Statistics Digest 2005-06

WESTERN AUSTRALIAN Mineral and Petroleum STATISTICS DIGEST 2005–06 Disclaimer Information provided in this Digest is made available without charge, as a public service, in good faith. The information provided is derived from sources believed to be reliable and accurate at the time of publication. However, use of the information in the Digest is at your own risk. The Digest is provided solely on the basis that users will be responsible for making their own assessment of the information provided therein and users are advised to verify all representations, statements and information for decisions that concern the conduct of business that involves monetary or operational consequences. Each user waives and releases the Department of Industry and Resources and the State of Western Australia and its servants to the full extent permitted by law from all and any claims relating to the use of the material in the Digest. In no event shall the Department of Industry and Resources or the State of Western Australia be liable for any incidental or consequential damages arising from any use or reliance on any material in the Digest.

FOREWORD 1

1. EXPLORATION AND INVESTMENT 2 1.1 Petroleum Exploration 2 1.2 Minerals Exploration 2 1.3 Investment 3

2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW 4 2.1 Overview 4 2.2 Petroleum 9 2.3 Iron Ore 14 2.4 Alumina 17 2.5 Nickel 19 2.6 Gold 21 2.7 Base Metals 24 2.8 Mineral Sands 25 2.9 Diamonds 27 2.10 Other Minerals 27

3. ROYALTIES AND EMPLOYMENT 30

Tables 1. Quantity and Value of Minerals and Petroleum 32 2. Quantity and Value of Selected Major Commodities 34 3. Value of Minerals and Petroleum by Region 36 4. Royalty Receipts 37 5. Average Number of Persons Employed in the WA Minerals and Petroleum Industries 38 6. Principal Mineral and Petroleum Producers 42

Abbreviations, Units and Conversion Factors 46 Data Sources and Classification of Countries 47

Maps 1. Local Government Boundaries 48 2. Local Government Boundaries 49 3. Major Mineral and Petroleum Projects in Western Australia 50

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 LIST OF FIGURES

Figure 1 Petroleum Exploration Expenditure 2 Figure 2 Mineral Exploration Expenditure 3 Figure 3 Mining Investment 3 Figure 4 Value by Commodity 2005–06 4 Figure 5 Major Commodities by Value 5 Figure 6 Average Price Comparison 2004–05 and 2005–06 6 Figure 7 Non-Rural Commodity Price Index 7 Figure 8 Exchange Rate US$/A$ 8 Figure 9 Exchange Rate Trade Weighted Index 8 Figure 10 Average Product Price 8 Figure 11 Petroleum Exports 9 Figure 12 Crude Oil and Condensate Exports 9 Figure 13 Crude Oil and Condensate Quantity and Value by Quarter 10 Figure 14 Tapis Crude Oil Price 10 Figure 15 Historic Oil Prices 10 Figure 16 Crude Oil and Condensate Quantity 11 Figure 17 LNG Import Prices 12 Figure 18 Average LNG Import Prices 12 Figure 19 Average Natural Gas Prices 12 Figure 20 Crude Oil and Condensate Production 13 Figure 21 Natural Gas Production 13 Figure 22 Iron Ore Exports 14 Figure 23 Iron Ore Price 14 Figure 24 Iron Ore Quantity and Value by Quarter 15 Figure 25 Iron Ore Quantity 16 Figure 26 China’s Iron Ore Imports by Source 16 Figure 27 Alumina Exports 17 Figure 28 Alumina Price 17 Figure 29 Alumina Quantity and Value by Quarter 18 Figure 30 Alumina Quantity 18 Figure 31 Nickel Exports 19 Figure 32 Nickel Price 19 Figure 33 Nickel Quantity and Value by Quarter 19 Figure 34 Nickel Quantity 20 Figure 35 Gold Price 21 Figure 36 Gold Quantity and Value by Quarter 21 Figure 37 Gold Production 22 Figure 38 Gold Exports 22 Figure 39 Historic Gold Price 23 Figure 40 Heavy Mineral Sands Exports 25 Figure 41 Heavy Mineral Sands Value by Quarter 25 Figure 42 Heavy Mineral Sands Price Index 26 Figure 43 Heavy Mineral Sands Value of Production 26 Figure 44 Selected WA Commodities Relative to World Production Ending 2005 by Quantity 29 Figure 45 Minerals and Petroleum Employment 30 Figure 46 Royalty Receipts 31 Figure 47 Regional Value of Minerals and Petroleum 36 Figure 48 Royalty Receipts by Commodity 37

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 FOREWORD

WELCOME TO THE DEPARTMENT OF INDUSTRY AND RESOURCES’ 2005–06 STATISTICS DIGEST.

This publication contains the Western Australia is one of most comprehensive statistical the great mineral provinces information available on the of the world. It hosts an Western Australian minerals impressive 560 commercial and petroleum industry. mineral projects, embracing 1222 operating mine The statistics in this Digest sites which produce over show that in 2005–06 the State’s 50 different minerals. In minerals and petroleum sector 2005–06, there were also 67 set a new record, rising by 29 operating oil and gas fields. per cent to reach $43.2 billion. This follows a decade of average With mine and port annual growth of more than ten expansions and anticipated per cent. continued strong demand, it is expected that the minerals and This record result was driven petroleum sector will continue by strong overseas demand its record-breaking run through for our resources and rising 2006–07 and beyond. commodity prices. Despite the robust nature of the industry, the It is not possible to prepare year produced many challenges such a comprehensive range of and the impressive result was information without assistance achieved against a background of from outside the Department. adverse weather conditions, skills I would like to thank the various shortages, mining equipment resource companies, Australian supply constraints together with Bureau of Agricultural and some shipping bottlenecks. Resource Economics (ABARE), Australian Bureau of Statistics The minerals and petroleum (ABS) and the Western Australian sector continue to remain the Treasury Department for their pillar of the State’s economy cooperation and help during the accounting for around 30 per preparation of this Digest. cent of Gross State Product, 80 per cent of its export income and around one-sixth of its Jim Limerick employment. Director General

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 1200 350 Rest of Australia Rest of Australia Western Australia Western Australia 300 1000

250 800 1. EXPLORATION AND INVESTMENT 200 600

$ million tonnes 150

400 • Plectrum Petroleum plc in the Bremer sub-basin off 1.110 Petroleum0 exploration southern Western Australia (two permits); and In 2005–06, total expenditure on petroleum expenditure • Woodside Energy Ltd in the Browse Basin, about 70 200 in Australia grew by 15 per cent to $1262 million. The 50 kilometres southwest of the Brecknock gas field. majority of this expenditure, 72 per cent, was spent offshore. Also, ABS statistics indicate that around 64 per The four new onshore permits are: 0 0 1957 1965 1973 1981 1989 1997 2005 cent of the1890 expenditure1900 was1910 on areas1920 inside production1930 1940 1950 1960 1970 1980 1990 2000 leases. However, this needs to be interpreted with • Emerald Gas Ltd in the Canning Basin;

Figure 43 Heavy Mineral Sands Value of Production some cautionFigur ase 37expenditure Gold Production reported Sour in ceareas: DoIR andoutside ABARE • Golden Dynasty Resources Ltd in the Canning Basin; Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite production lease areas is not necessarily in green field, • Exceed Energy (Australia) Pty Ltd in the Canning Basin; Source: DoIR and ABARE frontier-type territory. and • Uramin Pty Ltd in the Officer Basin. Expenditure on petroleum exploration in Western Australia during the same period grew by three per cent to $593.6 65 20 000 million.1400 This represented 47 per cent of the national total 1400 Rest of Australia Rest of Australia Rest of Australia and a decrease on 2004–05 when the share was 53 per cent. Western Australia Western Australia 18 000 Western Australia 1200 1200 64 16 000 In the ongoing endeavour to increase Western Australia’s petroleum exploration, in September 2006, 16 new 14 000 petroleum1000 exploration permits in the State, worth $347 1000 million were announced. Twelve of these permits were for 63 12 000 n offshoren 800 exploration and have been granted in conjunction n 800 10 000 with the Federal Government. The other four permits were

$ millio for onshore$ millio 600 exploration and were offered to companies $ millio 600 62 8000 subject to native title and environmental processes. (May 1970 = 100) 6000 400 400 The permits were for under-explored regions of the State 61 4000 that could contain sizeable gas or oil reserves and include 200 200 2000 investments by overseas companies.

60 0 Plectrum0 Petroleum from the UK will explore Western 0 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 Australia for the first time, with two permits in the Bremer sub-basin off Western Australia’s southern coast. Also, Figure 9 Exchange Rate Trade Weighted Index Figure 3 Mining Investment Source: ABS Perth companyFigur eOilex 2 Mineral NL teamed Expl uporation with fourExpenditur Indian e Figure 1 Petroleum Exploration Expenditure (units of foreign currency per A$) companies and was Sourgrantedce: ABS a permit in deep water Source: ABS Source: Reserve Bank of Australia in the Northern Exmouth Plateau. 1.2 Minerals exploration With the 12 additional offshore permits, Western Australia 0.80 100% Other 75 now has almost 100 petroleum exploration permits While high commodity prices have driven up mineral South Africa A$ 11.4% 9.6% 9.2% 6.5% production,65 mineral exploration expenditure has not operating5.3% off its coast.3.8% India US$ Brazil been robust. In addition, Western Australia is experiencing 55 80% Australia falling mineral exploration expenditure, whereas the rest 0.75 15.6% 18.3% 20.2% 21.8% The 12 24.1%new offshore24.9% permits comprise: of 45Australia is at least showing some benefit from the • Shell Development (Australia) Pty Ltd and Chevron current boom. Australia Pty Ltd in the Carnarvon Basin, adjacent 35 60% to the Scarborough gas field; 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% Australian mineral exploration expenditure in 2005–06 0.70 25 US$ • Octanex NL and Strata Resources NL in the Southern rose by 21 per cent from $1028 million in 2004–05 to

Exmouth Sub-basin, southwest of the Enfield oil $1241% Change 15 million. However, despite the commodity boom and 40% production area (two permits); popular expectations, mineral exploration expenditure in Western5 Australia actually fell during 2005–06 by three per 0.65 • Oilex NL, Gujarat State Petroleum Corporation Ltd, cent ($16 million) from $606 million in 2004–05 to $590 46.8% 41.1% 38.4% 39.3% Videocon37.6% Industries40.7% Ltd, Bharat Petroleum Corporation -5 20% Ltd and Hindustan Petroleum Corporation Ltd in deep million in 2005–06. This highlights the weakness of the water in the Northern Exmouth Plateau; so-called-15 current boom in mineral exploration in Western Australia, where, in inflation-adjusted terms, expenditure 0.60 • Gascorp Australia Ltd in the Outer Exmouth Plateau -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% has not yet reached the level of the previous boom in 2000 2001 2002 2003 in a deep2004 water extension2005 of Australia’s major Lump hydrocarbon producing basin; 1996–97.

Figure 8 Exchange Rate US$/A$ Figure 26 China’s iron ore imports by source Sour• ceCue: China Exploration Customs and The Pty TEX ReporLtd int the Northern Exmouth Figure 6 Average Price Comparison Source: Reserve Bank of Australia Mineral exploration for the rest of Australia though is Plateau, northwest of the Mutineer–Exeter oil field; 2004–05 and 2005–06 relatively strongSour andce: LME, as Kitca result,o, TEX Report, Western Metal Pric Australia’ses share • Gascorp Australia Ltd in the Northern Exmouth Plateau, of the national expenditure on mineral exploration fell northeast of the Jansz–Io gas discovery; sharply from 59 per cent in 2004–05 to 48 per cent, during • Westralian Petroleum Ltd, Lempika Pty Ltd and 2005–06 and this share is now at its worst level for at least Emphazise Pty Ltd in a proven petroleum system twenty years. in the Perth Basin (two permits);

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 It is important to note also that although national mineral It is important to note that the figures reported above exploration expenditure was up by 21 per cent in 2004–05, do not capture all mining investment as the ABS mineral exploration drilling (metres drilled) was up by only uses classifications specified in the 1993 edition of one per cent. This reduces the chance of new discoveries the Australian and New Zealand Standard Industrial 1200 350 Rest of Australia and the resultingRest resources of Australi necessarya for the long-term Classification (ANZSIC) (ABS catalogue number 1292.0). Western Australia sustainability of theWestern mining Australia industry. Accordingly, mining is broadly defined as the extraction 300 1000 of minerals occurring naturally as solids such as coal Turning to specific mineral commodities, in 2005–06, iron and ores, liquids such as crude petroleum and natural ore 25expenditure0 increased, but nickel and gold exploration gas. Downstream mining activities such as smelting of 800 declined. For example, iron ore exploration expenditure in minerals or ores (other than preliminary smelting of gold) Western Australia is still rising and increased by nine per or refining are classified as manufacturing activities under 200 cent in 2005–06, surpassing all previous records. On the the ANZSIC. Products such as coke and alumina are also 600 other hand, State nickel exploration expenditure declined included in the ANZSIC manufacturing category. $ million by tonnes 3415 per0 cent in 2005–06 compared to 2004–05 and it 400 appears exploration expenditure for nickel has passed The Department’s databases indicate that there are its peak.100 more than $69 billion worth of potential resource projects currently under construction or consideration 200 Gold exploration expenditure in Western Australia also for development in Western Australia. This includes large 50 declined, by 12 per cent in 2005–06 compared to 2004–05 projects such as, for example, the Hope Downs iron ore and the long-term trends for gold exploration in the mine and Ravensthorpe nickel mine and processing plant. 0 0 1957 1965 1973 1981 1989 1997 2005 State are1890 very disappointing,1900 1910 with high1920 gold prices1930 during1940 A1950 significant1960 number1970 of upstream1980 petroleum1990 projects2000 are 1200 2005–06 doing very little in encouraging gold exploration either underway or planned for the State over the next 350 Rest of Australia Rest of Australia Figure 43 Heavy Mineral Sands Value of Production Weactivity.stern Australia AsFigur a result,e 37 Goldthe proportion Production of Sourmineralce: DoIR explorationand ABARE few years, totalling $22 billion. These projects include Western Australia Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite expenditure channelled into gold in Western Australia has committed expenditure on Woodside’s huge expansion 300 1000 Source: DoIR and ABARE dropped dramatically over the last decade, from around of North West Shelf (NWS) upstream facilities, its Enfield, 76 per cent of the total in the mid-1990s to only 41 per cent Stybarrow and Vincent oil developments plus its Browse 250 800 in 2005–06. and Pluto Liquefied Natural Gas (LNG) projects. Also included is committed expenditure by Chevron and Inpex 200 65 20 000 1400 on1400 the Gorgon and Ichthys LNG developments. Rest of Australia Rest of Australia Rest of Australia 600 18 000 Western Australia Western Australia Western Australia $ million Major petroleum-related projects underway: tonnes 1200 1200 150 16 000 - NWS 5th LNG train; 64 400 100 14 000 1000 - 1000NWS $5-billion expansion of upstream facilities; - Woodside’s $1.5-billion Enfield, Vincent and Laverda 63 12 000 200 n n 800 n oil800 and gas project; and 50 10 000 - Woodside’s $200-million Goodwyn A low-pressure train.

$ millio 0 $ millio 600 $ millio 600 0 8000 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 62 Taking into consideration the total potential completed (May 1970 = 100) 6000 400 investment400 value of upstream petroleum projects either Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazitunderwaye or planned for the State over the next few 61 4000 Source: DoIR and ABARE years, the value of these projects climbs to around $35 200 200 2000 billion. Associated with this is around 11 000 additional construction and 1400 full-time jobs. The projects are 60 0 0 located0 mainly in offshore Commonwealth waters. Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 65 20 000 1400 1400 Rest of Australia Rest of Australia Rest of Australia Figure 9 Exchange Rate Trade Weighted Index Figure 3 Mining Investment Source: ABS Figure 2 Mineral Exploration Expenditure Figure 1 Petroleum Exploration Expenditure Western Australia Western Australia 18 000 Western Australia (units of foreign currency per A$) Source: ABS Source: ABS 1200 1200 Source: Reserve Bank of Australia 64 16 00 0

1.3 Investment 14 000 1000 1000 0.80 100% ABS private new capital expenditureOther statistics show a very 75 63 12 000 significant rise in the value of newSouth capital Africa expenditure in n A$ n 800 n 800 11.4% 9.6% 9.2% 6.5% 65 the mining5.3% sector during3.8% 2005–06.India In Western Australia 10 00US$0 Brazil

alone, the total amount of capital expenditure on mining 55$ millio $ millio 600 $ millio 600 80% 62 Australia 8000 0.75 15.6% 18.3% 20.2% 21.8% amounted24.1% to $10.2 24.9%billion, which was an 84 per cent (May 1970 = 100) increase compared to the previous financial year. This 45 6000 400 400 also represented 64 per cent of Western Australia’s total 35 60% 61 ($15.9 billion) new capital expenditure in 2005–06. 4000 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 25 200 200

US$ 2000 Total national mining investment in 2005–06 amounted % Change 15 40% 60 to $18.1 billion, an increase of 76 per cent compared to 0 0 0 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 the previous financial year. In 2005–06, Western Australian 5 0.65 accounted for around 56 per cent of the total national -5 46.8% 41.1% 38.4% Figur39.3% e 9mining Exchange37.6% investment. Rate Tr40.7% ade Weighted Index Figure 3 Mining Investment Source: ABS Figure 2 Mineral Exploration Expenditure Figure 1 Petroleum Exploration Expenditure 20% Source: ABS Source: ABS (units of foreign currency per A$) -15 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Source: Reserve Bank of Australia WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump 0.80 100% Other 75 South Africa A$ Figure 8 Exchange Rate US$/A$ Figure 6 11.4% Average Pric9.6%e Comparison9.2% 6.5% 65 Figure 26 China’s iron ore imports by source Source: China Customs and The TEX Report 3.8% India US$ Source: Reserve Bank of Australia 5.3% 2004–05 and 2005–06 Brazil 55 80% Source: LME, Kitco, TEX Report, Metal Prices Australia 0.75 15.6% 18.3% 20.2% 21.8% 24.1% 24.9% 45

35 60% 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 25 US$

% Change 15 40% 5 0.65 46.8% 41.1% 38.4% 39.3% 37.6% 40.7% -5 20% -15

0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump

2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

The base metals sector also performed particularly 2.1 Overview strongly with new projects coming on-stream, to record In 2005–06, the value of Western Australia’s mineral and a 187 per cent increase and reach a total of $821 million petroleum industry reached $43.2 billion. This represented worth of sales. Diamonds recorded a 28 per cent increase a 29 per cent increase compared to the previous financial in sales reaching a little over 29 million carats and salt year. The record result was achieved through high overseas sales of $230 million, increased almost 13 per cent demand for resources which has underpinned solid compared to the previous period. commodity prices. This strong result was also achieved against a background of adverse weather conditions in An average of only half a percentage depreciation in the the first quarter of 2006 plus mining equipment supply Australian dollar against the US dollar during the 12- constraints together with some shipping bottlenecks. month period to the end of 2005–06 had little influence on the outcome, which was driven by strong commodity prices Whilst most of the State’s minerals and energy industries and increased output by Western Australian producers. recorded higher sales quantities, the overall rise in value It is expected that the strong demand for the State’s of sales for 2005–06 is mainly attributable to the significant resources by Western Australia’s trading partners will increases in the value of the petroleum and iron ore continue through 2006–07. sectors (23 per cent and 56 per cent respectively). These two industries accounted for around 65 per cent of the Some additional salient indicators of Western Australia’s total value of $43.2 billion for 2005–06. significance in the national resource industry are that the State accounts for: Petroleum is the largest resource sector by value and • approximately 50 per cent of Australia’s total value of an increase in sales of $2.8 billion saw it reach a record mineral and petroleum sales (based on a DoIR estimate level of $15.2 billion. This was chiefly due to high world as no current total national value data is published); oil prices together with increased LNG shipments. • 67 per cent of Australia’s 2005–06 oil and condensate The next largest is iron ore and this giant of the minerals production (based on ABARE); industry sold a record 244 million tonnes in 2005–06, • approximately 50 per cent of mineral production (based valued at $13 billion, an increase of four per cent and 56 on a DoIR estimate as no current total national value per cent respectively. With mine and port expansions and data is published); and anticipated continued strong demand, it is expected that • 31 per cent of Australia’s total merchandise exports in this sector will continue its record-breaking run through 2005–06 (sourced from ABS). 2006–07 and beyond.

Next in order of value to the State is alumina, with a sales value of $4.1 billion (an increase of some 19 per cent compared to the previous period), followed closely by nickel at $3.8 billion (up eight per cent) and gold at $3.6 billion, up 18 per cent. 250

4% 5% 7% Japan 7% 9% Canada 18% 225 18% 2% 16% Finland 15%

China 23% n 30% 11% Taiwan 6% 200

Figure 4 Value by Commodity 2005–06 Source: DoIR

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

TWI Yen US$ Euro Index A$ per boe

90 0.90 240 80 TWI A$ WA Natural Gas Yen Brent Oil 85 0.85 220 SDR US$ US$ 70 Henry Hub Gas Euro Victoria Bass Strait Gas 80 0.80 200 LNG FOB net 60 75 0.75 180 50 70 0.70 160 65 0.65 40 140 60 0.60 30 120 55 0.55 20 100 50 0.50 10 45 0.45 80

40 0.40 60 0 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–02 Nov–02 Mar–03 Jul–03 Nov–03 Mar–04 Jul–04 Nov–04 Mar–05 Jul–05 Nov–05 Mar–06 Jul–06 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Figure 0 Australian Dollar Exchange Rate Against Major Currencies Figure 7 Non-Rural Commodity Price Index 2001–02 = 100 Figure 10 Average Product Price Source: Wood Mackenzie and DoIR Source: Reserve Bank of Australia Source: Reserve Bank of Australia US$/Gj US$/Gj

8.5 14 Australia to Japan Taiwan Qatar to Japan US 8.0 Average Japan 12 France Australia to Taiwan Spain South Korea 7.5 Japan HIGHLIGHTS IN 2005–0610 Diamonds saw a resurgence of sale volumes with an increase of 28 per cent or 29 million carats. Reported 7.0 The Tapis oil price peaked in May at US$78.79/bbl and production also increased, by 28 per cent to 32.5 million averaged US$66.51 per8 barrel during the 2005–06 financial carats. 6.5 year. Strong oil prices resulted in a 20 per cent increase in the value of crude oil to realise $6.2 billion worth of sales. 6 Gold output dropped marginally during 2005–06 by nearly 6.0 four per cent to reach 5.2 million ounces (161 060 kg) and LNG sale volumes rose by six per cent to realise a record remains well below peak output levels achieved in the late sales value of $4.9 billion,4 an increase of 24 per cent. This 5.5 1990s. This sector also slipped into sixth place behind makes LNG the third most valuable individual commodity nickel with a value of $3.6 billion despite strong gold in the State after iron ore, and crude oil and condensate. 5.0 2 prices which in May 2006 achieved an all-time record Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Feb–05 May–05 Aug–05 inNov–05 Australian dollarFeb–06 terms ofMay–06 $933.20 per ounce.Aug–06 LPG butane and propane also enjoyed a healthy output increase of 12 per cent, returning a sales value of $654 Base metals joined the record breakers by achieving a Figure 17 LNG Import Prices Source: Argus Monthly LNG million, up 55 per cent. NaturalFigure gas 18 remained Average LNGrelatively Import Prices Source: Argus Monthly LNG value of $821 million for the 2005–06 period (a 187 per steady with a small increase in quantity sold of nearly one cent increase). This was achieved through strong per cent and an increase of four per cent in value to reach commodity prices together with increased output from $703 million. Crude oil and condensate were the only two producers, the new Magellan lead mine coming on-stream petroleum items to record lower outputs due to maturing and a full year’s production from Telfer. US$/Gj fields; however, strong prices still resulted in a 22 per cent 16 increase in value to $8.9 billion. Alumina All base metal sectors performed well, with copper Western Australia Henry Hub increasing in quantity by 15 per cent, recording 71 000 UK Iron ore is now the largest individual mineral sector by Rest of Australia Diamonds tonnes, while value increased by 65 per cent to $403 Europe value, accounting for 30 per cent of the value of resources WA domgas million. Lead quantities soared to 59 000 tonnes, valuedRest of World output for 2005–06, Goldup from 22 per cent in 2004–05. On the 12 East Coast domgas at $87 million whilst zinc sales more than doubled to reach back of a 71.5 per cent increase in prices effective April Ilmenite 108 000 tonnes and record a value of $332 million. 2005 and strong demand, particularly from China, iron ore Iron ore reached a record sales value of $13 billion in sales, based Mineral sand sale values remained virtually static at $800 8 on 244 million tonnesLN Gof ore. million with sale quantities dropping in all categories except Nickel leucoxene. Mineral sands’ share of the overall total value Alumina’s steady performance over the years continued of resources dropped from three per cent in 2004–05 to through 2005–06 toRuti claimle fourth place behind LNG. A less than two per cent in 2005–06. Zircon however, despite 4 modest output increase of three per cent resulted in a Salt recording a 12 per cent drop in sale quantities, achieved a record 11.5 million tonnes being shipped and a respectable Tantalum nine per cent increase in sales value to $327 million. 19 per cent increase in the value of sales to reach $4.1 billion. Zircon 0 Salt achieved a 13 per cent increase in sales value for Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 0 20 40 2005–06 reaching60 $330 million80 but tonnages100 were down Nickel output increased by six per cent to reach a record by 7 per cent. Cobalt sales volumes rose by 13 per cent, 191 000 tonnes, while the value of sales increased by eight however, weaker prices saw sale values declining by Figure 19 Average Natural Gas Prices Source: Argus Monthly LNG, EnergyQuest, DoIR per cent to reach a total Figurof $3.8e 44 billion Sel inected 2005–06. WA Commodities This Relative to World Production Ending 2005 around nine per cent to $183 million. Manganese tonnages was a record for nickel and accountsby for Quantity nearly nineSourc e:per DoIR, ABARE, USGS increased by 46 per cent, but again, lower prices meant cent of the total value of resources. sales value remained little changed from last financial year at around $118 million.

Iron Ore

Crude Oil & Condensate 2005–06

LNG 2004–05

Alumina

Nickel

Gold

Natural Gas & LPG

Heavy Mineral Sands

Base Metals

Coal

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10,000 11,000 12,000 13,000 $Million

Figure 5 Major Commodities by Value Source: DoIR

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 1200 350 Rest of Australia Rest of Australia Western Australia Western Australia 300 1000

250 800

200 600

$ million tonnes 150

400 100

200 50

0 0 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite Source: DoIR and ABARE

65 20 000 1400 1400 Rest of Australia Rest of Australia Rest of Australia Western Australia Western Australia 18 000 Western Australia 1200 1200 64 16 000

14 000 1000 1000

63 12 000 n n 800 n 800 10 000

$ millio $ millio 600 $ millio 600 62 8000 (May 1970 = 100) 6000 400 400

61 4000 200 200 2000

60 0 0 0 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06

Figure 9 Exchange Rate Trade Weighted Index Figure 3 Mining Investment Source: ABS Figure 2 Mineral Exploration Expenditure Figure 1 Petroleum Exploration Expenditure (units of foreign currency per A$) 2. MINERALS Sour ANDce: ABS PETROLEUM INDUSTRY 2005–06Source: ABS REVIEW Source: Reserve Bank of Australia

0.80 100% Other 75 South Africa A$ 11.4% 9.6% 9.2% 6.5%RESERVE BANK OF AUSTRALIA (RBA) 65 5.3% 3.8% India US$ COMMODITY PRICE INDEX Brazil 55 80% Australia 0.75 15.6% 18.3% 20.2% 21.8%The Reserve24.1% Bank of Australia24.9% Commodity Price Index is based on the price of 19 major commodities exported 45 by Australia. These commodities collectively account for 35 60% around two-thirds of total commodity exports. The index 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 is apportioned into three sections – rural, non-rural and 25 US$ base metals.

% Change 15 40% The non-rural index comprises base metals (which consist 5 0.65 of aluminium, copper, nickel, zinc and lead), gold, coking 46.8% 41.1% 38.4% 39.3%coal, steaming37.6% coal, iron40.7% ore, alumina and LNG. The -5 20% index is compiled monthly and is expressed in US dollars, -15 Australian dollars and Special Drawing Rights (SDR). 0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003The RBA’s index,2004 expressed2005 in US dollar terms is useful Lump because most commodities are traded in world markets

Figure 8 Exchange Rate US$/A$ Figure 26 China’s iron ore imports by sourcein USSour cedollars.: China Customs However and The such TEX Repor an tindex is subject to changes Figure 6 Average Price Comparison Source: Reserve Bank of Australia in the US dollar exchange rate (as it is based on spot 2004–05 and 2005–06 prices). In this respect, the SDR index is a better indication Source: LME, Kitco, TEX Report, Metal Prices of underlying supply and demand for commodities than the US dollar index. GLOBAL ECONOMIC CONTEXT With Western Australia’s resources sector’s performance SDR is a unit of account used by the International strongly dependent on global economic growth, a positive Monetary Fund (IMF). Its value is based on a basket of outlook on the world economy should bolster the sector’s currencies comprising the euro, Japanese yen, English continued good performance. While risks to this outlook pound and US dollar. Weights are assigned to each of are present, the most likely adverse event for the global these currencies to reflect their relative importance in economy would appear to be an economic slowdown in the world terms. The RBA expresses the SDR component of US that ends in recession. its index in US dollar terms, with commodity prices derived from the London Metal Exchange and Bloomberg and A favourable short-term world economic outlook was converted to monthly averages of daily data. confirmed in September 2006 with the International Monetary Fund (IMF) raising its forecasts for 2007 and Alternatively, the Australian dollar index is useful for expecting growth to broaden with projections for Germany, gauging the domestic currency price received by Australian France, Italy, Spain and the UK upgraded. The growth commodity exporters as it reflects the interrelation forecast for the US was 2.9 per cent and the broadening between world commodity prices and the Australian growth base among mature economies together with exchange rate. For example, if prices in foreign currency continued growth in the US is particularly reassuring for terms remain unchanged but the Australian dollar emerging markets. depreciates, this will be recorded as a favourable upward shift in the index, which would not be evident in either the The favourable outlook, however, also depends on whether SDR or US dollar index. inflationary pressures are successfully contained with only modest increases in official interest rates. An increased The RBA index is a fixed-weight Laspeyres index, using inflation risk, among other factors, means that there is a 2001–02 as the base year and excludes crude oil. The greater possibility that global growth may falter and the index is re-based every five years in order to make long- IMF reported a one in six chance that global economic run reliable comparisons, unlike the national accounts growth could be 3.25 per cent or less in 2007. that are re-based annually to track short-run movements. Base-period weights indicate the relative importance Focusing on the United States, the world’s largest given to individual commodities. They are based on gross economy which accounted for 20 per cent of the world’s exports thus explaining the omission of crude oil (for total output in 2005, the IMF forecasts that it is likely to which Australia is a net importer) and correspond to the continue to decelerate modestly. The latest data shows export value of each commodity as a share of total exports. that the US economy grew at an annualised growth rate These weights change over time to reflect changes in the of 2.5 per cent in the June quarter 2006, compared with composition of commodity exports. Movements in the 5.6 per cent in the March quarter. index from one period to the next reflect underlying price movements and do not take into account changes China of course continues to grow at exceptionally high in volumes. rates. According to China’s National Bureau of Statistics, it expanded by 11 per cent in the year to June quarter 2006, following a 10 per cent rise in the year to March quarter 2006. After years of consistently high economic growth, China accounted for 15 per cent of the world’s total output in 2005. In contrast to the US economy, the Chinese economy is driven mainly by exports and investment.

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 250

4% 5% 7% Japan 7% 9% Canada 18% 225 18% 2% 16% Finland 15%

China 23% n 30% 11% Taiwan 6% 200

South Korea 6% $ millio 35% 6% 14% Europe 16% 15% 6% USA 5% 175 6% Other 4% 8% 2% 23% 8% 150 10% Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Petroleum 35% LNG 11% Figure 31 Nickel Exports Others 8% Condensate 6% Total Value $2.96 billion Source: DoIR Figure 41 Heavy Mineral Sands Alumina 10% Natural Gas 2% Value by Quarter Source: DoIR Gold Japan 8%recordedCrude an annual Oil growth rate of14% 1.0 per cent In Europe, in nominal terms, Germany appeared to Iron Orine the30% June quarterLPG –2006, Butane down and fromPropane a year-on-year 2% rise expanded by 2.4 per cent in the year to June quarter Nickel of 2.7 per9% cent in the previous quarter. Private non- 2006. The growth was due largely to a recovery in business residential investment was the main driver of economic investment in plant and equipment, and construction. Figure 4 Value by Commodity 2005–06 Souractivity,ce: DoIR followed by private demand and exports of goods The French economy also continued to grow in the June and services. Turning to India, although the June quarter quarter, recording an annual growth rate of 2.6 per cent. official estimate for India’s GDP is yet to be released until Exports and capital investment were the main drivers late September, a number of crucial indicators such as of economic activity. Likewise, the UK continued its industrial production and passenger car sales already expansion, with growth up by 0.8 per cent in the second suggest stronger than expected growth. quarter of 2006, following a 0.7 per cent rise in the first quarter. The main drivers in the economy were activity in the service sector and spending by households and government.

TWI Yen US$ Euro Index A$ per boe

Tenements in Force 1978 Act 1999–00 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 Number 000 ha Number 000 ha Number 000 ha Number 000 ha Number 000 ha Number 000 ha Number 000 ha

Prospecting Licences 5,827 745 5,512 711 4,964 635 4,566 575 4,561 568 4,665 586 5,056 638

Exploration Licences 3,394 20,687 3,162 18,152 2,899 18,556 2,855 21,123 2,917 20,896 3,066 22,215 3,966 30,822

Mining Leases 4,865 1,829 4,841 1,803 4,820 1,774 4,770 1,762 4,713 1,716 5,172 1,805 5,118 1,806

Other 2,001 468 3,625 2,840 3,618 3,002 3,629 3,299 3,590 3,115 3,258 2,982 3,432 3,037

Mineral Claims & Other 1904 Act 194 22 186 21 186 22 186 22 186 22 186 22 186 21

Total 16,280 23,751 17,326 23,829 16,487 23,988 16,006 26,781 15,967 26,317 16,347 27,610 17,758 36,324

Source: DoIR

250 800

200 600

$ million tonnes 150

400 100

200 50

0 0 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite Source: DoIR and ABARE

1200 350 Rest of Australia Rest of Australia 65 Western Australia20 000 1400 1400 Western Australia Rest of Australia Rest of Australia Rest of Australia 300 1000 Western Australia Western Australia 18 000 Western Australia 1200 1200 64 16 000 250 800 14 000 1000 1000 200 63 12 000

600 n n 800 n 800

$ million 10 000 tonnes 150

$ millio $ millio 600 $ millio 600 2. MINERALS62 AND PETROLEUM INDUSTRY400 2005–068000 REVIEW

(May 1970 = 100) 100 6000 400 400 250 200 61 4000 50 4% 200 200 5% 7% 2000 Japan 7% 0 0 9% 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 60 225 0 0 0 CanadaJul–04 18Jan–05% Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 18% 2% 16% Finland 15% Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite

China Figure 23%9 Exchange Rate Traden Weighted Index Source: DoIRFigur and ABAREe 3 Mining Investment Source: ABS Figure 2 Mineral Exploration Expenditure Figure 1 Petroleum Exploration Expenditure 30% 11% Taiwan 6%(units of foreign currency200 per A$) Source: ABS Source: ABS Source: Reserve Bank of Australia South Korea 6% $ millio 35% 6% 14% Europe 16% 15% 6% USA0.80 5% 65 100% 20 000 Other 75 1400 1400 175 Rest of Australia Rest of Australia Rest of Australia South Africa A$ Other 4% 11.4% 9.6% 9.2% 6.5% 65 Western Australia Western Australia 6% 18 000 We3.8%stern AustraliaIndia US$ 5.3% 1200 1200 Brazil 8% 2% 23% 16 000 55 64 80% Australia 0.75 15.6% 18.3% 20.2% 21.8% 24.1% 24.9% 8% 150 1000 1000 10% Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 14 000 45

Petroleum 35% LNG 11% Figure 31 Nickel Exports 63 12 000 35

60% n n 800 n 800 Others 8% Condensate 6% Total Value $2.96 billion Source: DoIR Figure 41 Heavy Mineral Sands 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 10 000 25 Alumina 10% Natural Gas 2% US$ Value by Quarter Source: DoIR

$ millio $ millio 600 $ millio 600

Gold 8% Crude Oil 14% % Change 62 8000 15 Iron Ore 30% LPG – Butane and Propane 2% 40% (May 1970 = 100) Nickel 9% 6000 5 400 400 0.65 61 4000 -5 Figure 4 Value by Commodity 2005–06 Source: DoIR 46.8% 41.1% 38.4% 39.3% 37.6% 40.7% 20% 200 200 2000 -15

0.60 60 0 -25 0 0 1996–97 1999–00 2002–03 2005–06 Oil 1996–97Iron Ore Nickel 1999–00Cobalt Gold Coppe2002–03r Lead Zinc 2005–06 1996–97 1999–00 2002–03 2005–06 Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 0% Jul–05 Jan–06 Jul–06 2000 2001 2002 2003 2004 2005 Lump

Figure 8 Exchange Rate US$/A$ Figure 9 ExchangeFigur Ratee 26 Tr adeChina’ Weighteds iron or Indexe imports by source Source: China Customs andFigur The eTEX 3 Repor Miningt Investment Source: ABS FigurFigure 6 e Av 2 erage Mineral Pric Exple Comparisonoration Expenditur e Figure 1 Petroleum Exploration Expenditure Source: Reserve Bank of Australia (units of foreign currency per A$) 2004–05Source: andABS 2005–06 Source: ABS Source: Reserve Bank of Australia Source : LME, Kitco, TEX Report, Metal Prices

0.80 100% Other 75 South Africa A$ 11.4% 9.6% 9.2% 6.5% 65 5.3% 3.8% India US$ TWI Yen US$ Euro Index A$ per boe Brazil 55 80% Australia 90 0.90 240 80 0.75 15.6% 18.3% 20.2% 21.8% 24.1% 24.9% TWI A$ WA Natural Gas Yen Brent Oil 45 85 0.85 220 SDR US$ US$ 70 Henry Hub Gas Euro Victoria Bass Strait Gas 35 80 0.80 60% 200 LNG FOB net 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 60 0.70 25 75 0.75 US$ 180 50 % Change 15 70 0.70 40% 160 5 65 0.65 40 0.65 140 46.8% 41.1% 38.4% 39.3% 37.6% 40.7% -5 60 0.60 20% 30 120 -15 55 0.55 20 0.60 -25 100 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc 50 0.50 Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump 10 45 0.45 80 Figure 8 Exchange Rate US$/A$ Figure 26 China’s iron ore imports by source Source: China Customs and The TEX Report Figure 6 Average Price Comparison 40 0.40 60 0 Source: Reserve Bank of Australia Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–02 Nov–02 Mar–03 Jul–03 Nov–03 Mar–04 Jul–04 Nov–04 Mar–05 Jul–05 Nov–05 Mar–06 Jul–06 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2004–05 and 2005–06 Source: LME, Kitco, TEX Report, Metal Prices

WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 0.1% 2% 4% 10% China 12% 2% 2% 4% 12% 6% Japan 5% 6% Saudi Arabia 5% Pilbara 65% 10% China 53% 5% 2% Netherlands 6% 10% Goldfields–Esperance 13% Japan 29% 2% 5% Belgium 2% Peel 10% South Korea 10% Spain 8% Mid West 6% Taiwan 4% United Kingdom 11% 53% 6% Italy 8% 65% Kimberley 2% Europe 4% 13% 2% Canada 2% South West 2% 29% USA 0.1% 21% USA 21% Other 2% 8% South Korea 2% Mexico 2% Taiwan 6% Due to decreased production from several mature oil 2% 8% 11% Other 10% 2.2 Petroleum fields, the actual volume of crude oil sales dropped by OIL, GAS AND CONDENSATE ten per cent during 2005–06 to 73 million barrels (200 000 Petroleum is the largest resource sector by value and barrels per day). Focusing on the 17 fields which exhibited Figure 47 Regional Value of Minerals and Petroleum Source: DoIR a sales increase during 2005–06 of 23 per cent (or $2.8 productionFigure 22 drops, Iron Or theire Exports total fall in oil sales amounted Figure 40 Heavy Mineral Sands Exports billion) saw it reach a record total level of $15.2 billion, to 24 million Tobarrels.tal Value Production $12.73 billion decreases Sourc e:were DoIR most Total Value $646.35 million Source: DoIR chiefly due to high world oil prices together with increased notable in the Harriet, Griffin, Woollybutt, Legendre and LNG shipments. The Western Australian petroleum Wanaea fields which alone accounted for almost 20 million industry also holds an eminent position nationally, barrels of decreased oil output. accounting for 67 per cent of national oil, gas and The total net fall in output was ameliorated by an increase condensate0.1% output during 2005–06. in output of 16 million barrels from eight oil fields. The 2% During the4% course of 2005–06, the price of oil based on a chief contributor accounting10% for more than 80 per cent ofChina 12% 2% 2% 6% 4% 12% 6% combination of Brent, WTI and Tapis, averaged US$64.43 this increase was Santos’ new Mutineer–Exeter field inJapan the 5% 4% Pilbara 65% per barrel. This represented a 34 per Chinacent increase 53% offshore Carnarvon6% Basin which commenced productionSaudi in Arabia 5% 3% 3% 10% 4% 2% 5% 5% Petroleum 38% March 2005.2% Netherlands 6% 7% Indonesia 3% Goldfields–Esperance 13% compared to the equivalent average priceJapan in 2004–0529% 4% 10% 3% Belgium 2% andGold notably, in5% May 2006, the Tapis oil price peaked at 4% 2% 5%Japan 53% South Africa 17% Peel 10% South Korea 10% Spain 8% 17% 38% US$78.79 per barrel. The average devaluation of the The value of condensate sales in 2005–06 was $2.8 billion, 10% New Zealand 2% Iron Ore 39% Thailand United Kingdom5% 11% Mid West 6% Australian dollar relative to its US counterpartTaiwan during4% representing a 27 per cent increase compared to the Diamonds 3% 53% 9% 6%Papua NewItal Guineay 3% 8% Bahrain 15% 65% Kimberley 2% Europe 4% previous financial year. However, this masked a static 2005–06 was only half a percentage point. Therefore, 2% 13% Nickel 5% volume of physical condensate sales. The quantity2%South of Kor Canadaea 16% 2% Russia 2% South West 2% similar to the outcome in US$ terms, USAin Australian 0.1% dollar 21% USA 21% 29% Alumina 4% condensate sold in 2005–06 totalled 35 million Singaporbarrels e 9% China 17% Other 2% 39% terms, the average price of oil based on a combination of 53% South Korea 2% 11% and was almost identical to the volume sold8% in 2004–05. UAE 13% Brent,Other WTI and6% Tapis represented a 35 per cent increase China Mexico 4% 2% 15% 16% compared to the equivalent average price in 2004–05. Other Taiwan 4% 6% Mozambique 11% Volume of condensate2% sales remained11% unchanged in Other 10% 5% 8% Indonesia 4% Canada 10% The strong oil prices resulted in a 20 per cent increase 2005–06 at 35.4 million barrels (97 000 barrels per day). New Zealand 2% USA 7% in the value of crude oil sales to realise $6.2 billion worth This was primarily due to declining recovery from the 13% 2% Echo–Yodel3% field combined with conclusion of production Other 3% of sales and make crude oil the most valuable Western 5% 17% Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Figure 46 Royalty Receipts 2005-06Figur Sourec 22e: DoIRAustralian Ir on Ore petroleum Exports resource in terms of sales. It needs from Apache’sFigure East 40 SparHeavy field Mineral being Sands offset Exportsby the to Tobetal emphasised Value $12.73 however, billion that Sour thisce: DoIR outcome was driven commencement of productionTotal Value from $646.35 Apache’s million new Sour Johnce: DoIR Brookes field and resumption of higher output from by the significant increase in oil prices which masked Figure 11 Petroleum Exports Figure 27 Alumina Exports Goodwyn. decreased physical output. Total Value $10.9 billion Source: DoIR and ABS Total Value $3.75 billion Source: DoIR

A$ million 6% 2,000 4% 2% Gold 3% 3% 1,800 4% 2% 4% 2% 5% Petroleum 38% 7% Japan Indonesia 16%3% 10% 4% 16% 3% 1,600 Nickel 9% 7% South Africa 17% South Korea 2% Gold 5% 4% Japan 53% Papua New Guinea 7% 4% 17% Thailand 10% 38% 1,400Iron Ore 39% ThailandAlumina 5% 10% South KorNewea Zealand25% 2% 4% 39% Singapore 4% 1,200Diamonds 3% Papua New Guinea 3% Bahrain 15% 9% Diamonds 7% Other 2% 2% United Kingdom 33% 1,000Nickel 5% South Korea 16% South AfriRuscasia 3%2% Iron Ore 10% China 17% Vietnam 3% 39% 800Alumina 4% 53% Singapore 9% Singapore 18% 11% Other 4% Petroleum UAE 13% 33% 600Other 6% China 4% 15%Thailand 10% 16% Japan 5% Other 4% Mozambique 11% 400 Other 25% China 4% 5% India 39% Indonesia 4% IndonesiaCanada 9%10% 200 18% USA 7% New Zealand 2% 13% 2% New Zealand 4% 5% 0 3% USA Other 2%3% 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-005% 2002-03 2005-06 17% 3% Figure 46 Royalty Receipts 2005-06 Source: DoIR 3% 2%

Figure 48 Royalty Receipts by Commodity Source: DoIR Figure 38 Gold Exports Figure 11 Petroleum Exports FigureFigur 12 Crudee 27 AluminaOil and Condensate Exports Exports Total Value $3.57 billion Source: DoIR and ABS Total Value $10.9 billion Source: DoIR and ABS Total VToaluetal $5.3Value billion $3.75 Sourbillionce: AB SourS ce: DoIR

A$ million 2,000 2% Gold 1,800 4% 2% Japan 16% 10% 16% 1,600 Nickel 9% 7% South Korea 2% Papua New Guinea 7% 4% Thailand 10% WESTERN1,400 AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Alumina South Korea 25% WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 4% 39% Singapore 4% 1,200 Other 2% Diamonds 7% United Kingdom 33% 1,000 South Africa 3% Iron Ore 10% Vietnam 3% 800 Singapore 18% Other 4% Petroleum Thailand 10% 33% 600 Japan 5% China 4% 400 Other 25% India 39% Indonesia 9% 200 18% New Zealand 4% 0 5% 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 USA 2% 3% 3% 2%

3.1 1200 LPG butane and propane enjoyed a healthy output increase 5.8 2750 60 1300 50 1000 of 12 per cent, returning a sales value of $654 million, Quantity Quantity Quantity Quantity 5.4 Value 2500 Value Value Value up 55 per cent in 2005–06. Natural gas sales remained 55 1200 3.0 1100 relatively steady with a small increase in quantity sold 45 900 of nearly one per cent and an increase of four per cent 5.0 2250 2.9 in value to reach $703 million. The value of natural gas 50 1100 1000 sales reported in the Digest is based on the sales value 4.6 2000 of gas delivered into the Dampier to Bunbury Natural Gas es 2.8 900 45 1000 40 800

Pipeline (DBNGP) in Karratha. nnes $ million $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr

Of particular relevance to future volume of gas sold Thousand tonnes 40 900 2.7 800 domestically in Western Australia was the announcement 3.8 1500 35 700 in September 2006 of the Stage 5A $700-million expansion 35 2.6 700 of the DBNGP. This is Western Australia’s most critical 3.4 1250 800 energy infrastructure asset and the expansion will comprise laying additional pipe alongside the existing 2.5 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 pipeline in a process known as looping. Stage 5A will Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 consist of ten loops, totalling in excess of 570 kilometres Figure 29 Alumina Quantity and Value and will mean that about half of the DBNGP will have been Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Figure 36 Gold Quantity and Value by Quarter Source: DoIR Quantity and Value by30.0 Quarter by Quarter Source: DoIR by Quarter Source: DoIR 430 950 duplicated. 700 75 Source: DoIR

900 A$/oz Construction of the latest expansion is70 expected to begin 30.0 410 430 950 650 700 75 27.5 US$/oz in early 2007 with the first capacity to be commissioned 850 during the first quarter of 2008 and the65 balance by the 390 900 600 70 410 A$/oz 650 70 25.0 3750 27.5 200 18 800 third quarter of 2008. Expansion of the pipeline will allow US$/oz Rest of Australia Rest of Australia an increase850 in gas transmission capacity60 of around 100 Quantity Western Australia 65 Value 3500 Western Australia 370 390 750 terajoules per day (as at550 the end of the Stage 4 expansion,600 22.5 25.0 15 A$ total capacity800 was around 720 terajoules55 per day). As with 65 160 US$ A$/oz 3250 700 US$/oz 60

350 the previous Stage 4 expansion,500 all additional capacity will $ Thousand 370 750 550 be fully contracted to new and existing 50shippers under 20.0 3000 22.5 12 A$ 650 55 US$ A$/oz

US$/oz 60 330 long-term700 arrangements.450 120 350 45 500 2750 $ Thousand 600 50 20.0 650 17.5 9 310 400 2500 $ million

330 40 450 Million tonnes 550 Million tonnes 55 tonnes Thousand 45 80 600 2250 15.0 17.5 6 290 310 500 350 35 400 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul-06 Jul–04 Jan–05 Jul–05 550Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 40Jan–06 Jul–06 50 2000 15.0 40 290 500 350 35 Figure 32 Nickel Price A$/tonneJul–04 Jan–05 Jul–05 Jan–06 Jul–06 3 Jul–04 SourceJan–05: ABS Jul–05 Jan–06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1750 Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil PricJul–04e US$/bblJan–05 Jul–05 Jan–06 Jul–06 Source: LME Cash, Monthly Average Source: WA Treasury Corporation 45 1500 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Figure 32 Nickel Price A$/tonne Source: ABS 0 0 Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl 1970 Source: LME1975 Cash, Monthly Average1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Source: WA Treasury Corporation Figur e 24 Ir on Ore Quantity and Value Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR 900 100 Average Landed Cost of Crude Oil Imports from all OPEC Countries Real Oil Price April 2006 = 100 800 90 US$ A$ 900 100 OPEC cuts prices 80 Average Landed Cost of Crude Oil Imports from all OPEC Countries 700 Real Oil Price April30 20060 = 100 45 800 90 US$ Rest of Australia Rest of Australia 70 OPEC cuts prices 600 A$ el Iranian revolution and Western Australia 40 Western Australia 12% 700 OPEC price rise 80 60 250 500 23% 70 35

el 5% 600 50 Iranian revolution and OPECIraq pric invadese rise Kuwait 400 60 Demand, weather, OPEC 500 40 200 30 Iron Ore 23% 300 OPEC embargo 50 US Dollars per barr 30 Iraq invades Kuwait 25 400 Demand, weather, OPEC es Alumina 16% 200 40 150 16% 20 Gold 20% 300 OPEC embargo 20 US Dollars per barr 16% 30 tonnes Million Gigalitr Petroleum 8% 100 10 200 100 15 20 Nickel 16% 0 0 8% Heavy Minerals Sands 5% Jan–71 Jan–74 Jan–77 Jan–80 Jan–83100 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 10 10

Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Other 12% 50 20% 0 0 5 Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 FiguJan–01re 15Jan–04 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR

Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 0Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR Figure 45 Minerals and Petroleum Employment 2005–06 10 11 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 61,278 persons Source: DOCEP and Petroleum Producing Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE 110 1.00 0.95

105 110 0.90 1.00 0.85 0.95 33% 33% 0.80 100 105 0.90 0.75 0.85 33% 33% 0.70 0.80 100 95 A$ 0.65 0.75 0.60 0.70

90 95 A$ 0.55 0.65 A$ Index (2000–01 = 100) 0.50 0.60 67% 67% 90 Rest of Australia 33% Rest of Australia 33% 85 0.45 0.55 A$ Index (2000–01 = 100) Western Australia 67% Western Australia 67% 0.40 0.50 67% 67% Rest of Australia 33% 85 Rest of Australia 33% 80 0.35 0.45 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Western Australia 67% Western Australia 67% 0.40 Source: ABARE (Data included LNG feedstock) Source: ABARE 80 0.35 Figure 42 Heavy Mineral SandsJul-0 4Price IndeJan-05x Jul-05 Jan-06Figure 23 Jul-06 Iron Ore Price A$/FJul–04e unit Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices Source: ABARE (Data included LNG feedstock) Source: ABARE

Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

3.1 1200 5.8 2750 60 1300 50 1000 Quantity Quantity Quantity Quantity 5.4 Value 2500 Value Value Value 55 1200 3.0 1100

45 900 5.0 2250 BONAPARTE 50 1100 BASIN 2.9 1000

4.6 2000 es BROWSE 2.8 900 45 BASI1000 N 22.9240 Tcf 800 nnes

CARNARVON $ million $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr BASIN Darwin Thousand tonnes 40 900 2.7 800 3.8 1500 30.3 Tcf 35 700 35 2.6 700 3.4 1250 800 80.6 Tcf Broome 2.5 600 3.0 1000 30 700 30 NORTHERN QUEENSLAN600 D Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 TERRITORY COOPER– EROMANGA Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and ValueKarratha Figure 36 Gold Quantity and Value BASIN SURA T–BOWENby Quarter Source: DoIR Quantity and Value by Quarter by Quarter Source: DoIR by Quarter Source: DoIR Source: DoIR BASIN 1.9 Tcf WESTERN (total) AUSTRALIA SOUTH Brisbane 70 3750 200 AUSTRALIA 18 Rest of Australia Rest of Australia Quantity Western Australia Value 3500 Western Australia 15 65 160 NEW SOUTH WALES 3250 0.06 Tcf Perth 3000 PERTH 12 60 120 BASIN Sydney 2750 Adelaide VICTORIA ACT 9 GIPPSLAND 2500 $ million Million tonnes Million tonnes 55 tonnes Thousand BASIN 80 3.13 Tcf 2250 Australia’s Gas Resources Melbourne6 Source: DoIR. Current as at end 2005 BASS 50 2000 BASIN 40 OTWAY 0.5 Tcf (in place) 1750 BASIN 3 2.4 Tcf 45 1500 TASMANIA Hobart Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 1970 1975 1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 24 Iron Ore Quantity and Value Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR

300 45 Rest of Australia Rest of Australia Western Australia 40 Western Australia 12% 250 23% 35 5%

200 30 Iron Ore 23% 25 es Alumina 16% 150 16% Gold 20% 20 16% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 Other 12% 50 20% 5

10 11 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

US$/Gj US$/Gj

8.5 14 Australia to Japan Taiwan Qatar to Japan US 8.0 Average Japan 12 France Australia to Taiwan Spain South Korea 7.5 10 Japan

7.0 8 6.5

6 6.0

4 5.5

5.0 2 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06

US$/Gj US$/Gj Figure 17 LNG Import Prices Source: Argus Monthly LNG Figure 18 Average LNG Import Prices Source: Argus Monthly LNG 8.5 14

US$/Gj US$/Gj Australia to Japan Taiwan Qatar to Japan US 8.0 8.5 14 Average Japan 12 France Australia to Taiwan Spain Australia to Japan Taiwan South Korea Qatar to Japan US$/G7.5 j US 8.0 Japan Average Japan 12 France 10 Australia to Taiwan 16 Spain 7.0 South Korea Alumina Western Australia 7.5 Henry Hub Japan 10 UK Diamonds 8 Rest of Australia Europe 6.5 Rest of World 7.0 WA domgas Gold 12 East Coast domgas 6 8 Ilmenite 6.0 6.5 Iron ore 4 5.56 6.0 8 LNG

Nickel 5.04 2 5.5 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Rutile

4 Salt 5.0 2 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 FeFigurb–05 e 17 LNGMay–05 Import PricAug–05es Source: ArNov–05gus Monthly LNGFeb–06 May–06 Aug–06 Figure 18 Average LNG Import Prices Source: Argus Monthly LNG Tantalum

Zircon Figure 17 LNG Import Prices Source: Argus Monthly LNG 0 Figure 18 Average LNG Import Prices Source: Argus Monthly LNG Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 0 20 40 60 80 100

US$/Gj Figure 19 Average Natural Gas Prices Source: Argus Monthly LNG, EnergyQuest, DoIR Figure 44 Selected WA Commodities Relative to World Production Ending 2005 16 by Quantity Source: DoIR, ABARE, USGS Alumina Western Australia US$/Gj Henry Hub UK Diamonds Rest of Australia Europe 16 Rest of World Alumina WA domgas Western AustraliaGold Henry Hub 12 East Coast domgas UK Diamonds Rest of AustraliaIlmenite Europe Iron Ore Rest of World WA domgas Gold Iron ore 12 East Coast domgas Crude Oil & Condensate 2005–06 Ilmenite 8 LNG LNG 2004–05 Iron ore Nickel Alumina 8 LNG Rutile Nickel Nickel 4 Salt Gold Rutile Tantalum 4 Salt Natural Gas Zi&rc LPonG 0 Tantalum Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Heavy Mineral Sands 0 20 40 60 80 100

Zircon Base Metals 0 Selected WA Commodities Relative to World Production Ending 2005 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 0 Figure 19 Av2erage0 Natural Gas40 Prices Source: 6Ar0gus Monthly LNG, Ener80 gyQuest, DoIR 100 Figure 44 Coal by Quantity Source: DoIR, ABARE, USGS

12 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10,000 11,000 12,000 13,000 13 Figure 19 Average Natural Gas Prices Source: Argus Monthly LNG, EnergyQuest, DoIR WESTERN AUSTRALIAN MINERALFigur ANDe 44 PETROLEUM Selected STATISTICS WA DIGEST Commodities 2005–06 Relative to World Production Ending 2005 $Million WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 by Quantity Source: DoIR, ABARE, USGS Figure 5 Major Commodities by Value Source: DoIR

Iron Ore

Crude Oil & Condensate 2005–06 Iron Ore LNG 2004–05 Crude Oil & Condensate 2005–06 Alumina

LNG 2004–05 Nickel

Alumina Gold

Nickel Natural Gas & LPG

Gold Heavy Mineral Sands

Natural Gas & LPG Base Metals

Heavy Mineral Sands Coal

Base Metals 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10,000 11,000 12,000 13,000 $Million Coal

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10,000 11,000 12,000 13,000 Figure 5 Major Commodities by Value Source: DoIR $Million

Figure 5 Major Commodities by Value Source: DoIR 30.0 30.0 430 950 700 75 430 950 700 75 LNG develop an LNG project using gas from this 3.5-trillion- 900 900 cubic-foot70 field. The LNG facility itself is to be based on the 410 A$/oz 650 70 410 27.5 LNG sales volumesA$/oz rose by six per cent to realise650 a record 27.5 US$/oz US$/oz Burrup Peninsula and produce five to seven million tonne 850 sales850 value of $4.9 billion, an increase of 24 per cent. This 65 of65 LNG per annum. 390 600 390 makes LNG the third most valuable individual commodity600 25.0 25.0 800 in800 the State after iron ore, and crude oil and condensate. Woodside is also appraising its extensive gas reserves in 60 Significantly, the NWS LNG project reached a major 60 370 550 370 750 550 750 the Browse Basin, off Western Australia’s Kimberley coast 22.5 milestone in January 2006 with the export of its 2000th 22.5 A$ A$ 55 which55 have the potential for a major gas production hub. US$ A$/oz US$ A$/oz

LNG cargo and 1000th condensate cargo. Also, in MayUS$/oz 700 US$/oz 700

The Browse Basin area gas includes the Torosa (formerly $ Thousand 350 500 350 $ Thousand 2006, the NWS LNG project shipped the first LNG500 cargo known50 as Scott Reef), Brecknock and Calliance (formerly 50 20.0 to China’s first LNG receival terminal at Guangdong in 20.0 650 650 known as Brecknock South) discoveries. Combined, these 330 450 330 southern China. 450 45 fields45 hold an estimated resource exceeding 20 trillion 600 600 17.5 cubic feet of gas and 300 million barrels of condensate. 17.5 310 The LNG quantity published in the Digest is sourced400 from 310 400 40 Options40 for an LNG development to process gas from 550 Woodside’s550 quarterly Australian Stock Exchange reports. these fields cover both an offshore and onshore processing 15.0 A value is obtained by multiplying this quarterly figure 15.0 290 500 350 35 290 Jul–04 Jan–05500 Jul–05 Jan–06 Jul–06 350 plant.35 Potentially, the first cargo from Browse could be Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–04 Jul–05 Jan–05 Jan–06 Jul–05 Jul–06 Jan–06 Jul-06 by anJul–04 LNG price.Jan–05 This priceJul–05 is an averageJan–06 publishedJul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 delivered from 2012–2014 subject to additional appraisal import price for a given quarter, converted at the average and customer negotiations. This would require a final Figure 32 exchange Nickel Pric ratee A$/tonnefor that quarter. Figure 32 Nickel Price A$/tonne Source: ABS Figure 28 Alumina Price A$/tonne Source: ABS Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Source: LME Cash, Monthly Average investment decision to be made around 2008–2010. Source: LME Cash, Monthly Average Source: WA Treasury Corporation Source: WA Treasury Corporation All LNG from Western Australia emanates from the NWS Chevron is also considering an LNG and domestic gas joint venture project in Karratha which comprises four development of up to ten million tonnes per annum based LNG production unit trains. Commissioned in August on Barrow Island, sourcing gas from its Gorgon and Jansz 2004, the 4.2-million-tonnes-per-annum fourth train is fields. Other additional potential LNG projects include 900 100 900 Australia’s largest single LNG production unit.100 Average Landed Cost of Crude Oil Imports from all OPEC Countries Average Landed Cost of Inpex’sCrude Oil Imports Browse from all OPEC CountriesBasin – Ichthys LNG operation and BHP Real Oil Price April 2006 = 100 Real Oil Price April 2006 = 100 800 90 800 90 Billiton’s – Exxon Mobil’s Pilbara LNG project to be based US$ US$ Train 4 boosted NWS production to almost 12 million OPEC cuts prices on the ScarboroughOPEC cutsfield. prices A$ A$ tonnes a year and its design is being replicated in Train 5, 80 700 80 700 now under construction on the Burrup Peninsula. When Western Australia potentially, could therefore have several 70 completed in 2008, it will lift the project’s capacity70 to about el el 600 600 Iranian revolution and Iranian revolutionLNG and projects operating within the next decade, depending 16.3 million tonnes a year and make it one of the biggestOPEC price rise 60 OPEC price rise 60 on market conditions and progress on finalising the 500 500 LNG plants in the world. However, Western Australia is no developments. In a global context, this potential future 50 longer the nation’s sole LNG producer with ConocoPhillips50 400Iraq invades Kuwait number of LNG projects inIraq Western invades Kuwait Australia is not 400 Demand, weather, OPEC and its partners commissioning the 3.5-million-tonnes- Demand, weather, OPEC 40 unusual when considering various forecast growth rates 40 per annum Darwin LNG plant earlier in 2006. It is possible 300 300 OPEC embargo for the LNG industry as a whole which range from seven to OPEC embargo US Dollars per barr US Dollars per barr Darwin LNG could see the construction of a 30second 30 ten per cent annual growth in LNG production. 200 200 production train by 2013 using gas from the Greater 20 Sunrise fields or the Caldita discovery in conjunction20 with The boom in LNG developments on drawing boards 100 100 other as yet undiscovered fields in the Timor Sea and 10 10 reflects soaring demand around the world and Western Bonaparte Basin. 0 0 0 0 Australia is very well placed to serve East Asian markets, Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 as well as the east coast of India and the west coast of Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 Whilst Darwin LNG has become Australia’s second LNG Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 the US. The US, for example, is making rapid progress hub, after the NWS, indicators point to it not being the last. Historic Gold Price US$/A$ per ounce Source: World Gold Council in accommodating LNG with 12 new terminals being Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Figure 15 Historic Oil Prices Source: Energy InformationFigur Administration,e 39 US Department of Energy; DoIR Woodside, operator of the NWS LNG project, discoveredFigure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR considered, including five in California, although terminals the Pluto gas field in April 2005, located approximately 180 actually located in California are facing tough community kilometres from the Burrup Peninsula and is planning to opposition.

110 1.00 110 1.00 0.95 0.95

105 0.90 105 0.90 0.85 0.85 33% 33% 33% 33% 0.80 0.80 100 100 0.75 0.75 0.70 0.70

95 A$ 95 A$ 0.65 0.65 0.60 0.60 90 90 0.55 0.55 A$ Index (2000–01 = 100) A$ Index (2000–01 = 100) 0.50 67% 0.50 67% 67% 67% Rest of Australia 33% Rest of Australia 33% Rest of Australia 33% Rest of Australia 33% 85 0.45 85 0.45 Western Australia 67% Western Australia 67% Western Australia 67% Western Australia 67% 0.40 0.40 80 0.35 80 0.35 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 NaturalJul-04 Gas PrJan-05oduction 2005–06Jul-05 Jan-06 Jul-06 FigurJul–04e 20 CrudeJan–05 Oil and CondensateJul–05 Jan–06 ProductionJul–06 2005–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Source: ABARE (Data included LNG feedstock) Source: ABARE Source: ABARE (Data included LNG feedstock) Source: ABARE 12 13 Figure 42 Heavy Mineral Sands Price Index WESTERN AUSTRALIANFigure 23 MINERAL Iron AND Or PETROLEUMe Price STATISTICS A$/Fe DIGESTunit 2005–06 Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW 30.0 430 950 700 75

900 410 A$/oz 650 70 27.5 US$/oz Strong steel demand850 has led to increased demand for 2.3 Iron ore 65 390 steel-making raw materials and the short- and medium- 600 25.0 In 2005–06, the iron ore industry broke new records in term outlook 800for the supply of iron ore has been affected 60 terms of output, despite the effect of the severe cyclone by cyclone activity in Australia, unforeseen interruptions 370 750 550 season experienced in the March quarter of 2006 and in Brazil and the ongoing global difficulty in sourcing some 22.5 A$ 55 US$ continued operational bottlenecks. A$/oz mining equipment700 such as speciality tyres and rail wagons. US$/oz

350 500 $ Thousand 50 20.0 The State’s iron ore industry plays a pivotal role in Western The world’s major650 suppliers’ case for a price increase was Australia’s export-driven330 economy, with the industry based upon high demand and constrained supply coupled 450 45 contributing $12.96 billion or 30 per cent of the total value 600 with increased steel prices, easing freight rates and lower 17.5 of mineral and petroleum sales for 2005–06. This equates 310 metallurgical coal costs. In May 2006, European, Japanese, 400 40 to around $1.5 million per hour and accounts for 27 per South Korean550 and Chinese-Taipei steel-makers agreed cent of the State’s merchandise exports. Supported by to a 19 per cent increase in negotiated prices with all 15.0 290 500 350 35 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Chinese demand,Jul–04 iron oreJan–05 sales reachedJul–05 recordJan–06 volumesJul-06 three major producers.Jul–04 It Jan–05was not untilJul–05 20 JuneJan–06 2006 thatJul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 for a seventh consecutive year, increasing by four per cent Boasteel (China’s representative) agreed to a 19 per cent to 244 million tonnes. Figure 32 Nickel Price A$/tonne Source: ABS increase in negotiations with BHP Billiton. Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Source: LME Cash, Monthly Average Source: WA Treasury Corporation China dominates Western Australia’s iron ore exports, Whilst the larger iron ore operations are based in the accounting for over half (53 per cent) of the total amount Pilbara region of Western Australia, there are two mines shipped for 2005–06. The past five years have seen China’s in the Midwest region, one in the Kimberley region and appetite grow three-fold whilst Japan has grown only 19 one in the Yilgarn. Rio Tinto Limited (with its wholly owned per cent over the same900 period. Japan received 29 per cent subsidiary Hamersley Iron Pty Ltd and its 53 per cent 100 Average Landed Cost of Crude Oil Imports from all OPEC Countries of the State’s exports for 2005–06. Other markets were shareholding in Robe River Mining Company Pty Ltd) and Real Oil Price April 2006 = 100 800 90 South Korea, Taiwan and Europe.US$ BHP Billiton (BHPB) dominate the industry in Western A$ OPEC cuts prices 700 Australia and account for around 90 per cent of the State’s80 All of the State’s iron ore producers made a significant iron ore production. contribution to this impressive performance. The success 70 600 el Iranian revolution and of the State’s iron ore industry rests critically on reliability, OPEC price rise The smaller producers consist of Portman Limited with 60 competitiveness and500 quality control in a demanding its Koolyanobbing operation about 50 kilometres northeast trading environment. Furthermore, the State’s iron ore of Southern Cross and its smaller operation at Cockatoo50 400 Iraq invades Kuwait industry continues to improve its competitiveness in mining Island, around 140 kilometres north of Derby. Mount Gibson Demand, weather, OPEC 40 practices, technological innovation and management Mining Ltd with its Tallering Peak operation, 50 kilometres 300 OPEC embargo processes. The continued fine-tuning of these sectors will north-northeast of Mullewa and the most recent new US Dollars per barr 30 be critical to the success200 of the industry in the years ahead. producer, Midwest Corporation Limited with its Koolanooka operation, 160 kilometres east-southeast of Geraldton. 20 As the largest importer100 of iron ore, it was expected that 10 China would play an increased role in price negotiations Due to unprecedented strong demand, iron ore companies 0 for the current contractual year with the world’s big three have been accelerating the development and expansion 0 Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 iron ore producers (Companhia Vale do Rio Doce [CVRD], of their operations. Because of the magnitude of these Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Rio Tinto and BHP Billiton). Falling steel prices had eroded works, the full impact of some of these projects will not Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council steel producers’ profit margins worldwide, however this be realised until 2007–08 and beyond. It is also recognised Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR fall was driven by a period of de-stocking and steel prices that difficulties in the acquisition of some mining have since recovered as demand remains robust. equipment and skilled labour are expected to slow the ongoing expansion of the iron ore industry. Investment in

110 0.1% 1.00 2% 4% 0.95 10% China 12% 2% 2% 4% 12% 6% 105 0.90 Japan 5% 6% Saudi Arabia 5% Pilbara 65% 10% China 53% 0.85 5% 2% Netherlands 6% 33% 33% 10% Goldfields–Esperance 13% Japan 29% 0.80 100 2% 5% Belgium 2% Peel 10% South Korea 10% 0.75 Spain 8% Mid West 6% Taiwan 4% 0.70 United Kingdom 11%

95 53% A$ 6% Italy 8% 65% Kimberley 2% Europe 4% 0.65 13% 2% Canada 2% South West 2% 29% USA 0.1% 0.60 21% USA 21% 90 Other 2% 0.55 8% South Korea 2% A$ Index (2000–01 = 100) Mexico 2% 0.50 67% 67% Taiwan 6% Rest of Australia 33% 85 Rest of Australia 33% 0.45 2% 11% Other 10% 8% Western Australia 67% Western Australia 67% 0.40 80 0.35 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Source: ABARE (Data included LNG feedstock) Source: ABARE Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Figure 22 Iron Ore Exports Figure 40 Heavy Mineral Sands Exports Total VFiguraluee $12.73 42 Heavy billion Mineral Source: Sands DoIR Price Index Figur e 23 IronTo Ortale VPricaluee A$/F$646.35e unit million Source: DoIR Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices 14 15 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

6% 4% 3% 3% 5% 4% 2% Indonesia 3% Petroleum 38% 4% 7% 3% Gold 5% Japan 53% South Africa 17% 4% 17% 38% Iron Ore 39% Thailand 5% 10% New Zealand 2% Diamonds 3% 9% Papua New Guinea 3% Bahrain 15% Nickel 5% South Korea 16% 2% Russia 2% Alumina 4% Singapore 9% China 17% 39% 53% 11% UAE 13% Other 6% China 4% 15% 16% Other 4% Mozambique 11% 5% Indonesia 4% Canada 10% USA 7% New Zealand 2% 13% 2% 3% Other 3% 5% 17% Figure 46 Royalty Receipts 2005-06 Source: DoIR

Figure 11 Petroleum Exports Figure 27 Alumina Exports Total Value $10.9 billion Source: DoIR and ABS Total Value $3.75 billion Source: DoIR

A$ million 2,000 2% Gold 1,800 4% 2% Japan 16% 10% 16% 1,600 Nickel 9% 7% South Korea 2% Papua New Guinea 7% 4% Thailand 10% 1,400 Alumina South Korea 25% 4% 39% Singapore 4% 1,200 Other 2% Diamonds 7% United Kingdom 33% 1,000 South Africa 3% Iron Ore 10% Vietnam 3% 800 Singapore 18% Other 4% Petroleum Thailand 10% 33% 600 Japan 5% China 4% 400 Other 25% India 39% Indonesia 9% 200 18% New Zealand 4% 0 5% 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 USA 2% 3% 3% 2%

Source: DoIR Figure 38 Gold Exports Figure 48 Royalty Receipts by Commodity Figure 12 Crude Oil and Condensate Exports Total Value $3.57 billion Source: DoIR and ABS Total Value $5.3 billion Source: ABS these expansions amounts to around US$4.7 billion The next producer to commence operations will (A$6.3 billion) with another US$9.8 billion (A$13 billion) be Murchison Metals Ltd which is nearing the potential new investment. Some of this work includes: commencement of mining of its Jack Hills project in • BHPB’s $2.4-billion Rapid Growth Projects 2 and 3 the Midwest region located 380 kilometres northeast which will increase the capacity of its Pilbara iron ore of the port of Geraldton. Murchison Metals’ high grade operations to approximately 129 million tonnes per hematite ore will be using contract mining, crushing and annum. Expansion includes its mine, rail and port screening operations and first shipments are scheduled facilities as well as the purchase of additional rolling to commence in September/October 2006. Ore will be stock and a new car dumper at Finucane Island. transported to Geraldton by road to Murchison Metal’s new ore storage and transfer facility at the port of • Rio Tinto’s wholly owned Hamersley Iron’s $700-million Geraldton ready for shipment. mine expansion of Yandicoogina to increase production from 36 million tonnes per annum to 52 million Murchison Metals proposes to develop the Jack Hills tonnes per annum. Once completed, this will make project in two stages. Stage 1 will initially produce 1.5 Yandicoogina the largest iron ore mine in the Pilbara. million tonnes per annum commencing in the second This latest expansion follows their recently expanded half of 2006 increasing to two million tonnes per annum operations by establishing a new wet processing plant in 2008. Stage 2 involves increasing annual production of to process low grade ore, an overland conveyor and direct shipping of high grade ore up to 25 million tonnes tertiary crushing/screening facilities. per annum. The ore would be railed to a new deep-water • Rio Tinto will invest $920 million to further expand port facility at Oakajee, 22 kilometres north of Geraldton. port facilities at Dampier which will increase its annual Oakajee is the Western Australian Government’s preferred 3.1 1200 shipping5.8 capacity from 116 to 140 million tonnes 2750per 60 1300 50 1000 annum. On completion in 2007, the expansion will take site for a new privately funded deep-water port to Quantity accommodateQuantit the rapidlyy expanding iron ore industry Quantity Quantity the5.4 capacityValue of Rio Tinto’s ports in the Pilbara close2500 to Value Value Value 55 1200 3.0 1100 200 million tonnes per annum. in the Midwest region of the State. In late 2005, the Geraldton Iron Ore Alliance (GIOA) was formed to take a 45 900 • Rio5.0 Tinto are proceeding with the $1.5 billion 2250 coordinated approach to the common-user infrastructure 50 1100 2.9 1000 development of the Hope Downs iron ore mine and a development and stakeholder relations required to unlock 58-kilometre4.6 railway line connecting into the Pilbara2000 the full potential of Australia’s fastest growing new iron ore es 2.8 900 Iron rail system near West Angelas. The rail link will province.45 GIOA members consist of: 1000 40 800 nnes

have the capacity of carrying up to 30 million tonnes $ million $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr • Midwest Corporation Ltd; per annum of Marra Mamba ore to either Dampier or

Thousand tonnes 2.7 Cape Lambert for export. First production is expected • Murchison40 Metals Ltd; 900 800 3.8 1500 in 2008. The area is the subject of a 50:50 joint venture • Gindalbie Metals Limited; 35 700 agreement between Hancock Prospecting Pty Ltd and • Mount35 Gibson Iron Limited; and 800 2.6 700 Rio3.4 Tinto Iron Ore. 1250 • Golden West Resources Limited. • The Port of Geraldton has undergone an upgrade 2.5 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 to BirthSep–04 5 Dec–04to includeMar–05 aJun–05 newSep–0 iron5 Dec–05ore shipMar–06 loaderJun–06 and In other developments,Sep–04 Dec–04 Mar–05 FortescueJun–05 Sep–0 Metals5 Dec–05 GroupMar–06 Jun–06(FMG), Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 modifications to adjacent berthing pockets to allow a new entrant of the State’s iron ore sector, has received Figure 29 Alumina Quantity and Value 240-metreFigure 13iron Crude ore carriers Oil and to Condensat call at thee port. This State and FigurFederale 33 Government Nickel Quantity environment and Value approval for Figure 36 Gold Quantity and Value by Quarter Source: DoIR $35-million upgradeQuantity includes and Va alue dedicated by Quarter iron ore their Cloud Break tenementby Quarter in the Sour Chichesterce: DoIR Range. FMG by Quarter Source: DoIR berth which is Sourcriticalce: DoIR to meet the increasing demand is scheduled to start commissioning its $2.5-billion project for iron ore exports from the area. in the first quarter of 2008.

In late 2004, negotiations between the State Government, 70 3750 FMG and The200 Pilbara Infrastructure (TPI – a subsidiary 18 of FMG) were completedRest for of a Australia State Agreement that will Rest of Australia Quantity Western Australia Value 3500 facilitate new $1.4-billionWestern multi-user Australia railway and port infrastructure in the Pilbara. Under this agreement, TPI 15 65 3250 160 proposes to construct a 520-kilometre multi-user railway from iron ore deposits in the eastern and central Pilbara 3000 12 to Port Hedland and to develop new multi-user facilities 60 120 2750 at the port. 9 2500 $ million FMG has now secured sales agreements for 39.5 million Million tonnes Million tonnes 55 tonnes Thousand tonnes per annum,80 which represents 88 per cent of 2250 expected initial production of 45 million tonnes per annum 6 from their Chichester Range tenements. 50 2000 40 1750 Gindalbie Metals Ltd is developing the two-stage Karara 3 iron ore project (located 45 kilometres east of Koolanooka) 45 1500 in a joint venture with Anshan Iron and Steel Group Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 Corporation (AnSteel),1970 China’s1975 second-largest1980 steel 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 24 Iron Ore Quantity and Value producer. Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR 14 15 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

300 45 Rest of Australia Rest of Australia Western Australia 40 Western Australia 12% 250 23% 35 5%

200 30 Iron Ore 23% 25 es Alumina 16% 150 16% Gold 20% 20 16% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 Other 12% 50 20% 5

45 900 5.0 2250 50 1100 2.9 1000

4.6 2000 es 2.8 900 45 1000 40 800 nnes $ million $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr

Thousand tonnes 40 900 2.7 800 3.8 1500 35 700 35 2.6 700 3.4 1250 800

2.5 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Figure 36 Gold Quantity and Value by Quarter Source: DoIR 2. MINERALS ANDQuantity PETROLEUM and Value by Quarter INDUSTRY 2005–06 by QuarterREVIEW Source: DoIR by Quarter Source: DoIR Source: DoIR 1200 350 Rest of Australia Rest of Australia Western Australia Western Australia 300 1000 The first stage70 of the project involves mining of direct 3750The forthcoming year200 will see some operators continue to 18 shipping hematite ore from Karara at an initial rate of battle bottlenecks at their northwestRest of iron Australia ore operations, Rest of Australia Quantity 1.5 million tonnes per annum. Logistics involve mining 3500specifically250 in the rail dumping Weandstern ship Australia loading aspects. Western Australia 800 Value on site, followed by road haulage along the existing 85- Whilst expansions and new entrants in the industry try to 15 65 160 kilometre haul-road to Morawa where a rail siding will be 3250keep20 pace0 with demand, which in the short-to-medium built for loading ore onto rail wagons for cartage on the term will be driven by China, globally it may be a race to 600 3000 existing Midwest railway network, 200 kilometres to the the market in terms of tonnage. In the longer term, it is 12 $ million tonnes tonnes 150 60 120 port of Geraldton. The joint venture is yet to announce a 2750forecast that demand will be driven by Brazil, Russia, India 400 production commencement date. and China (BRIC). 100 9 2500 $ million Million tonnes Million tonnes 55 tonnes Thousand The second stage involves the mining and concentrating Analysts indicate that 80about 75 per cent of the future 200 2250 of the 737 million tonnes of magnetite resource at Karara. growth50 in the iron ore market will be absorbed by China 6 Some 20 million tonnes per annum of raw magnetite ore which by 2008 would represent about 50 per cent of the 2000 will be mined50 followed by a concentration on site at Karara total seaborne iron ore market. The shortage of supply 0 0 40 1957 1965 1973 1981 1989 to produce1997 8 million tonnes2005 per annum of magnetite 1750has created1890 a situation1900 where1910 lower 1920grade, higher1930 cost 1940 1950 1960 1970 1980 1990 2000 3 concentrate (68.8 per cent Fe). This material will then producers are entering the market. Figure 43 Heavy Mineral Sands Value of Production be transported45 via a 225-kilometre slurry pipeline to 1500 Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 Source: DoIR and ABARE the industrial estate at Narngulu, six kilometres east The State’s iron ore industry1970 is poised1975 for a long- 1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 of Geraldton. The joint venture has also decided to ship term future of high production rates with some initial Figure 24 Iron Ore Quantity and Value concentrate and pellet products to provide maximum challenging supply difficulties.Figure It 34 is thereforeNickel Quantity an industry Source : DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR certainty for its development and shipment plans. diversifying into new mines and into a changing product mix with the major iron ore companies continuing to 65 20 000 improve1400 product quality and infrastructure. 1400 Rest of Australia Rest of Australia Rest of Australia Western Australia Western Australia 18 000 Western Australia 300 1200 45 1200 Rest of Australia Rest of Australia 64 16 000 Western Australia 40 Western Australia 12% 1000 1000 25140 000 23% 35 5% 63 12 000

n n 800 n 800 200 30 10 000 Iron Ore 23% $ millio $ millio 600 25 $ millio 600 62 8000 es Alumina 16% 16%

(May 1970 = 100) 150 6000 Gold 20% 400 20 400 16% Million tonnes Million Gigalitr Petroleum 8% 61 1004000 15 200 200 Nickel 16% 2000 8% Heavy Minerals Sands 5% 10 Other 12% 60 50 0 0 0 20% Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 5 1996–97 1999–00 2002–03 2005–06

0 0 Figure 9 Exchange Rate Trade Weighted Index 1950 Figur1955e 3 Mining1960 Investment1965 1970 Source: AB1975S 1980 1985 Figur1990e 2 Mineral1995 Expl2000oration2005 Expenditure 1965 1970Figure 1 1975 Petroleum1980 Exploration1985 Expenditur1990 e 1995 2000 2005 (units of foreign currency per A$) Source: ABS Source: ABS Figure 45 Minerals and Petroleum Employment 2005–06 Source: Reserve Bank of Australia 61,278 persons Source: DOCEP and Petroleum Producing Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE

0.80 100% Other 75 South Africa A$ 11.4% 9.6% 9.2% 6.5% 65 5.3% 3.8% India US$ Brazil 55 80% Australia 0.75 15.6% 18.3% 20.2% 21.8% 24.1% 24.9% 45

35 60% 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 25 US$

% Change 15 40% 5 0.65 46.8% 41.1% 38.4% 39.3% 37.6% 40.7% -5 20% -15

0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump

Figure 8 Exchange Rate US$/A$ Figure 26 China’s iron ore imports by source Source: China Customs and The TEX Report Figure 6 Average Price Comparison Source: Reserve Bank of Australia 2004–05 and 2005–06 16 Source: LME, Kitco, TEX Report, Metal Prices 17 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

Alumina exports reflect global aluminium market 2.4 Alumina conditions with around 98 per cent of the world’s alumina The State’s alumina industry is the third-largest sector in being used for aluminium production. Alumina feedstock is terms of sales after petroleum and iron ore, accounting for the largest single component of the cash cost of producing ten per cent of total mineral and petroleum sales. During primary aluminium metal. Some two tonnes of alumina 2005–06, the total quantity of alumina sold continued are required to produce one tonne of aluminium and to break new production records with the quantity sold the industry is very competitive, with the world’s major increasing by three per cent to 11.5 million tonnes in aluminium-producing companies also playing key roles 2005–06, compared to 11.2 million tonnes in 2004–05. in both bauxite mining and alumina refining.

Sale values increased by 19 per cent ($650 million) to Western Australia currently has two alumina producers, $4111 million compared with 2004–05. The average annual Alcoa World Alumina Australia and Worsley Alumina alumina price (in Australian dollar terms) increased 16 per Pty Ltd (BHP Billiton Limited 86 per cent and Japan cent from $310 per tonne in 2004–05 to $365 per tonne Alumina Association (Australia) Pty Ltd 14 per cent). Both in 2005–06. In 2005–06, alumina prices continued their producers’ refineries are located within close proximity to upward trend with strong growth from December to the their bauxite mines and shipping facilities which allows 0.1% end of the financial year. The year commenced with July economical processing of relatively low-grade bauxite. alumina prices averaging $334 per tonne and by June 2% 4% 2006, having10% increased to $428 per tonne. InChina terms of 12% 2% 2% 4% 12% Alcoa mines bauxite at their Huntly (the biggest bauxite 6% aluminium, in 2005–06 prices averaged US$2537Japan per tonne 5% mine in the world) and Willowdale mines south of Perth which6% was only three per cent lower than theSaudi record Arabia peak 5% Pilbara 65% 10% China 53% 5% and extracts alumina at the Kwinana, Pinjarra and in2% 1988 when tight supply and demand conditionsNetherlands pushed 6% Wagerup refineries. 10% Goldfields–Esperance 13% Japan 29% prices2% to an average of US$2607 per5% tonne. Belgium 2% Peel 10% South Korea 10% Spain 8% United Kingdom 11% Worsley’s bauxite mine is located approximately 120 Mid West 6% Taiwan 4% Australia is the world’s largest bauxite and alumina 53% 6% Italy 8% kilometres southeast of Perth at Boddington and the 65% Kimberley 2% Europe 4% producer. In 2005, Western Australia produced 32 per 13% Canada 2% crushed ore is transported to the refinery via overland cent and 64 per cent of the world’s2% and Australia’s alumina South West 2% 29% USA 0.1% 21% USA 21% conveyor to Worsley near Collie. Alumina is then carted respectively. The State’s total alumina production has Other 2% 8% South Korea 2% by rail and exported through the Port of Bunbury. demonstrated a modest average annual growthMexic rateo of 2% four per cent per annum during the past tenTa years.iwan 6% The 657 000-tonne Pinjarra refinery capacity upgrade to 2% 8% 11% Other 10% 4.2 million tonnes per annum was commissioned in the The total value of alumina exports in 2005–06 increased last quarter of 2005–06 at a cost of US$510 million. With by around 22 per cent to $3.7 billion. Western Australia’s the ramp-up of production to continue through to the end markets for its alumina are very diverse with China and of 2006, this will increase overall output for the coming Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Figure 22 Iron Ore Exports FigurSouthe 40 Africa Heavy each Mineral accounting Sands for Exports 17 per cent ($663.2 period. Total Value $12.73 billion Source: DoIR million andTo tal$634.6 Value million $646.35 respectively) million Sour in ce2005–06.: DoIR This was followed by Bahrain at 15 per cent, the United Arab Emirates accounting for 13 per cent, Mozambique 11 per cent, Canada ten per cent, the United States seven per cent and others making up the ten per cent balance.

30.0 430 950 700 75 6% 900 4% 410 A$/oz 650 70 3% 3% 27.5 4% 2% US$/oz 5% Petroleum 38% 7% Indonesia 3% 850 4% 65 3% South Africa 17% 390 600 Gold 5% 4% Japan 53% 25.0 17% 800 38% Iron Ore 39% Thailand 5% 10% New Zealand 2% 60 Diamonds 3% 9% Papua New Guinea 3% Bahrain 15% 370 750 550 22.5 2% Russia 2% A$ 55 US$ Nickel 5% South Korea 16% A$/oz 700 US$/oz China 17% 350 500 $ Thousand 39% Alumina 4% 53% Singapore 9% 11% 50 20.0 UAE 13% 650 Other 6% China 4% 15% 16% 330 450 Other 4% Mozambique 11% 45 600 5% Indonesia 4% Canada 10% 17.5 310 400 USA 7% 550 40 New Zealand 2% 13% 2% 3% Other 3% 15.0 5% 17% 290 500 350 35 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 46 Royalty Receipts 2005-06 Source: DoIR Jul–04 Jan–05 Jul–05 Jan–06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06

Figure 32 Nickel Price A$/tonne Source: ABS Figure 11 Petroleum Exports Figure 27 Alumina Exports Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Source: LME Cash, Monthly Average Source: WA Treasury Corporation Total Value $10.9 billion Source: DoIR and ABS Total Value $3.75 billion Source: DoIR

16 17 A$ million WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN900 MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 100 Average Landed Cost of Crude Oil Imports from all OPEC Countries Real Oil Price April 2006 = 100 2,000 800 90 2% US$ Gold OPEC cuts prices 1,800 4% 2% A$ Japan 16% 10% 80 16% 700 1,600 Nickel 9% 7% South Korea 2% Papua New Guinea 7% 4% 70

Thailand 10% el 1,400 600 Iranian revolution and Alumina South Korea 25% OPEC price rise 4% 39% Singapore 4% 60 1,200 Other 2% 500 Diamonds 7% United Kingdom 33% 1,000 South Africa 3% 50 Vietnam 3% 400 Iraq invades Kuwait Iron Ore 10% Demand, weather, OPEC 800 Singapore 18% 40 33% Other 4% Petroleum 300 OPEC embargo

Thailand 10% US Dollars per barr 600 Japan 5% 30 China 4% 400 Other 25% India 39% 200 Indonesia 9% 20 200 18% New Zealand 4% 100 10 0 5% 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 USA 2% 3% 0 3% 2% 0 Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Figure 48 Royalty Receipts by Commodity Source: DoIR Figure 38 Gold Exports Figure 12 Crude Oil and Condensate Exports Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Total Value $3.57 billion Source: DoIR and ABS Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR Total Value $5.3 billion Source: ABS

110 1.00 0.95

105 0.90 0.85 33% 33% 0.80 100 0.75 0.70

95 A$ 0.65 0.60 90 0.55 A$ Index (2000–01 = 100) 0.50 67% 67% Rest of Australia 33% Rest of Australia 33% 85 0.45 Western Australia 67% Western Australia 67% 0.40 80 0.35 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Source: ABARE (Data included LNG feedstock) Source: ABARE

Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

3.1 1200 5.8 2750 60 1300 In 50September 2006, Government approval was given1000 for Quantity Quantity the constructionQuantity of a third production unit at the Wagerup Quantity 5.8 2750 60 1300 3.1 1200 5.4 Value 2500 Value 50 refinery1000 toVa increaselue alumina capacity from 2.6 million Value 55 1200 3.0 1100 Quantity Quantity Quantity tonnes per annum to 4.7. It is estimatedQuantity that the project will 5.4 Value 2500 Value Value 45 Value 900 5.0 55 2250 1200 cost in the vicinity of $1.53.0 billion. Approval for the project’s 1100 50 1100 expansion is subject to 42 conditions, including that Alcoa 2.9 1000 45 900 5.0 2250 funds air quality testing and health surveys in addition to 4.6 2000 2.9 1000 es 50 1100 purchasing land. The project is expected to create 1500 jobs 2.8 900 45 1000 during40 construction and 260 permanent jobs. 800 nnes

4.6 2000 $ million es $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr 2.8 900 45 1000 40 800 Thousand tonnes nnes The outlook for aluminium is that the market will remain 2.7 800 40 $ million 900 $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr 3.8 1500 in deficit through 2006. Aluminium demand continues to

Thousand tonnes 700 40 900 be35 strong worldwide and2.7 Chinese aluminium consumption 800 3.8 1500 35 2.6 700 3.4 1250 800 continues to be the driver of global demand. Alumina 35 markets700 are moving to a relatively balanced position, with 35 800 2.6 700 3.4 1250 low inventory levels worldwide and new refinery capacity in 2.5 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 ChinaSep–0 adding4 Dec–04 significantlyMar–05 Jun–05 Sep–0to alumina5 Dec–05 Mar–06productionJun–06 growth in 2006, reducing Chinese dependence2.5 on alumina imports. 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 NickelSep–0 Quantity4 Dec–04 andMar–05 ValueJun–05 Sep–05 Dec–05 Mar–06 Jun–06 Figure 36 Gold Quantity and Value by Quarter Source: DoIR Quantity and Value by Quarter by Quarter Source: DoIR by Quarter Source: DoIR Source: DoIR Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Figure 36 Gold Quantity and Value by Quarter Source: DoIR Quantity and Value by Quarter by Quarter Source: DoIR by Quarter Source: DoIR Source: DoIR

70 3750 200 18 Rest of Australia Rest of Australia Quantity Western Australia 70 3750 Value 200 3500 Western Australia 18 Rest of Australia Rest of Australia 15 Quantity 65 3250 160 Western Australia Value 3500 Western Australia 15 65 160 3250 3000 12 60 120 3000 2750 12 60 120 9 2750 2500 $ million Million tonnes Million tonnes 55 tonnes Thousand 80 9

2500 $ million 2250

Million tonnes 6 Million tonnes 55 tonnes Thousand 80 2250 2000 50 6 40 1750 3 50 2000 40 45 1750 1500 3 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 1970 1975 1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 45 1500 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Figure 24 Iron Ore Quantity0 and Value 0 1970 1975 1980 1985 Figure1990 34 Nickel Quantity1995 Source2000: DoIR and ABARE2005 1960 1965 1970 1975 1980 Figur1985e 30 Alumina1990 Quantity1995 Source2000: DoIR and ABAR2005E by Quarter Source: DoIR Figure 24 Iron Ore Quantity and Value Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR

300 45 Rest of Australia Rest of Australia 300 Western Australia 45 40 Western Australia 12% Rest of Australia 250 Rest of Australia Western Australia Western Australia 12% 23% 40 35 5% 250 23% 200 35 30 5% Iron Ore 23% 200 30 25 es Alumina 16% 150 16%Iron Ore 23% Gold 20% 25 20 es Alumina 16% 16% 150 tonnes Million Gigalitr 16% Petroleum 8% Gold 20% 100 20 15 16% Nickel 16% Million tonnes Million Gigalitr Petroleum 8% 8% Heavy Minerals Sands 5% 100 15 10 Nickel 16% 50 Other 12% 8% Heavy Minerals Sands20% 5% 10 5 Other 12% 50 20% 0 5 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 45 Minerals and Petroleum Employment 2005–06 18 19 0 0 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 61,278 persons Source: DOCEP and Petroleum Producing Companies WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 1950 1955 1960 1965 1970 1975 Figur1980e 25 Ir1985on Ore 1990Quantity1995 Source: DoIR2000 and ABAR2005E 1965 1970 1975 1980 1985Figure 16 1990Crude Oil and1995 Condensate2000 Quantity2005 Source: DoIR and ABARE Figure 45 Minerals and Petroleum Employment 2005–06 61,278 persons Source: DOCEP and Petroleum Producing Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE 250

4% 2.5 Nickel 5% 7% Japan 7% 9% The value of nickel sales reached $3.79 billion in 2005–06, Canada 18% 225 an increase of eight per cent compared to 2004–05. Sale 18% volumes rose2% by six per cent to 191 161 tonnes in the 16% Finland 15%

same period. Overall average prices received by exporters China 23% n 30% increased by only four per11% cent in Australian dollar terms Taiwan 6% 200 from the previous period. South Korea 6% $ millio 35% 6% Stainless14% steel production accounts for about 65 per cent Europe 16% 15% of world nickel use, which makes the nickel industry 6% USA 5% highly dependent on developments in world stainless steel 175 Other 4% markets. Stainless steel6% production fell in the second half 8% of 2005 as steel2% producers reduced stocks. This reduction 23% led nickel prices to decline from an average of US$14 581 8% 150 10% per tonne (US$6.61 per pound) in July 2005 to US$12 116 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 per tonne (US$5.50 per pound) in November 2005. Stainless Petroleum 35% LNG 11% Figure 31 Nickel Exports steel production started to recover in December 2005 and Others 8% Condensate 6% Total Value $2.96 billion Source: DoIR Heavy Mineral Sands by July 2006 saw the average price reach US$20 755 per Figure 41 Alumina 10% Natural Gas 2% tonne (US$9.41 per pound). Prices have since surged to Value by Quarter Source: DoIR Gold 8% Crude Oil 14% record highs and reached US$33 995 per tonne (US$15.42 Iron Ore 30% LPG – Butane and Propane 2% per pound) in late August 2006. Nickel 9% 30.0 430 950 700 Western75 Australia remains Australia’s only nickel-mining Figure 4 Value by Commodity 2005–06 Source: DoIRstate. The Western Australian nickel industry remains 900 410 A$/oz 650 heavily 70concentrated with the top five producers accounting 27.5 US$/oz 850 for 85 per cent of all nickel sales. The largest of these is 65 390 600 BHP Billiton’s Nickel West with concentrators at Mount 25.0 800 Keith, Leinster and Kambalda, the Kalgoorlie smelter and the Kwinana60 refinery. Nickel West is the world’s third- 370 750 550 largest producer of nickel in concentrate. 22.5 A$ 55 US$ A$/oz 700 US$/oz The Murrin Murrin Joint Venture (Minarra Resources Ltd

350 500 $ Thousand 60 per cent and Glenmurrin Pty Limited 40 per cent) is the 50 20.0 650 second-largest producer with their laterite project located 330 450 between45 Leonora and Laverton in the northeast goldfields 600 of Western Australia. 17.5 310 400 TWI Yen 550 The third-largest40 US$ Eur oproducer Indeis LionOrex Australia (Nickel) A$ per boe 90 Ltd with its Black0.90 Swan operations240 located 53 kilometres 15.0 80 290 TWI 500 350 35 A$ Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 WA Natural Gas Jul–04 Jan–05 Jul–05 Jan–06 Jul-06 Yen Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 northeastJul–04 of KalgoorlieJan–05 and itsJul–05 Lake JohnstonJan–06 operationsJul–06 Brent Oil 85 0.85 220 SDR US$ (incorporating the Emily Ann and MaggieUS$ Hays underground 70 Henry Hub Gas Euro Victoria Bass Strait Gas 80 mines) located0.80 125 kilometres southeast of Marvel Loch. Figure 32 Nickel Price A$/tonne Figure 28 Alumina Price A$/tonne Source: ABS Source: Perth Mint and London Fix Tapis Crude200 Oil Price US$/bbl LNG FOB net Figure 35 Gold Price Figure 14 Source: LME Cash, Monthly Average 60 Source: WA Treasury Corporation 75 Other major 0.75producers include Mincor Resources’ Miitel 180 nickel operation (which recorded above its targeted 13 000 50 70 0.70 tonne of nickel-in-concentrate160 production for the 2005–06 3.1 5.8 2750 60 1300 1000 1200 65 year) located0.65 13 kilometres southeast of Widgiemooltha 40 50 Quantity 140 Quantity Quantity Quantity 900 and Jubilee Mines NL with their Cosmos operations located 60 100 5.4 0.60Value 2500 Value Value Value Average Landed450 Cost kilometres of Crude Oil Imports fr omnorth all OPEC Countriesof Kalgoorlie. 55 1200 30 3.0 1100 Real Oil Price April 2006 = 100 120 800 55 90 0.55 US$ A range of nickel sulphide producers have toll treatment 45 900 5.0 OPEC cuts prices 2250 20 A$ 100 700 50 80 and concentrate0.50 purchase agreements in place with Nickel 50 1100 2.9 1000 West, trucking ore to be concentrated at their Kambalda 10 45 70 4.6 0.45 80 2000 el 600 Iranianconcentrator. revolutiones and These operations include: 2.8 900 60 OPEC• pric eAustralian rise Mines Limited’s Blair nickel operation; 45 1000 40 800 40 0.40 60 0 nnes $ million

500 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–02 Nov–02 Mar–03 Jul–03 Nov–03$ million Mar–04 Jul–04 Nov–04 Mar–05 Jul–05 Nov–05 Mar–06 Jul–06 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 4.2 1750 To $ million Million tonnes $ million • IndependenceGigalitr Group’s Long mine; 50 • Reliance Mining Limited’s BetaIraq invades Hunt Kuwait deposit; Thousand tonnes 2.7 800 400 Demand, weather, OPEC 40 900 Figure 0 Australian Dollar Exchange Rate Against Major40 Currencies • Tectonic3.8 Resources NL’s RAV8Figur minee at7 Ravensthorpe;Non-Rural Commodity1500 Price Index 2001–02 = 100 Figure 10 Average Product Price Source: Wood Mackenzie and DoIR 35 700 300 Source: Reserve Bank of Australia OPEC embargo Source: Reserve Bank of Australia US Dollars per barr • View Resources’ Carnilya Hill mine near Kambalda; 30 35 800 2.6 700 • Mincor3.4 Resources’ Miitel–Wannaway project; and 1250 200 20 • Sally Malay Mining Limited’s Lanfranchi Tramways 3.0 1000 30 2.5 600 100 10 operation. 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 While current Western Australian production is chiefly 0 Figure 29 Alumina Quantity and Value Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 based on Figurnickele sulphide13 Crude deposits, Oil and Condensat most of Westerne Figure 33 Nickel Quantity and Value Figure 36 Gold Quantity and Value by Quarter Source: DoIR Jan-70 Jan-71 Jan-72 Jan-73 Australia’sJan-74 Jan-75 Jan-76 Jan-77 Jan-78 nickelJan-79 Jan-80 resourcesJan-81 QuantityJan-82 Jan-83 Jan-84 Jan-85 are andJan-86 laterite. Jan-87 VaJan-88 lueJan-89 by However,Jan-90 QuarterJan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 by Quarter Source: DoIR by Quarter Source: DoIR operational problemsSour ince laterite: DoIR processing have hindered Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR development of these resources. 18 19 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

70 3750 200 18 Rest of Australia Rest of Australia Quantity Western Australia 110 1.00 Value 3500 Western Australia 0.95 15 65 3250 160 105 0.90 0.85 3000 12 33% 33% 0.80 60 120 100 2750 0.75 9 0.70 2500 $ million Million tonnes Million tonnes 55 tonnes Thousand 95 A$ 80 0.65 2250 6 0.60 90 2000 0.55 50 A$ Index (2000–01 = 100) 40 0.50 67% 1750 67% 3 Rest of Australia 33% Rest of Australia 33% 85 0.45 45 Western1500 Australia 67% Western Australia 67% 0.40 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 1970 1975 1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 80 0.35 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Figure 24 Iron Ore Quantity and Value Source: ABARE Source: ABARE (Data included LNG feedstock) Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

300 45 Rest of Australia Rest of Australia Western Australia 40 Western Australia 12% 250 23% 35 5%

200 30 Iron Ore 23% 25 es Alumina 16% 150 16% Gold 20% 20 16% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 Other 12% 50 20% 5

The combination of Western Australia’s large nickel With the completion of LionOre’s Maggie Hays mine reserves and buoyant nickel prices has resulted in a upgrade, it is anticipated that production will increase range of exploration and development activities. Among by approximately 20 per cent to over 14 000 tonnes per the most significant is BHPB’s $1.8-billion Ravensthorpe annum payable nickel by the end of 2006. The upgrade nickel laterite project that is envisaged to produce up to includes an expansion of the existing underground mining 220 000 tonnes per annum of nickel–cobalt hydroxide with operations as well as an upgrade of the processing plant a mine life currently expected of around 25 years. First capacity to 1.5 million tonnes per annum. production is expected some time in the third quarter of In addition to the Maggie Hays upgrade, LionOre’s Black 2007. Production will be shipped to the BHPB’s metal Swan $69-million Disseminated 2 project involving pit refining section of the Yabulu refinery near Townsville in expansion, plant construction and processing plant Queensland. Ravensthorpe will rival Murrin Murrin as capacity upgrade to 2.15 million tonnes per annum, is Western Australia’s second-largest lateritic nickel mine. on track and is scheduled for commissioning in the third The Western Australian Government is contributing about quarter of 2006. Ramp-up to full production is expected $24 million to common-user infrastructure in the region. in the fourth quarter of 2006. Other projects under consideration are: A bankable feasibility study is also due for completion in • Heron Resources’ Goongarrie laterite nickel project, the second quarter of 2007 on LionOre’s Honeymoon Well located about 85 kilometres north of Kalgoorlie. Heron project. Amongst one of the world’s largest undeveloped and Inco signed a formal agreement in 2005 under nickel deposits, Honeymoon Well is located 53 kilometres which they will complete a feasibility assessment and northeast of Kalgoorlie. It is envisaged that the project if warranted, develop the project. would operate at around 10 million tonnes per annum • Jubilee Mines’ Prospero deposit just 4.5 kilometres producing in excess of 40 000 tonnes per annum of nickel3.1 1200 5.8 2750 60 south of the Cosmos mine underwent1300 a resource 50 in concentrate. 1000 Quantity Quantitupgradey revealing a 31 per cent increase in contained Quantity Quantity Following an increase in resource inventory, Western 5.4 Value 2500 Value nickel metal to 79 200 tonnes. Prospero is the Value 3.0 Value 1100 55 1200 Areas’ new nickel sulphide concentrator at Forrestania, centrepiece of a new mine development at Cosmos 45 which is expected to be commissioned900 by the end of 2006, 5.0 2250 which includes the nearby Tapinos deposit. 50 1100 will also add to increased production for the forthcoming2.9 1000 • BHPB’s Yakabindie project is based on a large nickel period. The first few months of high-grade ore produced 4.6 2000 deposit situated near their existing Mount Keith from their Flying Fox tenement will be treated at the Emily es operation. BHPB is conducting a pre-feasibility study 2.8 900 45 1000 40 Ann plant under the terms of an existing800 agreement with nnes

with consideration being given to developing$ million Yakabindie

$ million LionOre until the Forrestania plant is available.

4.2 1750 To $ million Million tonnes $ million Gigalitr as an integrated part of the Mount Keith project.

Thousand tonnes Subject to the expected continued high level of growth 2.7in 800 40 • The Sherlock Bay Nickel Company is900 currently 3.8 1500 China with infrastructure development, construction and undertaking a major review of its Sherlock Bay nickel 35 manufacturing, being the main feature700 of rising stainless project (9000 tonnes per annum) with the key focus 35 800 steel consumption, the outlook for Western Australian 2.6 700 3.4 1250 over the next 12 months to complete the necessary nickel operations remains strong. Record prices, various metallurgical test programs which remain on the critical mine expansions and new mines coming on-stream will2.5 600 3.0 1000 30 path for project development. 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04ensureMar–05 aJun–05 verySep–0 active5 Dec–05 periodMar–06 forJun–06 the State’s nickel industry The 2006–07 year will see the continued ramping-up in 2006–07. Western Australia is also likely to continue to Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figureof 33 Consolidated Nickel Quantity Mineral’s and VEastalue Alpha mine, located five Figure 36account Gold Quantity for all of andAustralia’s Value nickel mining in 2006–07. Quantity and Value by Quarter kilometresby Quarter southeast Source: DoIRof Kambalda, which commenced by Quarter Source: DoIR Globally,by Quarter nickel Sour productionce: DoIR for the coming year is expected Source: DoIR production in late March 2006. This will consolidate a to increase with the ramping-up of Inco’s Voisey Bay 9–10 000 tonnes per annum nickel production complex nickel mine in Canada (55 500 tonnes per annum capacity) through combined production from Beta Hunt and East being the main source of Alpha. the increase. Production is 70 3750 200 expected18 to rise further with Rest of Australia Rest of Australia Quantity the start-up in lateWestern 2007 Australia of Value 3500 Western Australia BHPB’s15 Ravensthorpe mine 65 3250 160 (50 000 tonnes capacity) and Inco’s Goro mine 3000 (60 00012 tonnes capacity) 60 120 in New Caledonia. 2750 9

2500 $ million Million tonnes Million tonnes 55 tonnes Thousand 80 2250 6

50 2000 40 1750 3

45 1500 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 1970 1975 1980 1985 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 24 Iron Ore Quantity and Value Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR 20 21 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

300 45 Rest of Australia Rest of Australia Western Australia 40 Western Australia 12% 250 23% 35 5%

200 30 Iron Ore 23% 25 es Alumina 16% 150 16% Gold 20% 20 16% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 Other 12% 50 20% 5

0 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 45 Minerals and Petroleum Employment 2005–06 61,278 persons Source: DOCEP and Petroleum Producing Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE Exports of gold from Western Australia totalled $7.2 billion 2.6 Gold for 2005–06 however only 49.5 per cent of this amount can In 2005–06, the gold industry, at $3.6 billion, ranked as be attributed to being sourced from Western Australian the fifth-largest commodity sector in Western Australia, mines (see Gold Export Update 2005–06 in this section). accounting for eight per cent of the State’s total mineral India topped the export destinations again with 39 per cent and petroleum sales. On a national scale, in 2005–06, followed fairly closely by the United Kingdom with 33 per Western Australia accounted for around 70 per cent of cent, Thailand ten per cent, Japan five per cent, Vietnam Australia’s gold production. Surbiton statistics show that three per cent and South Korea two per cent. India’s share Australia’s gold production fell to 233 tonnes (7.5 million of exports has decreased from 2004–05 where it took half ounces) or six per cent in 2005–06 compared to 2004–05. of the total exports from Western Australia. Although the United Kingdom is credited with taking 33 per cent of Western Australia’s gold sales in 2005–06 amounted to exports in 2005–06, it should be noted that with London 5.2 million ounces (161 tonnes), representing a four per having a central role in the gold market, when the Asian cent decrease compared with the previous year. Some market falls and demand is depressed elsewhere, gold can operations have had to rely on treatment of lower grade be shipped to London to be on-sold from London accounts. stockpiles in the March quarter due to the effects of the wet weather caused by seasonal cyclonic activity. However, the higher prices have allowed producers to profitably reduce head grades.

The increase in the gold price helped boost the value of 30.0 430 950 700 75 the State’s gold sales to $3567 million, an increase of 18 per cent. 900 410 A$/oz 650 70 27.5 US$/oz In 2005–06, the average international price of gold was 850 65 390 600 US$527 per ounce, up 25 per cent compared to the 25.0 800 previous financial year. Since the start of 2006, the gold 60 price has remained in the spotlight following its upward 370 750 550 trend in the last half of 2005, peaking in May at US$725 per 22.5 A$ 55 US$ A$/oz ounce. In Australian dollar currency terms, the average 700 US$/oz

350 500 $ Thousand gold price was 24 per cent higher, up from $562 per ounce 50 20.0 in 2004–05 to $705 per ounce in 2005–06. In mid-May 2006, 650 330 450 gold hit an all-time record in Australian dollar terms of 45 600 $933.20 per ounce. 17.5 310 400 550 40 The gold sector is also a significant employer, accounting 15.0 for29 about0 28 per cent of total employment in the mineral 500 350 35 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 and Jul–04petroleumJan–05 sector in WesternJul–05 Australia.Jan–06 TheJul-06 number Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 of people employed within the gold industry in 2005–06 Figure 32 Nickel Price A$/tonne was more than 12 500, up by three per centSour once 2004–05.: ABS Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Source: LME Cash, Monthly Average Source: WA Treasury Corporation

Western Australia’s ten largest projects accounted for 72 per cent of the State’s gold output in 2005–06. These projects comprised: 3.1 1200 5.8 2750 60 1300 50 1000 • Golden Mile (Kalgoorlie Consolidated Gold Mines Quantity 900 Quantity Quantity 100 Quantity 5.4 Value 2500 Pty Ltd (KCGM))Value – 23.4 tonnes Value Average Landed Cost of Crude Oil Imports from all OPECValu Countriese 55 1200 Real Oil Price April 2006 = 100 3.0 1100 800 90 • St Ives (Gold FieldsUS$ Ltd) – 15.5 tonnes A$ 45 900 OPEC cuts prices 5.0 2250 • Telfer Gold700 (Newcrest Mining Limited) – 14.3 tonnes 80 50 1100 2.9 1000 • Sunrise Dam (AngloGold Ltd) – 13.0 tonnes 70 4.6 2000 600 el Iranian revolution and es • Granny Smith (Placer Dome Inc) – 13.9 tonnes OPEC price rise 2.8 900 45 1000 40 60 800

500 nnes $ million $ million

4.2 1750 • Jundee Nimary (Newmont Mining Corp) – 9.8 tonnes To $ million Million tonnes $ million Gigalitr 50 Iraq invades Kuwait

Thousand tonnes 400 • Kanowna40 Belle (Placer Dome Inc) – 7.9 tonnes 900 2.7 Demand,800 weather, OPEC 3.8 1500 40 • Plutonic300 (Barrick Gold Corp) – 7.3 tonnes 35 OPEC700 embargo US Dollars per barr 30 35 800 2.6 700 3.4 1250 • Agnew (Gold200 Fields Ltd) – 6.9 tonnes 20 • Marvel Loch (St Barbara Limited) – 5.1 tonnes 100 10 2.5 600 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Figure 36 Gold Quantity and Value Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 byJan-84 QuarterJan-85 Jan-86 Jan-87 Jan-88 SourJan-89 ceJan-90 : DoIRJan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Quantity and Value by Quarter by Quarter Source: DoIR by Quarter Source: DoIR Source: DoIR Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR

20 21 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

70 3750 200 18 Rest of Australia Rest of Australia Quantity 110 1.00 Western Australia Value 3500 Western Australia 0.95 15 65 3250 160 105 0.90 0.85 3000 12 33% 33% 0.80 60 100 120 2750 0.75 0.70 9 2500 $ million A$

95 Million tonnes Million tonnes 55 tonnes Thousand 80 0.65 2250 0.60 6 90 2000 0.55 50 A$ Index (2000–01 = 100) 40 0.50 67% 67% 1750 3 Rest of Australia 33% Rest of Australia 33% 85 0.45 Western Australia 67% Western Australia 67% 45 1500 0.40 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 0 80 1970 1975 1980 1985 0.35 1990 1995 2000 2005 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Figure 20 Crude Oil and Condensate Production 2005–06 Figure 24 Iron Ore Quantity and Value Source: ABARE (Data included LNG feedstock) Source: ABARE Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

300 45 Rest of Australia Rest of Australia Western Australia 40 Western Australia 12% 250 23% 35 5%

200 30 Iron Ore 23% 25 es Alumina 16% 150 16% Gold 20% 20 16% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 Other 12% 50 20% 5

Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Figure 22 Iron Ore Exports Figure 40 Heavy Mineral Sands Exports Total Value $12.73 billion Source: DoIR Total Value $646.35 million Source: DoIR

6% 2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW 4% 3% 3% 5% 4% 2% Indonesia 3% Petroleum 38% 4% 7% 3% Gold 5% 4% Japan 53% South Africa 17% 1200 350 17% Rest of Australia 38% Iron Ore 39% Rest of AustraliThailanda 5% 10% New Zealand 2% Western Australia Western Australia Diamonds 3% 9% Papua New Guinea 3% Bahrain 15% 300 1000 Nickel 5% South Korea 16% 2% Russia 2% Alumina 4% Singapore 9% China 17% 39% 250 53% 11% UAE 13% 800 Other 6% China 4% 15% 16% Mozambique 11% 200 Other 4% 5% Canada 10% 600 Indonesia 4% USA 7% $ million tonnes tonnes 150 New Zealand 2% 13% 2% 3% Other 3% 5% 17% 400 Figure 46 Royalty Receipts 2005-06 Source: DoIR 100

200 Figure 11 Petroleum Exports Figure 27 Alumina Exports 50 Total Value $10.9 billion Source: DoIR and ABS Total Value $3.75 billion Source: DoIR

0 0 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE A$ million Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite Source: DoIR and ABARE 2,000 2% Gold 1,800 4% 2%GOLD EXPORT UPDATE 2005–06 Japan 16% 10% 16% 1,600 Nickel 9% The Australia Bureau7% of Statistics (ABS) released South Korea 2% Papua New Guinea 7% 4% trade data that indicated a significant rise in Thailand 10% 1,400 65 20 000 Alumina 1400 South Korea 25% 1400 4% Western AustralianRest of gold Australi exports.a However, this Rest of Australia Rest of Australia 39% Singapore 4% 1,200 18 000 Western AustraliaOther 2% Western Australia DiamondsWestern Australia apparent increase7% in gold exports from Western United Kingdom 33% 1,000 Australia1200 has been due to aSouth restructuring Africa of 3% 1200 16 000 64 Iron Ore 10% Vietnam 3% 800 Australia’s gold refining industry.Singapor e 18% Other 4% 14 000 Petroleum 1000 1000 33% 600 Thailand 10% In October 2002, AGR Matthey was formed. This Japan 5% 400 63 12 000 Other 25% China 4% n is a partnershipn 800 between Johnson Matthey (Aust) n 800 India 39% Indonesia 9% 200 10 000 18% in Victoria, WA Mint (The Perth Mint) and the New Zealand 4% 0 $ millio Australian$ millio 600 Gold Alliance. As a result of the merger, $ millio 6005% 62 8000 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 USA 2% 3% (May 1970 = 100) 3%all2% Australian gold is now refined in Western 6000 Australia.400 The Victorian refinery still refines silver 400

Source: DoIR 4000 and jewellery products. Figure 38 Gold Exports Figure 48 Royalty Rece61ipts by Commodity Figure 12 Crude Oil and Condensate Exports 200 200 Total Value $3.57 billion Source: DoIR and ABS Total Value $5.3 billion Source: ABS 2000 Gold export data published by the ABS from 60 0 Western Australia0 must therefore be interpreted Using GFMS0 Ltd data the World Gold Council report that Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 with some 1996–97caution. It includes1999–00 gold produced2002–03 2005–06 world total1996–97 end-user 1999–00demand for gold2002–03 fell by 112005–06 per cent to in other States and Territories, in addition to 3400 tonnes however in value terms it rose by ten per cent Figure 9 Exchange Rate Trade Weighted Index Figure 3 Mining Investment Source: ABS production Figurfrom eoverseas 2 Mineral operations, Exploration namely Expenditur e to reach FigurUS$57.5e 1 billion.Petrol eumJewellery Exploration consumption Expenditur fell somee (units of foreign currency per A$) Papua New Guinea andSour Asia,ce: ABS which is refined and 16 per cent to 2400Sour tonnesce: ABS and identifiable investment Source: Reserve Bank of Australia exported from Western Australia. This export figure demand for gold remained almost static at 606 tonnes. is therefore larger than Western Australia’s own level of gold production. In terms of the State’s gold production outlook, there are 0.80 100% Other several75 gold projects looking at re-opening and some South Africa A$ 11.4% 9.6% 9.2% 6.5% current65 producers looking to expand, due to the higher The ABS5.3% estimates that3.8% gold exportsIndia from Western US$ Brazil gold price. The effect of higher prices does not necessarily Australia in 2005–06 amounted to approximately 55 80% Australia lead to a rapid rise in gold output but allows producers to 0.75 15.6% 18.3% 20.2% 21.8% $7.2 billion.24.1% Approximately24.9% 49.5 per cent or $3.6 adjust45 head grades to maximise mine life and subsequent billion was gold produced in Western Australia. returns. Some feasibility studies, previously shelved, are The remaining 50.5 per cent (approximately $3.6 35 60% also being re-examined based on the high price, including: 21.1% 26.5% 26.7% 25.9% billion) can22.1% be attributed19.9% to gold refined and 0.70 • The25 Laverton Exploration Joint Venture Whisper US$ exported from Western Australia, but produced project (located near Laverton in Western Australia) from mining operations in other States, Territories % Change feasibility15 study, which was deferred in June 2005, is 40% and overseas. to5 be reviewed due to the increase in the gold price. 0.65 The Whisper deposit is part of a larger oxide resource 46.8% 41.1% 38.4% 39.3% Overseas37.6% imported gold40.7% also includes scrap which comprising-5 the Rumour, Innuendo, Beasley Creek and 20% is refined in Western Australia and exported. Garden Wall deposits. -15

0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump 22 23 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Figure 8 Exchange Rate US$/A$ Figure 26 China’s iron ore imports by source Source: China Customs and The TEX Report Figure 6 Average Price Comparison Source: Reserve Bank of Australia 2004–05 and 2005–06 Source: LME, Kitco, TEX Report, Metal Prices

• Newmont Mining Corporation in Joint Venture • Range River Gold Ltd expects to produce first gold from with Anglo Gold Ashanti Limited’s expansion of the its Indee heap leach operation located 80 kilometres Boddington gold mine (Wandoo). Production will be up southwest of Port Hedland in the third quarter of 2006. to 600 000 ounces per annum of gold and about 20 000 • Following the re-estimation of their mineral resource, tonnes per annum of copper in concentrates over a Westonia Mines believes that the basis for project re- 15-year life. Initial production is not expected until late development has been established and will rework its 2008. feasibility study into the Westonia project and expects • Kalgoorlie Super Pit – Kalgoorlie Consolidated Gold to complete this work by the September 2006 quarter. Mines Pty Ltd (KCGM) plans to extend the life of its • Integra Mining Limited has published promising results open-cut mine by five years to 2017 with the Golden of its pre-feasibility financial outcomes on its Aldiss- Pike Cutback. KCGM is in the process of finalising its Randalls deposit 130 kilometres east of Kalgoorlie. Public Environmental Review for release by the EPA The modelling indicates a four-year mine-life producing for public comment. up to 115 000 ounces per annum. • The refurbishment of Gleneagle Gold Ltd’s Fortnum • In May 2006, revised mineral resource estimates gold project was completed in early July 2006 when it announced by Saracen Mineral Holdings Limited at poured its first gold. Plant throughput is expected to its Carosue Dam project have revealed significant ramp-up to the forecast one million tonnes per annum increases in resources. The revised estimate is some rate during the September 2006 quarter. Mining will be 650 000 ounces of gold which will enable the deposits from the Toms and Eldorado pits and the operation has to be re-evaluated economically. an initial mine life of around three years producing a • St Barbara Limited is carrying out feasibility work total of 156 000 ounces of gold. 30.0 430 to determine950 the viability of commencing mining at 700 75 • Tectonic Resources NL’s Phillips River gold project the earliest900 possible time at their Gwalia Deeps and upgrade410 is targeting to be in gold production prior to Tarmoola open pitA$/o projects.z Feasibility work is expected650 70 27.5 US$/oz the end of the first quarter of 2007 and is projected to be completed850 some time in the September 2006 65 to produce390 a total of 246 000 ounces of gold, 550 000 quarter. 600 25.0 ounces of silver and 8350 tonnes of copper. 800 • Avoca Resources Limited continues their pre- 60 • View Resources Limited is looking to re-open its 370 development750 activities at Trident with the feasibility 550 Bronzewing mine 117 kilometres southeast of Wiluna. 22.5 A$ remaining on track for the end of August completion. 55 US$ A$/oz • Wedgetail Exploration NL has been making solid Dewatering700 of the north end of the Poseidon South pit US$/oz 350 500 $ Thousand progress into the planning and development of its has been successfully completed with refurbishment of 50 20.0 Nullagine gold project about seven kilometres south the historic650 underground workings to commence in the 330 450 of Nullagine. The mine is expected to have an initial third quarter of 2006. 45 600 five-year life producing around 70 000 ounces per • Prospect Resources continues to progress the feasibility 17.5 310 400 annum. Production is targeted to commence in the for gold 550mining at its Melville deposit with an estimated 40 first half of 2007. 50 000 ounces of gold. 15.0 290 500 350 35 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 • Reed ResourcesJul–04 announcedJan–05 aJul–05 75 per centJan–06 increaseJul-06 in Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 gold resources at the Sand Queen gold mine situated The direction of gold prices in 2006–07 will largely depend at Comet Vale some 100 kilometres north of Kalgoorlie. on world economic growth. Other uncertainties and risks Figure 32 Nickel Price A$/tonne Figure 28 Alumina Price A$/tonne Source: ABS Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl The first toll milling campaign was completed in June that may significantly affect gold prices include the value Source: LME Cash, Monthly Average Source: WA Treasury Corporation 2006 and at the current level of production (20 000 of the US dollar, ongoing threats of terrorism and regional ounces per annum) potentially extends the mine life political tensions in the Middle East and North Korea. to beyond six years.

900 100 Average Landed Cost of Crude Oil Imports from all OPEC Countries Real Oil Price April 2006 = 100 800 90 US$ A$ OPEC cuts prices 700 80 70 600 el Iranian revolution and 60 OPEC price rise 500 50 Iraq invades Kuwait 400 Demand, weather, OPEC 40

300 OPEC embargo US Dollars per barr 30 200 20

100 10

0 0 Jan–71 Jan–74 Jan–77 Jan–80 Jan–83 Jan–86 Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04 Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06

Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR

22 23 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

110 1.00 0.95

105 0.90 0.85 33% 33% 0.80 100 0.75 0.70

Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

2.7 Base metals LEAD The overall value of the Western Australian base metals The only current stand-alone lead producer in Western sector rose by a staggering 186 per cent to reach $821 Australia was commissioned in 2005 and officially opened million during 2005–06. The increase was primarily due in September 2005. Ivernia’s Magellan lead operation, to new projects coming on stream, increased production located 30 kilometres west-northwest of Wiluna, is from nickel producers, the Telfer operation and very considered amongst the top five lead-producing mines strong international prices for base metals. On average, in the world (when in full production). It has a mine life throughout 2005–06, in Australian dollar terms, zinc rose of approximately ten years. an amazing 83 per cent, copper increased 62 per cent and lead, a more modest but nonetheless impressive, 12 per For 2005–06, Magellan produced 50 800 tonnes of lead cent. In value terms, this puts base metals ahead of heavy in concentrate. This was lower than expected and like a mineral sands for the first time. lot of mining operations in Western Australia, the mine was affected by adverse weather conditions early in 2006. The overall largest producer of base metals by value in This impinged on the concentrate drying and shipping Western Australia is Oxiana Limited with its Golden Grove processes. project located approximately 450 kilometres northeast of Perth. Oxiana acquired Golden Grove from the Newmont Shortages of road and rail transport capacity due to the Mining Corporation in July 2005. The Golden Grove project high level of activity in the Western Australian resource produces zinc concentrate and copper concentrate which sector also impacted on shipping. The bulk of Magellan’s also contains silver, gold and lead. Product is exported to shipments were made to smelters in China, with Belgium, China, South Korea, Thailand and India. South Korea and Thailand receiving smaller quantities. Golden Grove’s reported production of lead for the 2005–06 COPPER period was 7939 tonnes in concentrate. With the proposed Copper production in Western Australia may be split into re-opening of the Lennard Shelf operations in the three categories comprising copper concentrate, copper Kimberley, there will be two operations in 2007 producing cathode and copper by-product (mainly from nickel lead in concentrate as a by-product. mining). During 2005–06, the total quantity of copper sold increased by around 15 per cent whilst the value rose ZINC 65 per cent to $403 million. Copper prices reached record levels of US$3.99 per pound in May 2006. Golden Grove currently produces all of Western Australia’s zinc in concentrate. Oxiana reported production of 107 863 Newcrest Mining Limited’s Telfer gold project, 310 tonnes for 2005–06 whilst LME prices reached record levels kilometres northeast of Newman, is the largest single in May of US$1.81 per pound. All of Golden Grove’s zinc is producer of copper and reported producing a total of sold to smelters in Asia under long-term supply contracts. 38 374 tonnes of copper in concentrate for the 2005–06 period. The high price of zinc has prompted Teck Cominco to re-open the Lennard Shelf mining operation. First Aditya Birla Minerals Ltd operates the Nifty copper mine concentrate production is planned for early 2007. located 150 kilometres east of Nullagine. Nifty currently Located 25 kilometres southeast of Fitzroy Crossing in has a capacity of 25 000 tonnes per annum of copper the Kimberley region of Western Australia, the mine is cathode and also has a large undeveloped copper sulphide expected to produce 70 000 to 80 000 tonnes per annum resource estimated to be around 1.9 million tonnes of of zinc for four to five years. Mill start-up is anticipated copper equivalent. A detailed feasibility study has recently for January 2007 with full production by the end of the first been concluded for the development of an underground quarter of 2007. The estimated capital cost to restart the mine and a copper concentrate plant with a projected operation is $23 million with an additional $5 million in capacity of 2.5 million tonnes per annum at Nifty. pre-production costs.

Straits Resources Limited operates the Whim Creek, Mons Cupri copper cathode project located midway between Karratha and Port Hedland. During the 2005–06 period, it produced a total 15 546 tonnes of copper cathode; however, not all of this production is reported to DoIR, as the Whim Creek tenements are not covered by the Mining Act 1978.

Golden Grove reported producing 15 295 tonnes of copper concentrate for the period.

Of the thirteen nickel operations which produce copper as a by-product in concentrate, Sally Malay Mining Corporation’s Sally Malay project contributed over 35 per cent of the total 9.9 tonnes for the 2005–06 financial year.

24 25 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 0.1% 2% 4%2.8 Mineral sands 10% China 12% 2% 2% 4% 12% 6% Western Australia remains the nation’s dominant producer Japan 5% of heavy mineral sands accounting for around 88 per 6% Saudi Arabia 5% Pilbara 65% 10% China 53% 5% cent by total value sold in 2005. During 2005–06, the 2% Netherlands 6% 10% Goldfields–Esperance 13% Japan 29% value of Western Australian mineral sands remained 2% 5% Belgium 2% Peel 10% almost static ($800 million) whenSouth comparedKorea 10% with 2004–05. Spain 8% Mid West 6% However quantities sold fell inTa iwannearly all instances4% with United Kingdom 11% 53% 6% Italy 8% 65% Kimberley 2% the exception of leucoxene whichEurope rose by 4%around seven 13% per cent. By tonnage, ilmenite fell 22 per cent, synthetic 2% Canada 2% South West 2% USA 0.1% USA 21% 29% rutile was down six per cent, rutile fell 17 per cent and 21% Other 2% 8% South Korea 2% zircon was down by 12 per cent. A 13-week outage for the Mexico 2% relining of a kiln at Iluka’s Narngalu synthetic rutile plant, Taiwan 6% reduced production, however the company reports that the 2% 11% Other 10% outage did not affect sales tonnage. 8% Export markets for Western Australian heavy mineral sands are very diverse with the United States accounting Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Heavy Mineral Sands Exports Figure 22 Iron Orfore Exports 23 per cent, China and the United Kingdom both taking Figure 40 Total Value $646.35 million Source: DoIR Total V12alue per $12.73 cent, Italy billion nine Sour perce: cent, DoIR Spain eight per cent, Taiwan seven per cent, the Netherlands six per cent, Saudi Arabia and Japan five per cent each and 12 other countries accounting for the balance. 250 As indicated by the shipped tonnages, with values 4% 5% remaining7% static, prices received by Australian producers Japan 7% 9% of heavy mineral sands during 2005–06 were on average 225 6% up. Prices for titanium dioxideCanada (TiO2) pigment18 %rose by over 4% three per cent, 18%ilmenite prices increased eight per cent, 2% 16% Finland 15% 2% 3% 3% 5% Petroleum 38% 4% leucoxene prices rose eight per cent, rutile climbed by Indonesia 3% 4% China 23% n 7% 14 per cent and zircon prices grew by 19 per cent. 3% Gold 5% 11% Japan 53% South Africa 17% 30% 4% Taiwan 6% 200 17% 38% Western Australia is dominated by two major producers, $ millio 10% New Zealand 2% 35% Iron Ore 39% ThailandSouth Kor ea 6%5% 6% Iluka Resources Ltd and the Tiwest Joint Venture, which is Diamonds14% 3% 9% PapuaEurope New Guinea16% 3% Bahrain 15% a joint venture between15% Tronox Western Australia Pty Ltd., Nickel 5% South Korea 16% 2% Russia 2% 6% a subsidiary of Tronox Incorporated,USA and the5% subsidiaries 175 Alumina 4% Singapore 9% China 17% 39% 6% of Australian-based53% Ticor ResourcesOther Pty Ltd.4% These two 11% UAE 13% Other 6% producers account for aroundChina 90 per cent (by value)4% of all 15% 8% 2% 16% 23% Western Australian heavy mineralOther sands sold in4% 2005–06. Mozambique 11% 8% 5% 150 10% Iluka’s operations include YoganupIndonesia Extended, Yoganup4% Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06CanadaJun-06 10% USA 7% Petroleum 35% LNG 11% Figure 31 NickelWest Exports and the Wagerup minesNew as Zealandwell as two dry2% separation 13% 2% Others 8% Condensate 6% 3%Total Vplantsalue $2.96 and a billion synthetic Sour rutilece: DoIR processing plant located at Figure 41 Heavy Mineral Sands Other 3% 5% North Capel and Capel in the southwest of the State. Capel 17% Figure 46 Royalty Receipts 2005-06Alumina Sour c10e: DoIR% Natural Gas 2% Value by Quarter Source: DoIR Gold 8% Crude Oil 14% is about 200 kilometres south of Perth and processed Iron Ore 30% LPG – Butane and Propane 2% product is shipped through the nearby Port of Bunbury. Figure 11 Petroleum Exports Figure 27 Alumina Exports Nickel 9% The new Waroona mine, approximately 140 kilometres Total VNarngulualue $10.9 is billionthe processing Source: DoIR centre and AB forS Iluka’s operations in Total Value $3.75 billion Source: DoIR the Mid West and is located on the outskirts of Geraldton, south of Perth, covers approximately 180 hectares of Value by Commodity 2005–06 Source: DoIR Figure 4 410 kilometres north of Perth. Titanium minerals and land and has an expected mine life of four years with zircon from the Eneabba (260 kilometres north of Perth) construction already started in August and mining to and Gingin (80 kilometres north of Perth) mine sites are commence in early 2007. Dry mining techniques will A$ million processed at Narngulu before they are exported through also be used at Waroona. 2,000 the Geraldton Port. The processing facilities consist of a TiWest’s Cooljarloo mine is situated approximately 2% Gold dry separation plant, zircon finishing plant and a synthetic 170 kilometres north of Perth. Ore is processed through 1,800 4% 2% rutile processing plant. Japan 16% concentrators before being10% transported in specially 16% 1,600 Nickel 9% 7% South Korea 2% Government approvals were Papuagiven forNew Iluka Guinea to develop7% designed road trains from the mine4% site at Cooljarloo to the dry mill, 110 kilometres to the south, at Chandala.Thailand 10% 1,400 Alumina two new mine sites in 2006. CatabySouth Kor approvalea was25% received 4% The39% Chandala complex includes three major Singaporplants –e a dry 4% 1,200 in April and Waroona in August 2006. Cataby is located 7% Other 2% Diamonds approximately 150 kilometres north of Perth and covers mill, which separates the minerals, a syntheticUnited rutile Kingdom plant, 33% 1,000 South Africa 3% a mineral resource approximately 25 kilometres long. It which upgrades ilmenite into high quality titanium dioxide Iron Ore 10% Vietnam 3% TWI800 Yen US$ Euro Index Singapore A$ per18% boe pigment feedstock, and a waste management plant. Using has an expected mine life of five years with 13 pits being Other 4% Petroleum mined progressively by dry miningThailand techniques 10% using a technology developed in Western 33%Australia – the Improved 90600 0.90 240 80 Japan 5% TWI A$ combination of scrapers, front-end loaders, excavatorsWA Natural GasBecher Process – Tiwest upgrades the titanium dioxide 400 Yen Other 25% China 4% Brent Oil 85 0.85 220 SDR and haul trucks. Construction is to commence in late 2006 content in ilmenite from an average 61 per centIndia to at least 39% US$ US$ Indonesia 70 9% Henry Hub Gas 200 Euro 18% Victoria Bass Strait93 per Gas cent in synthetic rutile. 80 0.80 with production planned for late 2007. 200 New Zealand 4% 0 LNG FOB net 5% 60 4% 75 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 0.752002-03 2005-06 USA 2% 3% 180 3% 2% 24 50 25 70 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 0.70 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 160 Figure 48 Royalty Receipts by Commodity Source: DoIR Figure 38 Gold Exports 65 0.65 Figure 12 Crude Oil and Condensate Exports 40 Total Value $3.57 billion Source: DoIR and ABS 140 Total Value $5.3 billion Source: ABS 60 0.60 30 120 55 0.55 20 100 50 0.50 10 45 0.45 80

900 410 A$/oz 650 70 27.5 US$/oz 850 65 390 600 25.0 800 60 370 750 550 22.5 A$ 55 US$ A$/oz 700 US$/oz

350 500 $ Thousand 50 20.0 650 330 450 45 600 17.5 310 400 550 40

15.0 290 500 350 35 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06

Figure 32 Nickel Price A$/tonne Source: ABS Figure 28 Alumina Price A$/tonne Figure 35 Gold Price Source: Perth Mint and London Fix Figure 14 Tapis Crude Oil Price US$/bbl Source: LME Cash, Monthly Average Source: WA Treasury Corporation 2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

900 100 Average Landed Cost of Crude Oil Imports from all OPEC Countries Not all synthetic rutile from Chandala is exported. TZI’s Mineral Sands Annual Review 2006 also reports Real Oil Price April 2006 = 100 800 90 A large quantity is railed to Tiwest’s Kwinana pigment that global demand forUS$ titanium feedstock is forecast to OPEC cuts prices plant where it is transformed into pure white pigment, increase to 5.64 millionA$ TiO2 units in 2006 and is expected 700 80 TiO2, which is used as a commercial colouring agent and to rise to 6.00 million TiO2 units by 2008. In contrast to the coating material. The Kwinana facility is a cogeneration previous two years, during which feedstocks were in short 70

600 el plant, where a gas turbine generates electricity and the supply, supply and demand in 2005 was close to being Iranian revolution and 60 OPEC price rise exhaust gases, which would in the past have been vented balanced. This500 is a temporary situation that will be reversed into the atmosphere, are used to raise steam for use in the over the next three years. Overall pricing was expected to 50 Iraq invades Kuwait pigment plant. The plant generates all of Tiwest’s power remain flat in400 2007, but to regain momentum in 2008. Demand, weather, OPEC requirements, plus surplus electricity for the South West 40 TZI also stated300 that for the third successive year the world OPEC embargo Interconnecting Grid. US Dollars per barr market was undersupplied with an estimated 17 000- 30 Bemax Resources Limited through its wholly owned 200 tonne deficit of zircon. Stocks were to have fallen to record 20 subsidiaries that make up the Cable Sands Group are low levels, well below what would be considered as an the next largest operator with its Ludlow and Tutanup acceptable working100 stock level for the industry. With new 10 South mines. Cable Sands’ Bunbury Mineral Separation zircon supply only0 set to enter the market from late 2006, Plant (MSP) treats feedstock from the company’s own 0 tight market conditionsJan–71 Jan–74 wereJan–77 forecastJan–80 duringJan–83 the nextJan–86 two Jan–89 Jan–92 Jan–95 Jan–98 Jan–01 Jan–04

mines as well as on a toll treatment basis for a number of years. Jan-70 Jan-71 Jan-72 Jan-73 Jan-74 Jan-75 Jan-76 Jan-77 Jan-78 Jan-79 Jan-80 Jan-81 Jan-82 Jan-83 Jan-84 Jan-85 Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 customers. During 2005, the MSP underwent a $6-million Figure 39 Historic Gold Price US$/A$ per ounce Source: World Gold Council upgrade to allow it to simultaneously process feedstock The development of supply deficits since 2003 has had a Figure 15 Historic Oil Prices Source: Energy Information Administration, US Department of Energy; DoIR significant impact on zircon pricing. The average Australian from both its Western Australian and Murray Basin operations in South Australia. export price for bulk zircon sand in 2005 was US$630 per tonne (fob) and represented the seventh successive year of Doral Mineral Sands Pty Ltd is the smallest of the Western nominal and real price increases. Australian mineral sands producers located at Dardanup 110 1.00 and Picton some 20 kilometres and 10 kilometres east of Bunbury. The company is a wholly owned subsidiary of 0.95 Perth-based Doral Mineral Industries Limited, itself an 105 0.90 unlisted public company owned by Iwatani International 0.85 33% 33% Corporation of Japan. Ore at Dardanup is concentrated 0.80 and trucked nine kilometres to the continuously operated 100 0.75 Picton dry separation plant. Product is then exported from the nearby Bunbury Port. 0.70

95 A$ 0.65 It should be noted that not all heavy mineral sands mined comes under the Mining Act 1978. Some product is mined 0.60 90 from land granted to private individuals prior to 1899 and as 0.55 A$ Index (2000–01 = 100) such is not reported to the Department. 0.50 67% 67% Rest of Australia 33% Rest of Australia 33% TZ Minerals International Pty Ltd (TZI) reports that 85 0.45 Western Australia 67% Western Australia 67% internationally, major cost increases, particularly 0.40 higher energy and raw material costs, have led to little 80 0.35 Figure 20 Crude Oil and Condensate Production 2005–06 improvement in pigment prices in most regions for the first Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 Figure 21 Natural Gas Production 2005–06 Source: ABARE (Data included LNG feedstock) Source: ABARE half of 2006. However, most producers reported increases in sale volumes for the first six months and remain Figure 42 Heavy Mineral Sands Price Index Figure 23 Iron Ore Price A$/Fe unit optimistic for the remainder of the year. Source: WA Treasury Source: Tex Report, High Grade Fine Ore Prices

1200 350 Rest of Australia Rest of Australia Western Australia Western Australia 300 1000

250 800

200 600

$ million tonnes 150

400 100

200 50

0 0 1957 1965 1973 1981 1989 1997 2005 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Figure 43 Heavy Mineral Sands Value of Production Figure 37 Gold Production Source: DoIR and ABARE Includes Ilmenite, Leucoxene, Upgraded Ilmenite, Rutile, Zircon and Monazite Source: DoIR and ABARE 26 27 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

65 20 000 1400 1400 Rest of Australia Rest of Australia Rest of Australia Western Australia Western Australia 18 000 Western Australia 1200 1200 64 16 000

14 000 1000 1000

63 12 000

n n 800 n 800 10 000

$ millio $ millio 600 $ millio 600 62 8000 (May 1970 = 100) 6000 400 400

61 4000 200 200 2000

60 0 0 0 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06 1996–97 1999–00 2002–03 2005–06

Figure 9 Exchange Rate Trade Weighted Index Figure 3 Mining Investment Source: ABS Figure 2 Mineral Exploration Expenditure Figure 1 Petroleum Exploration Expenditure (units of foreign currency per A$) Source: ABS Source: ABS Source: Reserve Bank of Australia

0.80 100% Other 75 South Africa A$ 11.4% 9.6% 9.2% 6.5% 65 5.3% 3.8% India US$ Brazil 55 80% Australia 0.75 15.6% 18.3% 20.2% 21.8% 24.1% 24.9% 45

35 60% 21.1% 26.5% 26.7% 25.9% 22.1% 19.9% 0.70 25 US$

% Change 15 40% 5 0.65 46.8% 41.1% 38.4% 39.3% 37.6% 40.7% -5 20% -15

0.60 -25 Oil Iron Ore Nickel Cobalt Gold Copper Lead Zinc Jul–03 Jan–04 Jul–04 Jan–05 Jul–05 Jan–06 Jul–06 0% 2000 2001 2002 2003 2004 2005 Lump

2.9 Diamonds 2.10 Other minerals Rio Rinto’s Argyle mine, 112 kilometres south-southwest of COAL Kununurra, accounts for the bulk of diamond production in All of Western Australia’s coal supplies are sold Western Australia and in 2005–06 produced a little over 25 domestically from Collie coal mines to Western Power million carats. Cyclonic conditions hampered production Corporation and other large local energy users, mainly creating flooding in the March quarter. in the mineral-processing sector. Collie is located 50 kilometres inland from the coastal city of Bunbury, itself Argyle commenced mining its main ore body in 1985 150 kilometres south of Perth. In 2005–06, the value of coal and since that time has produced over 670 million carats increased by nine per cent to reach $297 million, whilst of diamonds. The open pit resource is in decline and volumes rose by seven per cent to 6.7 million tonnes. projected to be exhausted by around 2008 when plans are in place to go underground. In December 2005 Rio Tinto About 90 per cent of Collie coal is used as thermal coal, announced its decision to develop the underground project mostly in power stations and the majority of the remainder at the Argyle diamond mine with an additional US$150 is used metallurgically by the mineral sands industry to million to be spent on a related open pit cutback. This will reduce ilmenite to synthetic rutile. A small quantity is used extend the life of the operation to 2018. to reduce silica sand to silicon metal. The Argyle mine is famous for its pink diamonds and In August 2005, Wesfarmers Premier Coal Limited was produces around 90 per cent of the world’s production. successful in its bid to supply Western Power Corporation’s It also accounts for the majority of natural-coloured long-term coal requirements from 2010 to 2030 for its diamonds in the market. The colour range includes white, coal-fired power stations at Collie in Western Australia. champagne and pink. Argyle production consists of five This contract will underpin the long-term future of the per cent gem and 70 per cent near gem with the remaining Premier coal mine for Wesfarmers. 25 per cent of the volume being industrial diamonds.

The other Western Australian coal producer, Griffin Coal, The Kimberley Diamond Company with its Ellendale commenced construction earlier this year on the State’s mine, 100 kilometres east of the coastal town of Derby first privately funded, owned and operated coal-fired (2000 kilometres north of Perth), is the State’s only other power station, Bluewaters I. All Government, community, producing diamond mine. Since mining began in mid- environmental and regulatory approvals for the $400- 2002 the company has produced and sold 396 568 carats million, 208-megawatt project have been received. Griffin worth $107 million. Expansions and upgrades will increase was also nominated as the preferred supplier of power Ellendale’s total processing capacity to more than 8.3 for the recently approved upgrade of the Boddington gold million tonnes per annum, from mid-2006 raising the mine. Griffin is planning to combine the construction of company’s annual production to more than 700 000 carats both Bluewaters I and Bluewaters II. per annum. Western Power Corporation will commence work in Although the abnormally wet weather impinged on October 2006 to connect Griffin Coal to the South West operations at Ellendale by closing the Gibb River Road Interconnected System and upgrade the distribution line (the only access road to the mine site) between January between Collie and Boddington. This upgrade is scheduled and April 2006, production during 2005–06 was in excess to be completed in 2008, the same year the mine is of 152 000 carats. Sales exceeded 146 000 carats and expected to open and the Bluewaters power station will averaged US$174 per carat. Mining operations returned be operational. to normal during June where record throughput was achieved. Ellendale has a projected mine life to 2014. Both coal producers are also examining other areas where they can expand the market for coal with coal carbonising Gem diamonds share the podium with gold as a luxury projects whereby coal is transformed into a higher value commodity, principally in diamond rings to mark product known as carbonised coal or char. engagements and the special anniversaries of life and in other jewellery. Industrial diamonds have an important A possible new development in the Mid West region of the role as abrasives in sanding discs, circular saws, drilling State is Aviva Corporation Ltd’s Central West coal project bits and other machining processes. near Eneabba, 270 kilometres north of Perth. Aviva plans to capitalise on the energy needs of the new Mid West iron ore producers and associated industrial and port infrastructure. A mining pre-feasibility study has been carried out including an iron-making scenario which includes capital costs for a coal preparation plant.

26 27 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 2. MINERALS AND PETROLEUM INDUSTRY 2005–06 REVIEW

SALT During 2005–06, Western Australia had two principal tantalum producers, Sons of Gwalia Limited Western Australia accounts for approximately 93 per (Administrators Appointed) (SOG) and Haddington cent of the nation’s salt production and is the country’s Resources. dominant exporter. In 2005–06 Western Australian salt sales fell by six per cent to 10.8 million tonnes. However In August 2004, SOG went into voluntary administration buoyant prices saw the value rise by 13 per cent to $230 and since then the tantalite market has continued to million. Japan accounts for around 35 per cent of the undergo major structural change. There has also been State’s exported salt, Taiwan 17 per cent, Indonesia and a downturn in the demand for tantalite with resultant China import 15 per cent each, South Korea 13 per cent depressed raw material price. and other countries six per cent. SOG announced in February 2006 that it would undertake Dampier Salt Limited, with its Dampier, Port Hedland an operational restructure following recent agreements and Lake McLeod operations located in the Pilbara region, reached with its two major customers for reduced sales accounts for 75 per cent of the total salt produced in volumes in return for, amongst other things, production Western Australia. and product specification flexibility. The restructure will maximise tantalum production at the Wodgina mine which Onslow Salt Pty Ltd’s operation at Onslow (approximately is located 100 kilometres south of Port Hedland. The 1000 kilometres north of Perth) is the next largest Greenbushes open cut operation, located 67 kilometres operation. The Shark Bay Joint Venture at Useless Loop southeast of Bunbury, would operate on reduced (which commenced operations in 1968) and the WA Salt tonnages and the underground tantalum operation will Supply’s Lake Deborah East (at Koolyanobbing) and Pink be put on “care and maintenance”. Lithium production at Lake (at Esperance) operations make up the smaller Greenbushes will continue at capacity. producers. The Greenbushes and Wodgina mines together contain A potential new entrant into Western Australia’s solar salt approximately 75 per cent of the world’s defined tantalum industry is Straits Resources with its Yannarie project near reserves and currently supply more than half of the world’s Exmouth Gulf. Should approvals be granted, construction demand for tantalum. Both mines have a projected life in could commence some time in 2007 with salt production excess of 25 years. SOG has two long-standing tantalum to follow around 2008–09. customers, Cabot Corporation of the USA and HC Starck, a division of the Bayer Group of Germany. The company Salt is primarily used as a feedstock for the production has sold all of its production to these two customers since of chemicals, glass and plastic. In the context of growing 1991. demand from Asia, demand for salt is likely to continue to increase. Western Australian salt producers are therefore Tantalum production was also sourced from Haddington well placed, due to their proximity to the Asian markets, Resources’ Bald Hill project in Western Australia’s eastern particularly in the context of rising freight rates for low- goldfields. Haddington Resources operated Bald Hill value bulk commodities. under a licence agreement with SOG which had purchased concentrate under a take-or-pay licence agreement. This TIN, TANTALUM AND LITHIUM agreement expired at the end of March 2006 and the Bald Tantalum is a rare, grey-blue metal used primarily in the Hill process plant will remain under care and maintenance electronics industry in the manufacture of capacitors and until new customers for future production are found. therefore found in many every day devices such as mobile Current operating costs and ore grades at Bald Hill are phones, lap-top computers and video cameras. Another uneconomic at current concentrate prices. increasing application for tantalum is as an alloy in the manufacture of turbine blades for power stations and jet Greenbushes also contains the largest hard rock, lithium engines, where tantalum improves the structural integrity mineral resource in the world and SOG is the world’s of blades at high temperatures, enabling turbines to largest producer of lithium minerals (spodumene) operate at higher temperatures, thereby improving fuel accounting for around 60 per cent of the world’s supply. efficiency. Lithium minerals are used in the glass and ceramics industries to improve product quality and enhance physical There is little public information on the tantalum market properties. and tantalum pricing. However, it appears that prices are currently depressed for raw material. Difficulty in establishing a price for tantalum is compounded by the many different types and grades of tantalum raw materials, all of which have implications for the refining process.

28 29 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 MANGANESE Another manganese benchmark price for 2006–07 was announced in December 2005 as US$3.00 per dry metric Consolidated Minerals’ Woodie Woodie mine is the State’s tonne unit. While off the extraordinary highs of 2005–06, sole producing manganese mine. During 2005–06, it it is 33 per cent more than the average price of US$2.25 reported production of 888 432 tonnes (up 46 per cent per dry metric tonne unit during the previous ten years on 2004–05) for an estimated value of $118 million. Long- and reflects underlying strong world demand for raw term production levels of one million tonnes per annum steel-making materials. US$/Gj are targetedUS$/G forj the future. 8.5 14 Woodie Woodie is recognised worldwide as a supplier of Reports from the Australian Stock Exchange and Australia to Japan Taiwan reliable high-grade, low impurity manganese ore. Located Qatar to Japan International ManganeseUS Institute show that the 8.0 300 kilometres southeast of Port Hedland in the Pilbara Average Japan benchmark12 price forFr anmanganesece ore into Japan (concluded region, the open cut mine was first established in 1954 with Australia to Taiwan between BHP BillitonSpain and Nippon Steel) were settled with South Korea production peaking around 1970. It continued operating 7.5 a price increase of 63 per cent to apply to shipments from 10 Japan until 1982 when it closed for a period of some seven years. April 2005 to March 2006. This reflected record levels of The mine re-opened again in 1989 and currently exports to 7.0 demand for, and price of, carbon–steel products. The around nine different countries. The company has long- increase brought the benchmark price for manganese ore 8 term sales agreements in place with China and Europe into line with the quarterly manganese prices achieved by 6.5 covering more than 75 per cent of its annual production. Consolidated Minerals during 2004 and also supported Annual sales contracts are also negotiated with Japan, Consolidated’s6 ongoing quarterly price negotiations under 6.0 South Korea and Taiwan. China took around 70 per cent its long-term supply contracts with China and Europe. of the total Western Australian manganese exports for 4 5.5 2005–06 and Australia is its leading supplier.

5.0 2 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06

Figure 17 LNG Import Prices Source: Argus Monthly LNG Figure 18 Average LNG Import Prices Source: Argus Monthly LNG

US$/Gj

16 Alumina Western Australia Henry Hub UK Diamonds Rest of Australia Europe Rest of World WA domgas Gold 12 East Coast domgas Ilmenite

Iron ore

8 LNG

Nickel

Rutile

4 Salt

Tantalum

Zircon 0 Feb–05 May–05 Aug–05 Nov–05 Feb–06 May–06 Aug–06 0 20 40 60 80 100

Figure 19 Average Natural Gas Prices Source: Argus Monthly LNG, EnergyQuest, DoIR Figure 44 Selected WA Commodities Relative to World Production Ending 2005 by Quantity Source: DoIR, ABARE, USGS

The latest comparable data show that the Western Australian share (by quantity) of the world’s output of the following products was: alumina 17%, gold 7%, ilmenite 18%, iron ore 18%, LNG (sea borne trade) 8%, nickel 15%, rutile 26%, salt 5%, tantalum 54%, zircon 32% and 18% of diamonds (mainly industrial grade) Iron Ore

Crude Oil & Condensate 2005–06

LNG 2004–05

Alumina

Nickel

28 Gold 29 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06

Natural Gas & LPG

Heavy Mineral Sands

Base Metals

Coal

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10,000 11,000 12,000 13,000 $Million

Figure 5 Major Commodities by Value Source: DoIR 5.8 2750 60 1300 3.1 1200 50 1000 3.1 1200 5.8 2750 60 1300 50 1000 Quantity Quantity Quantity Quantity 5.4 VaQuantitylue 2500 VaQuantitlue y VaQuantitlue y 3.0 VaQuantitlue y 1100 5.4 Value 2500 55 Value 1200 Value Value 55 1200 3.0 1100 45 900 5.0 2250 45 900 5.0 2250 50 1100 2.9 1000 50 1100 2.9 1000 4.6 2000 es 4.6 2000 2.8 es 900 45 1000 40 800 3. ROYALTIES AND EMPLOYMENT 45 nnes 2.8 900 1000 $ million 40 800 $ million To $ million Million tonnes $ million 4.2 1750 nnes Gigalitr $ million $ million

4.2 1750 To $ million Million tonnes $ million Gigalitr Thousand tonnes 40 900 2.7 800 3.8 1500 Thousand tonnes 40 900 2.7 800 3.8 1500 35 700 Total royalties received from mineral and petroleum RMS has been in operation for several years and new 35 700 2.6 35 800 producers within Western Australia passed the $2 billion 700system improvements are aimed at encouraging industry 3.4 1250 35 800 2.6 700 3.4 1250 mark for the first time with $2.09 billion collected during to lodge and pay royalties online. The system’s forecasting the 2005–20062.5 financial year. 600capabilities are currently being upgraded to address the 3.0 1000 30 700 30 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 2.5 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 600 3.0 1000 30 700 30 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 600 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Government’s requirements for timely and accurate details Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 The $2.09 billion includes royalties collected on behalf for use in its planning for future expenditures on such Figure 29 Alumina Quantity and Value Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Gold Quantity and Value of the Commonwealth from the NWS project (where the items as public utilities and infrastructure. Figure 13 Crude Oil and Condensate Figure 33 Nickel Quantity and Value Figure 36 Figure 29 Alumina Quantity and Value Quantity and Value by Quarter by Quarter Source: DoIR Figure 36 Gold Quantity and Value State receives 60 to 68 per centby Quarter of royalties) Source : andDoIR royalties by Quarter Source: DoIR by Quarter Source: DoIR QuantitySource: DoIR and Value by Quarter by Quarter Source: DoIR by Quarter Source: DoIR Source: DoIR which are collected from the Territorial Sea subsisting With increased economic activity from emerging countries permit areas and Barrow Island, that are shared with the such as China and India and continued strong prices, Commonwealth. royalty collections are expected to remain above $2 billion for a number of years. 70 3750 200 18 The Western Australian share of actual royalties paid into 70 3750 200 Rest of Australia 18 Rest of Australia Quantity the ConsolidatedRest of Australia Revenue Fund amounted to $1.7 billion The Department of Industry and Resources’ mining 3500 WeReststern of Australia Australia Western Australia VaQuantitylue in 2005–06.Western Australia employment statistics are compiled from information Value 3500 Western Australia 15 65 3250 160 15 provided by the Department of Consumer and Employment 65 3250 160 Increased international oil prices meant the bulk of Protection. This information comes from monthly industry 3000 12 collections came from the petroleum industry with about returns supplied for the purpose of monitoring the number 3000 12 half of all royalties coming from the North West Shelf and nature of workplace accidents. The employment 60 120 60 2750 120 Project. Although the mineral industry had several high figures published reflect the average number of workers 2750 9 performers in gold, nickel and diamonds, a third of all on the mine sites including contract workers.

2500 $ million 9 Million tonnes

Million tonnes tonnes Thousand royalty collections came from the iron ore industry which 55 2500 $ million Million tonnes Million tonnes 55 tonnes Thousand 80 2250 80 benefited from a 71 per cent price increase in 2005. Petroleum employment data is provided by each producer 2250 6 directly to DoIR and reflects the average number of 6 50 2000 This trend in iron ore is likely to continue into the future employees (including contractors) working on site. In the 50 2000 40 with prices increasing again by 19 per cent this year and case of Chevron Australia Pty Ltd data reported includes 3 1750 40 BHP Billiton and Rio Tinto announcing major increases total average Western Australian employment whilst 1750 3 in production. Increased activity and a drive for greater Woodside Energy Limited figures are estimated as at 45 1500 45 Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 1500 0 0 efficiencies have been contributing factors for the recent 30 June 2006. Sep–04 Dec–04 Mar–05 Jun–05 Sep–05 Dec–05 Mar–06 Jun–06 0 1970 1975 1980 1985 1990 1995 2000 2005 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 1970 1975 1980 1985 1990 1995 2000 2005 1960Phase 31965 development1970 of the1975 Royalties1980 Management1985 1990 1995 2000 2005 Figure 24 Iron Ore Quantity and Value System (RMS) which administers royalty collections. Iron Ore Quantity and Value Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE Figure 24 by Quarter Source: DoIR Figure 34 Nickel Quantity Source: DoIR and ABARE Figure 30 Alumina Quantity Source: DoIR and ABARE by Quarter Source: DoIR

300 45 300 Rest of Australia 45 Rest of Australia WeReststern of Australia Australia 40 WeReststern of Australia Australia 12% Western Australia Western Australia 12% 250 40 250 23% 35 5% 23% 35 5% 200 30 200 30 Iron Ore 23% 25 Iron Ore 23% es Alumina 16% 25 16% 150 es Alumina 16% 150 16% Gold 20% 20 16% Gold 20% Million tonnes Million Gigalitr 20 16% Petroleum 8% Million tonnes Million Gigalitr Petroleum 8% 100 15 Nickel 16% 100 15 Nickel 16% 8% Heavy Minerals Sands 5% 10 8% Heavy Minerals Sands 5% 50 10 Other 12% 20% Other 12% 50 5 20% 5 0 0 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 1965 1970 1975 1980 1985 1990 1995 2000 2005 Figure 45 Minerals and Petroleum Employment 2005–06 Figure 45 61,278Minerals persons and Petr Sourolceeum: DOCEP Emp andlo ymentPetroleum 2005–0 Producing6 Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE 61,278 persons Source: DOCEP and Petroleum Producing Companies Figure 25 Iron Ore Quantity Source: DoIR and ABARE Figure 16 Crude Oil and Condensate Quantity Source: DoIR and ABARE

30 31 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 It is no coincidence that the mining and related industries The recent expansion of Western Australia’s resources of Western Australia have been among those most affected sector has involved the construction of new infrastructure, by skills shortages. The rapid and somewhat unexpected which has increased the state’s need for additional rise (at least in magnitude) in overseas demand for the building and engineering professionals, as well as State’s resource commodities, mainly from China and construction workers. ABS statistics show that from India, has meant that these industries have had to react 2001–02 to 2004–05, Western Australian heavy industry quickly to increase production capacity. In the process the engineering construction activity rose by $1423 million demand for skilled labour has also risen sharply. (145 per cent), from $985 million to $2408 million. Heavy industry engineering construction activity includes the Employment in the Western Australian mining and construction of production, storage and distribution petroleum industries increased by around 6030 persons facilities, refineries, pumping stations, mines, chemical (11 per cent) between 2004–05 and 2005–06 to reach a plants, blast furnaces, steel mills, other industrial 0.1% record 61 278. This represents 8 per cent of total full-time2% processing plants and ovens. 4% 10% China 12% employment in Western Australia. With the exception2% 2% 4% 12% of gold, which fell 4 per cent, the number of 6%persons Other statistics show that from 2001–02 to 2004–05 Japan 5% 6% Saudi Arabia 5% employed rose across all sectors. Iron ore, gold, nickel, engineers directlyPilbara associated with the65% mining industry 10% China 53% 5% 2% Netherlands 6% alumina and petroleum account for 8410% per cent of all direct – mining and materialsGoldfields–Esperan engineers ce– 13%increased by 935 Japan 29% 2% 5% Belgium 2% employment. persons (66 per Peelcent.) Civil engineers10 were% up by 987 South Korea 10% Spain 8% persons (36 per cent) and mechanical, production and Mid West 6% Taiwan 4% United Kingdom 11% Using a multiplier of between 3.5 and 4, the total number plant engineers up 641 persons (24 per cent). 53% 6% 65% Italy 8% of direct and indirect full-time employees associated Kimberley 2% Europe 4% 13% 2% Canada 2% with the resource sector, amounts to about 215 000. ABS labour forceSouth statistics West for the State2% indicate continuing 29% USA 0.1% 21% USA 21% This represents around 30 per cent of Western Australia’s tight labour supply,Other characterised by the2% small pool of 8% South Korea 2% full-time workforce in 2005–06. unemployed persons and historically high rates of labour Mexico 2% force participation. The Department of Treasury and Taiwan 6% 2% During 2005–06, there was strong employment growth Finance has forecast employment in Western Australia 8% 11% Other 10% in technical business services, such as surveying and to grow by two per cent in 2006–07 primarily based consultant engineering, much of which can be associated on an expectation that despite strong labour demand, with mining operations in the State. employment growth will be constrained over the next Figure 47 Regional Value of Minerals and Petroleum Source: DoIR Heavy Mineral Sands Exports few years by tight labour supply. Figure 22 Iron Ore Exports Figure 40 Total Value $12.73 billion Source: DoIR Total Value $646.35 million Source: DoIR

Figure 11 Petroleum Exports Figure 27 Alumina Exports Total Value $10.9 billion Source: DoIR and ABS Total Value $3.75 billion Source: DoIR

A$ million 2,000 2% Gold 1,800 4% 2% Japan 16% 10% 16% 1,600 Nickel 9% 7% South Korea 2% 30 31 Papua New Guinea 7% 4% WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Thailand 10% 1,400 Alumina South Korea 25% 4% 39% Singapore 4% 1,200 Other 2% Diamonds 7% United Kingdom 33% 1,000 South Africa 3% Iron Ore 10% Vietnam 3% 800 Singapore 18% Other 4% Petroleum Thailand 10% 33% 600 Japan 5% China 4% 400 Other 25% India 39% Indonesia 9% 200 18% New Zealand 4% 0 5% 4% 1984-85 1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06 USA 2% 3% 3% 2%

2004–05 2005–06 2004–05 2005–06 Commodity Unit Commodity Unit Quantity Value Quantity Value Quantity Value Quantity Value

ALUMINA t 11,162,619 (r) 3,461,633,038 (r) 11,466,687 4,111,251,807 IRON ORE

BASE METALS Domestic t 4,115,878 127,295,683 4,257,423 226,143,930

Copper Metal t 61,933 (r) 243,730,391 (r) 71,060 402,505,055 Exported t 229,035,568 8,175,039,902 239,279,346 12,730,182,523

Lead Metal t 2,324 (r) 313,649 (r) 58,739 86,549,244 TOTAL IRON ORE 233,151,446 8,302,335,585 243,536,769 12,956,326,453

Zinc Metal t 48,400 (r) 42,418,636 (r) 107,863 332,112,685 LIMESAND–LIMESTONE–DOLOMITE 4,001,157 (r) 38,753,542 (r) 3,908,057 37,933,674

TOTAL BASE METALS 286,462,676 (r) 821,166,984 MANGANESE ORE t 606,944 116,320,952 (r) 888,432 117,972,661

CHROMITE t 101,295 (r) 33,078,673 (r) 105,951 43,033,959 NICKEL INDUSTRY

CLAYS 1,658,835 1,800,645 Cobalt t 4,499 (r) 202,378,324 (r) 5,069 183,482,569

COAL t 6,275,622 (r) 271,715,240 (r) 6,711,155 297,367,332 Nickel t 180,420 (r) 3,503,195,015 (r) 191,161 3,785,533,927

CONSTRUCTION MATERIALS Palladium and Platinum By-Product kg 1,051 9,150,844 622 5,037,065

Aggregate t 430,979 (r) 4,069,958 (r) 932,280 22,472,730 TOTAL NICKEL INDUSTRY 3,714,724,183 (r) 3,974,053,561

Gravel t 303,086 (r) 1,044,043 (r) 96,825 537,828 PETROLEUM

Rock t 329,689 (r) 1,917,061 (r) 531,801 6,115,996 Condensate kl 5,628,746 2,203,113,669 (r) 5,626,187 2,791,727,182

Sand t 2,730,454 (r) 13,547,686 (r) 3,590,817 21,504,665 Crude Oil kl 12,768,567 5,146,612,371 (r) 11,552,543 6,157,571,570

TOTAL CONSTRUCTION MATERIALS 20,578,749 (r) 50,631,219 LNG t 11,037,572 (r) 3,953,102,751 (r) 11,679,836 4,902,655,166

DIAMONDS ct 22,799,773 (r) n/a 29,263,869 n/a LPG - Butane and Propane t 777,166 (r) 421,735,055 (r) 871,983 654,423,834

GEM & SEMI-PRECIOUS STONES kg 550,767 (r) n/a 235,257 n/a Natural Gas ‘000m3 7,642,801 678,722,971 7,713,414 703,282,553

TOTAL DIAMONDS, GEM 468,238,107 (r) 681,066,243 TOTAL PETROLEUM 12,403,286,817 (r) 15,209,660,305 & SEMI-PRECIOUS STONES SALT t 11,506,549 (r) 203,797,625 (r) 10,834,196 229,850,354 DIMENSION STONE t 4,521 854,816 1,851 745,591 SILICA–SILICA SAND 700,240 6,155,323 (r) 778,115 7,779,625 GOLD kg 167,354 (r) 3,016,377,032 (r) 161,060 3,573,957,898 (e) SILVER kg 108,616 (r) 34,140,716 (r) 100,258 35,819,470 GYPSUM t 1,407,689 (r) 23,724,041 (r) 1,578,206 26,485,751 TIN–TANTALUM–LITHIUM HEAVY MINERAL SANDS Spodumene t 108,804 (r) n/a (r) 193,229 n/a Garnet t 186,668 (r) n/a 278,576 n/a Tantalite t 1,063 n/a 871 n/a Ilmenite t 707,121 (r) 79,548,045 (r) 554,469 61,572,051 Tin Metal t 384 (r) 4,054,313 (r) 610 5,853,294 Leucoxene t 70,729 (r) 22,113,519 (r) 75,663 21,973,414 TOTAL TIN–TANTALUM–LITHIUM 184,027,435 (r) 170,457,141 Zircon t 420,039 (r) 298,369,892 (r) 371,559 326,604,041 OTHER (Includes Feldspar, Red Oxide, 17,160,929 13,432,566 Other 400,855,908 (r) 389,375,204 Spongolite, Talc and Vanadium)

TOTAL HEAVY MINERAL SANDS 800,887,364 (r) 799,524,710 TOTAL VALUE 33,405,911,679 (r) 43,160,317,948

Note: Quantities used in this table only apply to Minerals and Petroleum covered by the Mining Act 1978, the Petroleum Act 1967, the Petroleum (Submerged Lands) Act 1982 and relevant State Agreement Acts. (e) Estimate (r) Revised from previous edition n/a Breakdown of feldspar, garnet, red oxide, talc, spodumene, tantalite and vanadium not available

32 33 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 WESTERN AUSTRALIAN MINERAL AND PETROLEUM STATISTICS DIGEST 2005–06 Table 1 Quantity and Value of Minerals and Petroleum Table 1 Quantity and Value of Minerals and Petroleum