Importance of the Resources Sector on

the National Economy – Particularly the

Record Production of Iron Ore in WA

Mining the Pilbara 2014

10 July 2014

William (Chub) Witham

Manager North West and Kimberley

The Chamber of Minerals and Energy of Western Australia

In 2013-14, the sector accounted for:

• $109 billion in sales value

• 89% of state and 47% of national

merchandise export incomes

• State royalties of $6.1 billion

As at February 2014, 109,200

people directly employed.

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Western Australia’s

Resources Sector

55%

12%

10%

9%

4%

4% 6%

WA Resources Sector Value1

Iron ore LNG

Crude & condensate Gold

Alumina Nickel

Others

1 Department of Mines and Petroleum, 2013. Statistics Digest 2012-13. Perth.

• In operation for 112 years and over 200 members representing

95% of production value in WA

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About CME

“To champion the WA resources sector and assist it in achieving its

vision to lead the world in sustainable practice, through innovation, and

continuing to underpin Australia’s position in the global economy.”

40,000 Bp - Flints, clays, salts, gravel,

stones and ochre

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1872 - Cossack founded -

pastoral and pearling

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1891 - Gold at Marble Bar

Gold Locations in the Pilbara

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1896 - Port Hedland gazetted

gold, pastoral and pearling

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1911 - Railway Marble Bar to

Port Hedland

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Port Hedland 1920

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1937 - Wittenoom Gorge

Asbestos Mine

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World War II

1939-45 - WWII caused many mines to cease operation

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Manganese 1951

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Port Hedland 1966

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Port Hedland 1966

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Port Hedland 1969

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Port Hedland 1969

Port Hedland – Size of Ships

• 1951 Jetty – Manganese

• 1965 65,000 DWT

• 1968 120,000 DWT

• 1975 185,000 DWT

• 1976 225,000 DWT

• 1986 260,000 DWT

• 2013 320,000 DWT

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Development Phases over

past 50 Years

• 1952 - First Manganese Exported

• 1960 - Commonwealth Government lifts iron ore export embargo

• 1964 - Oil discovered on Barrow Island

• 1965 - Salt production

• 1965-66 - Mt Goldsworthy and Mt Tom Price Iron

• 1967 - Oil production on Barrow Island begins.

• 1981 - The Western Australian Government negotiated an agreement to allow development of the large natural gas reserves on the North West Shelf.

• 1987 - Global stock market crash

• 1989 - First LNG cargo exported to Japan

• 2008 - Global Financial Crisis.

• 2009 - Gorgon Consortium signs $50 billion agreement.

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Phase 1 – Swinging 60s

• 1960 – Iron Ore Embargo Lifted

• 1962 – Small town of Port Hedland (900 people)

• 1963 - Port of Dampier developed in 1963 when Hamersley Iron

entered into an agreement with the Government over Mt Tom Price

• Thousands of construction workers camped on Spinifex Hill in 1965

where the Port Hedland Civic Centre now stands.

• 1965 - the railway from Goldsworthy to Finucane island was started

and completed to take its first shipment

• 1966 – Parker Point designed to accept vessels up to 60,000 DWT.

• 1966 - Leslie Salt Port Hedland

• 1967 - The harbour was dredged and the spoil bank created

• 1969 – 1st iron ore shipment for Mt Newman sent from Nelson Pt.

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1967

2010

Phase 2 – Stellar 1970s

• 1970, first development of South Hedland

• 1970 - Pannawonica built

• 1971 - New Port Hedland airport terminal, and 2 high schools

• 1972 - Paraburdoo mine starts production

• 1972 - Dampier Salt commences operations

• 1973 - Shay Gap starts production

• 1976 - BHP continued to expand its production with a second

processing plant at Nelson Point which increased annual production

to 40 million tonnes

• 1978 saw a decline in world markets for iron ore due to fall in price

for steel.

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Phase 3 – Quieter 1980s

• 1982 - The mine at Goldsworthy was closed on 22 December 1982

• 1985 – Port hedland suffers a set back with mothballing of rail

carriages as the demand for iron ore is reduced. Port Hedland's

population decreases from 14,000 down to 8,000.

• Opening of the Pretty Pool housing estate in 1987 (too late for the

70’s boom).

• Focus on gold and nickel exploration in the rest of WA

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Phase 4 – Ramping up slowly

in the 1990s

• 1993 - Operations ceased at Shay Gap

• 1992 – Mesa J opened (Robe)

• 1996 - Australia's iron ore output expanded by 12 per cent to 145

Mt, the quickest expansion

• 1996 - expansion at BHP's Yandi mine;

• 1996 - Robe River's investment in infrastructure,

• 1996 - Hamersley's Marandoo mine (12Mt/y)

• 1996 - Expansion of the Jimblebar operations (+5 Mtpy),

• 1996 - Start-up of Yandi 2

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Just a quick mention - Oil and

Gas

• Late 1970s Woodside Offshore Petroleum and their joint venturers decided on Dampier as the site of their onshore LNP production plant and export wharf.

• 1980 - The North Rankin ‘A’ production platform was constructed about 130km NNW of Dampier and was connected by pipeline to their onshore site at Withnell Bay. The project was the largest engineering works ever undertaken in Australia at the time, and at peek construction about 4,500 workers were employed in the onshore production plant. The total project cost was estimated at $12,000,000,000.

• 1995 - A second jetty was constructed. This facility was designed to handle LPG vessels as well as condensate tankers. Approximately 1,500,000 million tonnes of LPG is exported annually.

• 2005 – Opening of the Dampier Bulk Liquids Berth, with Burrup Fertilisers Pty Ltd (now Yara International) exporting its first consignment of anhydrous ammonia in June 2006.

• 2012 - Pluto LNG Plant first gas was exported

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Phase 5 – 2002 to 2014

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• Fotescue Metals Group – New Mines, Railway and Port

• Major Expansion at BHP Billiton

• Major Expansion Rio Tinto

• New Juniors including Atlas Iron, BC Iron and MRL

• Expansion of Ports

• Automation of Mines and Trains

• Rapid Price Hikes

• Massive expansion in construction workers

• Pilbara Cities and Royalties for regions

• Lack of Housing affordability

• Lack of Investment since 1970s

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Record Recent Iron Ore

Production and Future Export

Tonnages

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Focus on Royalty and Tax

Contribution of Resource

Companies • 55-73% of total value of WA’s

resources

• $56.37 billion total value (27%

annual growth 2003-13)

• 513 Million tonnes (+11%

annual growth 2003-13)

• Royalties - $5.6 billion in 2013-

2014

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55%

12%

10%

9%

4%

4% 6%

WA Resources Sector Value1

Iron ore LNG

Crude & condensate Gold

Alumina Nickel

Others

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WA Royalties Increasing

• Government revenue is highly sensitive to the iron ore price,

• Iron ore royalties projected to account for 19.7% ($5.6 billion) of

total revenue in 2014-15

• Iron Ore Royalty income has increased from 4% of total revenue

in 2004-05 to an estimated 19.7% in 2014-15

Community Perceptions of

the Resources Sector

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“Provide funds for local areas with regards to

sporting facilities, entertainment venues so this

can only be a good thing.”

“It is a dynamic industry that provides a lot of

employment for this state and is the

backbone of our economy.”

“Provides an income to many people, my house

included. We have been able to build a home we

otherwise never could have afforded.”

“The mining industry in West Australia whether

iron ore, gold, oil and gas has been a wonderful

uplift for the economy.”

Important Role of Resource

Companies Contributions

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• Community Programs

• Company Towns

• Members have built approx. 1000 houses in Port Hedland, Dampier,

Karratha & Wickham since 2010 and refurbished over 2,400 houses

across the Pilbara.

• Significant investment in community infrastructure e.g. PICC Health,

Great Northern Highway bypass, Karratha LeisurePlex, Wickham

Recreation Centre etc etc.

• In 2013, members contributed $50.4 million in financial and $16.2

million in in-kind support to community initiatives across Western

Australia.

Important Role of Resource

Companies Contributions

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• Iron Ore Industry employment adds to a vibrant regional Western

Australia sharing the employment and economic benefits of

operations across the whole of WA

• At coastal locations, members are approx. 75% residential

• Will continue to be in the Pilbara for years to come

Plug - WA Resources Sector

Outlook

• CME’s flagship publication

• Member surveys for supply

and demand forecasts:

– people

– energy

– water

– roads

– rail

– ports

– aviation

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The Chamber of Minerals and Energy of Western Australia

Level 10, 2 Mill Street

Perth WA 6000

T 08 9325 2955

F 08 9221 3701

E chamber@cmewa.com

W www.cmewa.com.au

Thank you

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