 2. The commodities boom is actually a three phase, sequential boom in prices then investment and finally volumes. While the first phase may have seen prices peak, the largest creator of new jobs is the investment phase and we are only one third of the way through this phase of the boom; 3. Chinese demand for steel is to double by 2025, which is forecast to drive global imports of coking coal by 80% in the same time (with the Bowen Basin in Queensland being one of the world s leading coking coal sources); The mining industry on average pays its workers 100% more than the average Australian wage and the peak construction workforce for Queensland mining infrastructure projects is not expected until The boom in Queensland major projects is far from over and the total number of construction workers isn t expected to peak until at least 2015; 5. The rapid expansion of coal mining in the Bowen Basin will potentially see a 100% increase in coal production between 2012 and 2020, principally driven by coking coal mining. Page 6

7 Queensland s Premier Mining Boom Town One of the youngest towns in Queensland, Moranbah (population: 13,575) was specifically created for miners and their families around 40 years ago. The town services 14 operating mines, including the large Peak Downs, Goonyella Riverside, Broadmeadows and Moranbah North mines and has had a soaring economy since the start of the commodities boom. Page 7

8 Over the years, Moranbah has significantly grown and developed (and now boasts plenty of modern facilities, including shopping facilities, childcare, a library, public swimming pool and sporting grounds), it is distinguished amongst Australian mining boom towns by the fact this Bowen Basin coal mining town has more operating mines within an approximate 60km radius than anywhere else in the nation if not the world. Map 1: Bowen Basin Page 8

9 Image: BMA, Metallurgical Coal Moranbah is also one of the leading FIFO townships in Australia and has been a focal point for a 2012 Federal Parliament Special Committee on the effect FIFO workers have on mining towns. Specifically, the recent approval of four separate billion dollar mining projects has seen FIFO numbers surge by over 63% in the last year to 4,585 workers the highest number of FIFO workers in the Bowen Basin and one of the largest in Queensland. While there are many affects FIFO workers bring to mining towns, the most prominent is severe rental shortages and skyrocketing rents. Indeed, rents until recently hit $3,000/week and median house values have risen a staggering 59% in the last two years. One of the Leading FIFO Townships in Australia 4,585 $3,000 59% Fly-in-fly-out (FIFO) Workers Weekly Rental Value Increase Rate of Medium House Values Page 9

10 Image: BMA Billboard The surge in FIFO workers has also been reflected in the massive growth in airline passenger numbers. Built in 2003 and operated by BHP Billiton Mitsubishi Alliance ( BMA ), who own the majority of mines around the town, the capacity of the Moranbah Airport was exceeded by the commodities boom by almost 15,000 passengers a year. Consequently in 2010, BMA spent $46m to make major upgrades to the airport and progressively expanding its capacity until completion in June This facilitated an immediate and breathtaking 800% surge in passenger numbers (virtually all FIFO workers) from 14,800 in 2010 to 119,000 by 2012 (representing some 60 flights a week). Chart 1: Moranbah Airport Passenger Numbers Source: Federal Bureau of Infrastructure, Transport and Regional Economies Page 10

11 $15.4bn in major infrastructure projects The importance of Moranbah to the Bowen Basin region is underscored by the 14 major coking and pulverized coal injection (both used to produce steel) projects all located within 60km of the township. These projects, in addition to a major liquefied natural gas ( LNG ) pipeline project, have an impressive value of over $15.4bn equivalent to $1.1m per person in this town of 13,575 people! Project Proponent Location Commodity Status Cap Ex, $m Peak Operational Workforce Workforce Red Hill BMA 30km N of Moranbah Coking Coal Feasibility 2,200 3,000 1,500 Caval Ridge BMA SE of Moranbah Coking Coal Approved 1,870 Grosvenor Underground Daunia Moranbah South Eagle Downs Arrow Bowen Pipeline Broadmeadow Eaglefield Talwood Coking Coal Codrilla Winchester South Grosvenor Phase 2 New Lenton Anglo America BMA Anglo Coal/Exxaro Aquila Resources/Vale Arrow Energy BMA Peabody Energy Aquila Resources Peabody Energy Rio Tinto Anglo America New Hope Coal 8km N of Moranbah 25km SE of Moranbah 4km S of Moranbah 25km SE of Moranbah Moranbah to Gladstone 30kn N of Moranbah 36km N of Moranbah 40km N of Moranbah 62km SE of Moranbah 40km S of Moranbah 8km N of Moranbah 20km E of Moranbah Coking Coal Approved 1, Coking Coal Approved 1,553 1, Coking Coal Pre-Feasibility 1,500 1, Coking Coal Approved 1,254 LNG Feasibilty 1, Coking Coal Approved Coking Coal Feasibilty Thermal/PCI Pre-Feasibilty PCI Feasibilty 500 Thermal and Coking Coal Pre-Feasibilty Coking Coal Pre-Feasibilty 500 Coking Coal Pre-Feasibility 400 Millennium Peabody Energy 22km E of Moranbah Coking Coal Approved Total = 15 Projects 15,471 8,110 4,120 Table 1: Major Infrastructure Projects Approved and Planned, Moranbah, $bn Source: BREE, QLD Dept of Natural Resources & Mines, Omega Investments Combined with the existing 14 operating mine sites around Moranbah, this tight concentration of projects has been the driver of one of the strongest regional economies in Australia rivaled only by the Pilbara region of Western Australia. Further, the 15 projects proposed in the Moranbah area are expected to bring in a peak workforce of over 8,100 construction workers that is set to guarantee the economic future of the region for the next decade. Page 11

12 One of Australia s strongest economies and lowest sustained unemployment rates Moranbah is located in one of the strongest economies in Australia, the Isaac Regional Council, which had a median household income of $2,778/week in more than twice the national average of $1,234 per week and the fifth highest in Australia after South Hedland, Port Hedland, Newman, Karratha, and Forest (ACT; which tops out at $2,935/week). With a Gross Regional Product ( GRP ) of over $7bn for each of the last four years (nearly three times the economy s value in 2001), the region has proved very resilient despite a pullback following the global financial crisis - a fact evidenced by a persistent unemployment rate of 1.5% and the number of unemployed being a mere 150 people. Moranbah tops the latest list of 40 localities with the highest rental yields for houses, according to information provided by RP Data. Queensland localities top the list, with 18 suburbs. Nicole Trotman Property Observer Chart 2: Gross Regional Product Isaac Regional Council, $m Source: National Institute of Economic and Industry Research Please note that NIEIR modeled estimates are subject to change and review for the most recent two financial years. Modeled data All $ values are represented in constant year dollars Page 12

13 Chart 3: Unemployment Rate Isaac Regional Council vs Queensland Source: Australian Bureau of Statistics. Labour force survey catalogue number and DEEWR. Small Area Labour Markets Australia Chart 4: Number of Unemployed Isaac Regional Council Source: Australian Bureau of Statistics. Labour force survey catalogue number and DEEWR. Small Area Labour Markets Australia Page 13

14 Queensland s Leading Boom Town In many ways, Moranbah shares the characteristics of the mighty inland iron ore boom town of Newman in the Pilbara region of Western Australia. Surrounded by numerous mines and extremely limited (until recently) in its supply of rental properties, Moranbah has experienced two major property booms. These two booms have contributed to an average annual growth rate of 23% in the decade to 2012 and over a 1,000% increase in median rents from $170/week in 2002 to a whopping $1,710/week in Page 14

15 The first occurred at the start of the commodities boom ( ), when median house values soared by a staggering average of 37% per annum and peaked at an amazing 57% increase in value during While this first boom moderated in 2008 due to the global financial crisis, unlike the vast majority of property markets around Australia (and similarly to iron ore boom towns, Newman and Port Hedland in Western Australia), growth remained positive at between 5-7%. The second boom began in 2011 and coincided with the approval of major infrastructure projects and near tripling of rents over the two years to 2012, with median rents rising from $650/week to $1,710/week and median house values rising 18% in 2011 and an impressive 35% in 2012 (year ending September 2012). Indeed, according to the Queensland Rental Bond Authority ( RTA ), median rentals for four bedroom houses hit $2,600/week in March 2012 up from $1,100/week in March Chart 5: Median House Value and Annual Growth Rate - Moranbah Page 15

16 Floods, strikes and rental freezes are over While Moranbah has experienced the highs of the commodities boom, there is no denying that 2012 was a very tough year for the township despite phenomenal growth. A succession of Queensland floods impacting mines in the Bowen Basin coupled with nearly two years of prolonged industrial strike action by mining unions led BMA to strategically impose a rental freeze on all accommodation in Moranbah. Faced with falling production due to the floods and strikes, BMA s decision to declare a rental freeze at a time of softening demand for new workings in Moranbah was a master stroke. This rental strike was compounded by reverse sea change by long term locals living in Moranbah, which saw some 200 local owner occupiers sell into the market and move to the beach in locations such as the Sunshine Coast, Whitsundays, Cairns and the Gold Coast. This mass selling by locals saw some 200 homes converted into rental properties and having the combined effect of doubling the vacancy rate every three months. Finally, after many years of delays, the production of new dwellings picked up in late 2011 and numerous new dwellings were delivered for investors and released into the rental market. Today, the rental market is still working through these issues, with vacancy rates having hit an alltime high of 8% and four bedroom rentals have eased from $2,600/week in March 2012 to $1,450/ week in September 2012 according to the latest RTA data. SEP 08 MAR 09 SEP 09 MAR 10 SEP 10 MAR 11 SEP 11 MAR 12 SEP/OCT 12 Chart 6: Vacancy rates - Moranbah Source: QLD RTA Page 16

17 However, the worst now appears to have passed. While Moranbah has been impacted by these events, the fundamentals of 14 operating mines and more than $7bn in approved projects have not changed. Rather, several positive events have occurred in the last quarter of 2012 that have set Moranbah for a continuation of the market s property boom, being: 1. Lucrative pay rises for miners A landmark enterprise bargaining agreement ( EBA ) that was finally agreed upon between union and BMA in October 2012, ending two years of prolonged strikes that had also led to the closing of two BMA operated coal mines (neither in the Moranbah vicinity). The EBA will deliver a pay rise of 15% and lift annual superannuation contributions to 12% (up from 9%), with productivity bonuses of up to $15k pa. Not only are the majority of workers happy with the three year EBA outcome, they are much more highly paid (many miners now earning up to $150,000 per annum) and therefore this will have a strong positive effect on the rental markets in the Bowen Basin. Further, the EBA essentially guarantees industrial calm for the next three years and also includes provisions for more family-friendly rosters that will enable them to live locally. Chart 7: BMA QLD Coal Production, Mtpa Source: BHP Billiton Page 17

18 2. 50% increase in coal production announced by major employer BMA BMA has announced that they expect their coking coal production from the Bowen Basin to increase 50% by 2015 now that the industrial action has ended. BMA has also confirmed that water logged mines are becoming fully operational again and this will contribute to the rapid rise in production. 3. Rental freeze lifting BMA has commenced renting in the market again, signaling their acknowledgment that the three BMA approved projects ($1.87bn Caval Ridge mine, $1.55bn Daunia mine and $0.87bn Broadmeadow expansion) are bringing a rapid influx of workers back into town. 3 BMA Approved Projects Caval Ridge mine Daunia mine Broadmeadow expansion $1.87b $1.55b $0.87b Page 18

19 Population level is 30 years ahead of its time According to the KPMG report Redefining Regional Planning: Managing Change, Measuring Growth ( KPMG Report ) released in Dec-11, the Isaac Regional Council has approximately 23,030 residents and a staggering 19,800 or so FIFO or drive-in/drive-out (DIDO) workers. This growth was enough to make the Isaac Regional Council the fifth fastest growing local government area in Australia during Consequently, previous State Government planning for a population of 43,080 by 2042 has been completely blown out of the water by 30 years due to the 2011 population of some 42,830 people. This has naturally placed a huge stress on local infrastructure (eg. hospitals, schools etc.) as well as being the key reason for the huge boom in rentals and house values. Chart 8: Population Isaac Regional Council Source: KPMG KPMG then predicted a further jump of 10,000 in the non-residential population (eg. FIFO/DIFO) in This would have a population well over 50,000 that would have exceeded the forecasts for 2050! However, as previously noted the combination of floods and industrial action has stymied actual growth in Based on the 2011 census, the Queensland Department of Treasury and Trade (the Department ) have revised their 2012 population estimates significantly upwards for the Isaac Regional Council to 40,850 inclusive of 17,125 FIFO/DIDO workers. This is well shy of the KPMG forecast of over 50,000 by 2012 but still represents an upward revision of the region s population by an amazing 17,000 or more people. Page 19

20 Interestingly, the Department also released the latest population figures for Moranbah, indicating its population had reached 13,585 a stunning 43% rise since the 2006 census population of 9,526 which is comprised of a residential population of 8,990 and FIFO/DIDO population of 4,585 workers. More interestingly is the revised population forecasts for Moranbah. The population is expected to soar by over 47% in the next five years and is expected to reach 19,910 people by This rise will be predominantly driven by the influx of highly paid FIFO/DIDO workers. While these new FIFO/DIDO workers will be predominantly housed in large workers accommodation villages (or WAVs ), not every worker will be a single man willing to live in glorified caravan camps. Hundreds of existing FIFO/DIDO workers will choose to bring their families to Moranbah and live in rental accommodation to commute to the nearby mines or live as DIDO workers to other Bowen Basin mines further afield. Further, the residential population is expected to surge 37% or 3,320 people to 12,310 by Assuming an average household of 2.5 people, this equates to a demand for 1,328 new dwellings or some 265 dwellings each and every year between and The demand for new dwellings will naturally act as a strong catalyst for future rental and median house value gains. Chart 9: Population Moranbah Source: ABS , Regional Population Growth, Australia, ; OESR, Survey of Accommodation Providers, ; OESR, 2011 Page 20

21 The Great Chinese Urbanisation The global economy is expected to grow by around $50 trillion US dollars by 2025 essentially meaning the economy will double in size over the next two decades. Across this period, the primary driving force fueling the global economy will be urbanisation. Like industrialisation before it, urbanisation is producing a tidal wave of economic growth and driving the booming commodities industry. Page 21

22 The global trend of urbanisation is significantly contributing to the increase in demand for resources, while new forces in the global economy namely China, India, South Korea and Indonesia are all on a path of development and growth that is seeing their need for steel, coal and LNG soar. Leading this growth is China, a country that is urbanising so fast, forecast to see its economy grow by a breathtaking 150% between 2011 and That s triple the growth rate of the United States and the Europe Union according to recent analysis by the world s largest economics organisation, Global Insight! GDP per capita Chart 13: GDP Change Between 2011 and 2025 (2005 real PPP US$ trillion) The dramatic impact of industrialisation and urbanisation in China is visually best demonstrated by the growth and change of Shanghai, China s largest and most modern city over the last 20 years. Page 22

23 Photo: Shanghai City 20 years ago and today According to the United Nations, about 60% of the world s population will be living in urban centres by 2030, compared to 34% in 1960, and 52% today. Leading the charge is China, which is experiencing mass migration from rural farmlands to urban centres. It s believed that almost 255m people will move to China s urban regions over the next 15 years, stimulating the creation of 37 cities about the size of Perth over the next decade or so. China is also a major player in coal consumption and is experiencing strong demand for energy (thermal coal) and steel production (coking coal). Chart 11: Major Chinese Cities Source: BHP Billiton Note: Tier 1 = 5.0m+ people, Tier 2 = 1.7m to 5.0m, Tier 3 = 1.7m to 5.0m (but lower nominal GDP/capita than Tier 2) Page 23

24 Over the next 20 years, the world s rural population is forecast to stay constant at around three billion. However, the United Nations Department of Economic and Social Affairs predicts that the number of people living in urban regions will increase significantly. In fact, it s expected to increase by around one billion people in just two decades a whopping 28% increase in the world s urban (high commodity consuming) population. While much has been made of the slow down of growth in China, Chinese growth has been written-off time and time again over the last decade. In fact, over the last ten years China has proved consensus economic forecasts wrong nine times out of ten with Chinese growth far outperforming forecasts. Chart 15: Global Urbanisation (billion people) Source: United Nations (Population Division, Department of Economic and Social Affairs) The reality is that China is much stronger economically than its critics claim and has many times the capacity to stimulate its economy than the US or Europe. Indeed, in September 2012, China launched a US$150bn stimulus program to build infrastructure projects across 18 of its cities. During the GFC, it launched an even larger US$500bn stimulus program that drove commodity demand through the roof. Unlike US stimulus spending that ends up on Wall Street and the casino speculation of its investment bankers, Chinese stimulus packages actually build real things things that require immense amount of coking coal (for steel making), thermal coal and LNG (both for electricity production). Chart 13: Chinese GDP Growth Forecasts (annual average) Source: ABS; CEIC; Consensus Economics; RBA ** As at January of first forecast year Page 24

25 Three phases of the commodities boom As iron ore and coal prices began decreasing in 2012, the newspapers couldn t jump on the story quick enough. The commodities boom is over! they declared. The mining boom is done and dusted! While it s true that commodity prices did retract, the reality of the situation is that the commodities boom is anything but over. In fact, it has barely begun. Mainstream media may be peddling fear with their reporting on a fall in Chinese growth, but the facts and figures present a different story. While China s growth is slowing, it is still traveling strongly at 8%, despite troubles in Europe and the US. The reality is that China has become so big that it cannot grow as fast as it may have once done, however this does not mean that it will produce smaller waves. The vast Chinese economy will continue to bring waves of prosperity to Australia for years to come. China s growth is doing anything but stalling, Federal Treasurer Wayne Swan has said: China is now 40% larger than in 2008, so its growth rate can be 20% lower for it to make the same contribution to global GDP growth. We are only part of the way through the current mining boom, which can be characterised as three overlapping phases: a boom in prices, then investment, and then in exports. While Mr Swan says we have passed the peak in prices, the second and third phases still have a way to run. In the 2012 June quarter, business investment as a per cent of GDP reached its highest point in 40 years at 17.1%, and we expect it to rise further over the next year or so, Mr Swan adds. The Federal Treasurer is not alone in his thinking, with Professor Quentin Grafton, Chief Economist of the Federal Government s Bureau of Resources and Energy Economics ( BREE ) telling attendees at the 2012 Australian National Conference on Resources and Energy: The investment phase began before the 2011 price peak and has yet to reach its maximum. Projects that have passed final approvals and final investment decisions currently amount to over $260bn more than two and a half times that spent since the commodities boom commenced. Therefore, even if there were to be no new additions to the Major Projects list, Australia is still only about a third of the way (in value terms) through the investment phase of the boom. There s about $260 billion investments on the books which indicates there s a large pipeline of investment underway in Australia, Professor Grafton adds. Page 25

26 400% Increase of Commodity Prices Since % 5 5 Approved Infrastructure Project Spending This will drive export volumes in 2017 to levels that are 250% higher than when the boom started. We ll expect a very large increase in volume over the next decade, and that volume increase will leave at a higher level than we were before the boom. So in other words, we ll have prosperity in the context of much higher volumes for some time to come, even though prices will eventually, and already are, moderating. JP Morgan Australia chief economist Stephen Walters says that although the first phase of the mining boom the sustained rise in commodity prices that boosted growth in national income has probably ended, the mining boom in itself is not over. He confirms that across the country, resources firms plan to spend another $120 billion by June. Chart 14: Phases of the Australian Mining Boom Source: BREE; ABS Page 26

27 Rising demand for coking and thermal coal Demand for coking coal to soar 80% by 2025 The urbanisation of China - and other developing countries such as India, South Korea, Malaysia and Indonesia is creating an immense thirst for coking coal for steel manufacturing and thermal coal for the generation of electricity. Specifically, the production of steel in China alone is currently nearly equal to the rest of the world combined at a staggering 650Mt per year. With 37 new cities being built in China alone over the next 15 years it is expected that its steel production will reach a mammoth 1.1bn Mt by Chart 15: Global steel production Source: CEIC; World Steel Association This demand for steel is forecast by the global commodities research and consultancy firm, Wood McKenzie, to translate into a lift in coking coal imports by 80% from 250Mt per annum in 2011 to nearly 450Mt per annum by Page 27

28 Chart 16: Annual seaborne coking coal demand (million tonnes) Source: IEA, Macquarie Bank Demand for thermal coal also to rise 30% by 2030 Rising energy demand particularly from China will also see approximately a 30% increase in thermal coal seaborne demand globally according to Wood Mackenzie. Chart 17: Seaborne thermal coal demand Page 28

29 Miners - Australia s wealthiest workforce No other industry has impacted the Australian economy more than the mining industry over the past 10 years. Ever since the resources boom in early 2000, Australia s mining industry has been at the forefront of wage growth in Australia. Page 29

30 This is because soaring global demand for commodities has ensured that mining workers remain in demand. As the mining sector has increased production, it has raised its employment levels and (especially) wages to attract new workers. Particularly for workers going to high demand areas like Moranbah in the Bowen Basin. Significantly, after two years of bitter strike action, a new Oct-12 EBA reached between BMA and mining workers in the Bowen Basin allowed for bonuses of up to $15,000 a year, guaranteed 5.0% pa pay rises for three years, minimum basic wage of $84,000 before overtime, 3% rise in superannuation contributions to 12%, $75/hour overtime, and top mining wages $139,000 rising to $153,000 by Furthermore, a recent report by Suncorp Bank found that miners are the new elite of Australia s workforce out-earning all other industries by an average of $60,000 per year. In an industry where overtime is common, these fluoro collared workers, alongside their blue collared brothers, have overtaken their white collar counterparts in the wages war. Among them, the FIFO miners are now amongst the highest paid workers in Australia. It s no wonder then that, according to a study by Commonwealth Bank, the largest wage increases in Australia were in the mining sector at +5.2% over the year to June Chart 18: Average Wages by Industry, 2012 Source: Suncorp Bank Wages Report 2012 Page 30

31 Queensland Boom Continues Queensland s world-class coal mines and infrastructure make it the Australian coal capital. Electrified rail links from the coal fields allow efficient production and transport of coal to destinations around the world, totaling some 230Mt of export annually worth a staggering $29.04bn in The number of construction workers required for major projects valued at $100m+ will continue to climb in the short term, according to the Queensland Major Contractors Association (QMCA), up from 6,400 in 2012, peaking at more than 19,000 in And while some media pundits talk about a mining slowdown, on the ground in Queensland, activity couldn t be higher. Mining giants such as BHPB, Vale and Peabody are advancing major projects, including the $1.7 billion Grosvenor coal mine Anglo American commenced in July 2012 less than 20km from Moranbah and the $1.8bn BHPB Caval Ridge mine 15km to the south of Moranbah. Page 31

32 These are not signs of a commodities slow-down but rather, signals that the industry is growing and expected to continue its upward trend for decades to come. Thousands Chart 19: QLD Major Projects Construction Workforce (Thousands) Source: BIS Shrapnel, ABS Data QMCA Queensland coal production could triple by 2020, with coking coal production to rise 100% In 2011, sale-able exports of coal mined in Queensland (not all coal exported is classed as sale-able) totaled 162.5Mt, and was principally comprised of coking coal (116.3Mt) produced in Queensland s Bowen Basin. Thermal coal is predominantly exported from the Port of Newcastle in New South Wales. According to the Queensland Resources Council, following a modest 50% growth in coal production over the previous eight years, the large scale expansion of mines in the Bowen Basin will see production increase by 100% by Chart 20: Queensland Coal Production Mtpa Source: ABS, DEEDI, QRC survey results. Note: P = projections based on QRC survey results Page 32

33 Biographies Crawford Property Group Ryan Crawford has been involved in the property investment industry for over 10 years, making the transition from successful investor to real estate professional. Developed in 2008 Crawford Property Group was created to provide an innovative solution to real estate investing in the Pilbara and Australia-wide. With their core focus on positive investment property and wealth creation, Crawford Property Group has fast become the network of choice when choosing to invest in positive property. From the dynamic website to their smart investor list, Crawford Property Group are dedicated to providing the most up to date information and properties in positively geared hotspots Australia-wide. Ryan is a firm believer in the positive power of real estate investing and offers his service and advice as a seasoned investor, with a sizable portfolio in the Pilbara and throughout the state. Ryan is the CEO of the Crawford Property Group. Flynn De Freitas is the Principal of Omega Investments and one of Australia s leading infrastructure spotting specialist. He has extensive experience researching and working on major residential subdivisions in Australia s hottest areas and, as a result, he offers a unique insider s perspective on boom town property markets. Omega Investments focuses on infrastructure spotting, rather than property hot spotting: that is, investment in high yield, high growth residential properties located in regional boom towns of Australia with a major impending or commenced infrastructure project. An active and successful residential property investor specialising in infrastructure towns, Flynn is a former investment banker with USbased Merrill Lynch and management consultant for the international consultancy McKinsey & Company. He has also worked extensively in the Australian retail banking industry. He has also spent four years working for a private property developer, focusing on mining town developments. This experience has helped him develop his extensive knowledge and understanding of towns exposed to the commodities boom. Page 33

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