Jon Hobbs, Arrium: The Whyalla Port Expansion Project

Development of the Whyalla Port

November 2013

Mining South Australia Conference

Introduction

• In July 2013 Arrium Mining completed ramp up of expansion works at

our Whyalla Port, achieving a doubling in export capacity promised

to market in September 2011

• On behalf of all who worked on this project, I am pleased to tell you

our story:

– The history of the Whyalla Port

– The Whyalla Port Expansion project

– Our new capability

– The challenges and project learning’s

Copyright Arrium Limited © 2012. All rights reserved

Outer Harbour Iron Ore Jetty

Inner Harbour with

Bulk & Products Berths

Existing Ore Storage Shed

Narrow Gauge rail line

to outer harbour

Whyalla Port – Historically 2 harbours


Owned and operated by Arrium Ltd and integral with the Steelworks site

October 2011

Whyalla Port History ~110 years

The first iron ore loading jetty was completed in 1901 together with a

tramway of some 60km from Iron Knob

Now referred to as the Outer Harbour, a modern jetty #2 has since

replaced the timber



Whyalla Port 2011

Outer Harbour Iron Ore Terminal Loading Jetty – 10.7m berth, 6.5mtpa capacity

Whyalla Port History (cont..)

In 1939 construction of the Inner Harbour and Shipyards commenced:

– Since 1941 has supported the Iron and subsequent steel works, handling ~ 1.4

mtpa of bulk and break-bulk goods

– Between 1941 and 1978 a total of 66 vessels built (now idle)


Bulk berth

Products berth

Channel entrance

Inner Harbour - basin with 2 berths (10.7m draft) on a 700m wharf

Whyalla Port – A New Focus

• In September 2011 Arrium Mining announced the acquisition of iron

ore subsidiaries of WPG and a plan to increase iron ore exports from

~ 6 mtpa to in excess of ~ 13mtpa

• Key value proposition is blending. Whyalla Port selected as central

point and has deep sea access;

– Ores from the existing Middleback mines

– Ores from the new Peculiar Knob mine acquired from WPG

As the Outer Harbour facilities were at capacity, this required an

expansion of the Inner Harbour facilities by 6.5mtpa


1st challenge – Common Infrastructure

• To use Whyalla Port for the Peculiar Knob mine required access to

the standard gauge mainline

• More difficult than assumed

– Economy of scale required 1.8km trains

– Train length longer than passing loop at Spencer Junction

– No bypass to Port Augusta

– Limited train paths due to limited passing loops

• Added costs and complexity

– Turn-outs at Wirrada and Whyalla

– Passing loops on our own property - no confidence in time line if left to others

– Restricted train length on the unloading loop as loco configuration dependent

on Port Augusta shunt

– Dual gauge on Steelworks site


Whyalla Port Development

The Expansion required construction of;

– 7.5km SG rail line across Steelworks site & mainline connection

– SG provisioning & holding lines on Steelworks site

– SG Loco and wagon maintenance facilities on Steelworks site

– 7.0km NG rail line across Steelworks site & Middleback line connection

– A dual gauge train turning loop and unloading station

– 2 ore storage sheds, each of 225kt storage capacity

– 135m iron ore berth complete with 4,200 tph travelling shiploader

while

Retaining capability to service the Steelworks over the Bulk and

Products berths

and

Without disrupting existing Mining & Steel operations


Whyalla Port Expansion

The Inner Harbour development has taken place on vacant, reclaimed

land east of the Steelworks on the northern side of the harbour


Ore Storage sheds

Iron ore Berth

SG & NG rail turning loop

Std gauge provisioning & maintenance

Whyalla Port Expansion

Layout


Rail Network


Mid October 2012

March 2012

25 October 2012 - Complete December 2012

Train Unloading Station


February 2012 June 2012

October 2012 December 2012

Ore Storage Sheds


April 2012 August 2012

March 2013

Iron Ore Berth

May 2013

December 2012 February 2013

Shiploader

Temporary radial loader Dec 12 – June 13

Permanent 4,200tph travelling loader July 13 16 June 2013 arrival of 4,200tph Cargotec Loader

Awaiting update from Paul Whitehouse

Whyalla Port 2013

Whyalla Port 2013

Inner Harbour – Northern Wharf Coal offloading at the bulk berth Billets loading at the Products Berth Iron ore loading at the new Iron Ore berth

Whyalla Port Capability November 2013

• Regulation

– Operated by the Whyalla Port Authority (part of Arrium Mining) in terms of H &

N Act SA 1993 and Whyalla Steelworks Act 1958

• An Outer Harbour capable of >6 mtpa servicing Arrium Mining

– Iron ore loading jetty of 3,000 tph capacity, and a 10.7m berth depth

– Iron ore storage shed connected to NG rail line

– 2 Capesize transhipment points at ~ 7.5 nm distance

– 1 Panamax transhipment point at ~ 5 nm distance

• A Handi-max capable Inner Harbour servicing Arrium Mining and the

Steelworks

– 650m wharf, of 10.7m draft, with berths for bulk and general cargo

– 2 iron ore storage and blending sheds connected to both NG and SG rail lines

– 135m iron ore loading berth capable of > 7 mtpa

– Fleeting facilities for tugs

Projected cargo July 13 to June 14 ~ 14m tonnes


Project Challenges

• Challenges

– Safety (Multiple contractors and high inherent risks)

– Aggressive timeline (Market guidance 1st ores 4th Q2012, rate July 13)

– Ground conditions (Reclaimed land & buried services)

– No disruption to operations (Rail, utilities, berths, roads affected)

– Cost certainty (We had given market guidance of $200m)

• Outcome

– 2 MTI injuries in 700k man-hours

– No uncontrolled environmental incidents

– Achieved cost guidance

– Achieved schedule guidance - First ore on Cape (Hsin May) 28 December 2012

(16 mths after first announcement)

– July-Sept 2013 sustained > 12mtpa on a dry basis


Whyalla Port Approach


• Owning the strategic vision (business case annual data unit data)

• Embracing the Planning Application process to refine scope

• Clear, practical understanding of risk (beware of assumptions)

• Good partners with clear understanding of ‘what success looks like’

• Local sourcing (95% of scope procured in Australia)

Whyalla Port – Milestones

Market announcement – 22 August 2011

First soil turned - 24 January 2012 (5 mnths after announcement)

First ore transhipped onto Cape (Hsin May) - 28 December 2012 (11

mths after first soil)

First 1 million tonnes through the Inner harbour – 18 May 2013

In July – September 2013 Arrium shipped 3.13m dmt, up 94% on the

prior corresponding quarter


Jon Hobbs, Arrium: The Whyalla Port Expansion Project

Business

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