FUTURE DEVELOPMENT OF THE PILBARA June 2013
OUR MISSION The Catalyst for Regional Growth and Development.
COMMISSION S ROLE ROLE Leader, Advocate, Broker, Innovator OBJECTIVES Diversity - Economic, Community and Social Development Development - Land Supply, Accommodation and Key Infrastructure
RESOURCE SECTOR 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 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. 2% 2% 2% 9% 5% Pilbara Peel Mid West Wheatbelt Goldfields-Esperance Other 80%
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)
The Pilbara has world class Ports. By tonnage Port Hedland is the largest in Australia and ranked 11 th largest in the world. Dampier Port Authority is ranked second in Australia and ranked 19 th in the world. P i l b a r a P o r t s 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
I R O N ORE The demand for iron ore is expected to grow; one of the biggest drivers of demand is the growth of China. GDP growth estimates 2018 2017 2016 2015 2014 2013 OECD China World 0% 5% 10% ( Resources and Energy Quarterly March 2013 p5 BREE)
million tonnes per annum (mtpa) I R O N 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. 1600 1400 Projected iron ore imports 1200 1000 800 600 400 other Countries Korea China Japan EU 200 0 2012 2013 2014 2015 2016 2017 2018 ( Resources and Energy Quarterly March 2013 p59 BREE)
I R O N 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 1600 1400 World Iron Ore Trade 1200 1000 800 600 400 Other Countries South Africa Canada India Brazil Australia 200 0 2012 2013 2014 2015 2016 2017 ( Resources and Energy Quarterly March 2013 p 59 BREE)
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) I R O N ORE 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
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) I R O N ORE Project Company Location Project Type Anketell Point port Estimated Start Up Estimated New Capacity Indicative Cost Estimate $m Resource 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 Fortescue Metals Group Nyidinghu Rail Spur 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 Construction Operating Employment Employment Estimate Estimate 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
I R O N 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.
I R O N 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 I Q U E F I E D N AT U R A L 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) L I Q U E F I E D N AT U R A L GAS Forecast demand for LNG in million tonnes per year in the Asia-Pacific 2018 2016 2014 2012 0 100 200 300 (Resource and Energy Quarterly March 2013 p 31 BREE)
L I Q U E F I E D N AT U R A L GAS Forecast world supply of LNG in million tonnes per year 2017 2015 2013 2011 0 100 200 300 400 (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) L I Q U E F I E D N AT U R A L GAS Project Company Location Project Type Balnaves Development Project Coniston Oil Field Project Apache Energy / KUFPEC Apache Energy / Inpex Estimated Start Up Estimated New Capacity Indicative Cost Estimate $m Resource 180 km NW of Dampier new project 2014 30 Oil $ 429 50 km N of Exmouth expansion 2014 22 Oil $ 526 Construction Employment Estimate Operating Employment Estimate Gorgon LNG Chevron / Shell / ExxonMobil Barrow Island new project 2015 15 LNG $ 52,000 10000 3500 Greater Western Flank - Phase 1 Julimar Development Project NWS North Rankin B Woodside Energy / BHP Billiton / BP / Chevron / Shell / Japan Australia LNG Carnarvon Basin expansion 2016 n/a Gas $ 2,300 Apache / KUFPEC Woodside Energy / BHP Billiton / BP / Chevron / Shell / Japan Australia LNG 180 km NW of Dampier new project 2016 1.65 Gas $ 1,200 150 km NW of Dampier expansion 2013 967 Gas $ 5,000 Spar 2 Wheatstone LNG Apache Energy / Santos Chevron / Apache / KUFPEK / Shell 120 km N of Onslow new project 2013 18 Gas $ 117 145 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) L I Q U E F I E D N AT U R A L GAS Project Company Location Project Type Equus Hess Estimated Start Up Estimated New Capacity Indicative Cost Estimate $m Resource 300 km W of Dampier new project 2018+ n/a Gas/LNG $ 2,000 Construction Employment Estimate Operating Employment Estimate Gorgon (train 4) Chevron / Shell / ExxonMobil Barrow Island expansion 2017+ 5.2 LNG $ 12,000 280 km NW of Scarborough Gas ExxonMobil / BHP Billiton Onslow new project 2017+ 3+ Gas/LNG $ 12,000
L I Q U E F I E D N AT U R A L GAS 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.
L I Q U E F I E D N AT U R A L GAS 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
O T H E R 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.
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) O T H E R MINERALS Committed projects Project Company Location Status Burrup ammonium nitrate plant Expected Startup New Capacity Indicative cost $M Employment Construction Orica / Yarra / Apache Burrup Peninsula New project 2015 330 775 600 65 Employment Operational Proposed projects Project Company Location Status Big Hill Tungsten Project Hazelwood Resources 220 km NW of Newman, WA New project, feasibility study under way Expected Indicative cost New Capacity Startup $M 2013 6 kt W $112m Employment Construction Employment Operational 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 Nullagine (Blue Spec) Northwest Resources 26 km NE of Nullagine, WA New project, prefeasibility study under way na 2.7-3.6 kt U3O8 600 600 250 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 Spinifex Ridge molybdenum/copper project Australasian Resources / Metals Australia Moly Mines 100 km E of Karratha, WA New project, prefeasibility study under way 50 km NE of Marble Bar, WA na 9 kt Ni $250m New project, on hold na 4.7 kt Mo, 5.9 kt Cu (in concentrates) 375 400 375
O T H E R 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.
TO TA L S K I L L R E Q U I R E M E N T S 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.
P I L B A R A P O P U L AT I O N F O R E C A S T S 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.
P I L B A R A P O P U L AT I O N F O R E C A S T S 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)
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. D E M A N D FOR KEY C O M M U N I T Y S E RV I C E S 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 pdc@pdc.wa.gov.au KARRATHA OFFICE Head Office Suite 49 / 5 Sharp Avenue PO Box 294 Karratha, WA, 6714 Tel: (08) 9185 0600 Fax: (08) 9185 0189 PERTH OFFICE Level 2 / 140 William Street, Perth PO Box 1143, West Perth 6872 Tel: (08) 6552 4476 Fax: (08) 6552 4417 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.