WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE June–August 2006 $3 (inc GST)
WA PORTS Vital infrastructure for Western Australia’s commodity exports LNG Keen interest in Browse Basin gas GOLD Major new development plans for Boddington IRON ORE Hope Downs project enters the fast lane Print post approved PP 665002/00062 approved Print post Jim Limerick DEPARTMENT OF INDUSTRY AND RESOURCES Investment Services 1 Adelaide Terrace East Perth, Western Australia 6004 Tel: +61 8 9222 3333 • Fax: +61 8 9222 3862 Email: [email protected] www.doir.wa.gov.au INTERNATIONAL OFFICES Europe European Office • 5th floor, Australia Centre From the Director General Corner of Strand and Melbourne Place London WC2B 4LG • UNITED KINGDOM Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637 Email: [email protected] Overseas trade and investment India — Mumbai In a rare get together, key people who facilitate business via the Western Australian Western Australian Trade Office 93 Jolly Maker Chambers No 2 Government’s overseas trade offices gathered in Perth recently to discuss ways to 9th floor, Nariman Point • Mumbai 400 021 INDIA maximise services for local and international businesses. Tel: +91 22 5630 3973/74/78 • Fax: +91 22 5630 3977 Email: [email protected] All of the Western Australian Government’s 14 overseas offices, with the exception of India — Chennai the USA, were represented by their regional directors. Western Australian Trade Office - Advisory Office 1 Doshi Regency • 876 Poonamallee High Road Kilpauk • Chennai 600 084 • INDIA The event was a huge success with delegates returning home with fresh ideas on how Tel: +91 44 2640 0407 • Fax: +91 44 2643 0064 to overcome impediments and develop and promote trade in, and investment from, their Email: [email protected] respective regions. Indonesia — Jakarta Western Australia Trade Office JI H R Rasuna Said Kav C15 - 16, Kuningan Western Australia is Australia’s largest export State, accounting for about one-third of Jakarta 12940 • INDONESIA the nation’s total exports. Tel: +62 21 5290 2860 • Fax: +62 21 5296 2722 Email: [email protected] While resource commodities dominate the State’s exports, other growth areas for 2006 Japan — Tokyo will include information communications and technology, which is expected to grow by Government of Western Australia, Tokyo Office 13th floor, Fukoku Seimei Building 4.3 per cent, mining services 4 per cent, tourism 3.5 per cent and environmental and 2-2-2 Uchisaiwai-cho Chyoda • TOKYO 100-0011 JAPAN defence industries each 3.3 per cent. Tel: +81 3 5157 8281 • Fax: +81 3 5157 8286 Email: [email protected] Japan — Kobe Our trade representatives in these and other countries are skilled professionals who Western Australian Government Office can assist with aspects of market intelligence and business matching. 6th floor, Golden Sun Building • 3-6 Nakayamate-dori 4-Chome Chuo-Ku • Kobe 650-0004 JAPAN Details of how to contact these people can be found on the right-hand side of this page. Tel: +81 78 242 7705 • Fax: +81 78 242 7707 Email: [email protected] Malaysia — Kuala Lumpar Western Australian Trade Office 4th floor, UBN Tower • 10 Jalan P Ramlee KUALA LUMPUR 50250 MALAYSIA Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177 Email: [email protected] Middle East — Dubai Western Australian Trade Office • Emarat Atrium PO Box 58007 • Dubai • UNITED ARAB EMIRATES Tel: +971 4 343 3226 • Fax: +971 4 343 3238 E-mail: [email protected] People’s Republic of China — Shanghai Western Australian Trade & Investment Promotion Shanghai Representative Office • Room 2208, CITIC Square 1168 Nanjing Road West • Shanghai 200041 PEOPLE’S REPUBLIC OF CHINA Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889 Email: [email protected] People’s Republic of China — Hangzhou Western Australian Trade & Investment Promotion Key people fostering WA trade in overseas markets: Front row (from left to right) Simon Johnson – Regional Director, India, Hangzhou Representative Office Jim Limerick –Director General, DoIR, Gary Stokes –Deputy Director General, Office of State Development, DoIR Second row Room 910 • World Trade Office Plaza (from left to right) Richard Muirhead – Chief Executive Officer, Tourism WA, Verghese Jacob – Regional Director, Malaysia, Noel Zhejiang World Trade Centre Ashcroft – Agent General, London (Europe office), Chris Heysen – Regional Director, United Arab Emirates Third row (from left to 15 Shuguang Road • Hangzhou 310007 right) BJ Zhuang – Regional Director, China , Sherry Lin – Senior Consultant Western Australian Trade Development, Hong Kong, PEOPLE’S REPUBLIC OF CHINA Pankaj Savara – Regional Marketing Manager, United Arab Emirates, Siraphop Apilertvorakorn – WA Business Development Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295 Manager, Thailand, Colin Slattery – General Manager, Market Development, International Market Development Division, DoIR Email: [email protected] Fourth row (from left to right) Young Yu – Regional Director, South Korea, Craig Peacock – Official Representative, North Asia, Martin Newbery – Regional Director, Indonesia, Brian Carew-Hopkins – Director, International Market Development Division, South Korea — Seoul DoIR, Nicholas Mackay – Senior Manager Western Australia, Taiwan Western Australian Trade & Investment Office 11th floor, Kyobo Building 1 Jongro 1-Ga, Jongro-Gu Seoul, SOUTH KOREA Prospect Cover photo: A heavily laden iron ore carrier exits Port Tel: +82 2 722 1217 • Fax: +82 2 722 1218 Western Australian Prospect magazine is published quarterly Hedland, which is currently Australia’s largest tonnage port. Email: [email protected] by the Western Australian Government’s Department of Industry and Resources (DoIR) and Ray Burns Media. Taiwan — Taipei Photo courtesy of BHP Billiton Iron Ore. WA Business Development Manager Editorial management: John Terrell, DoIR Communications Australian Commerce & Industry Office and Marketing. Tel: (08) 9222 3804 • Fax: (08) 9222 3069 Email: [email protected] Suite 2606, International Trade Building Advertising management: Ray Burns Media, #333 Keelung Road Section 1 • Taipei 110 TAIWAN PO Box 1230, South Perth Western Australia 6951 Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707 Tel: (08) 9227 6688 • Mobile: 0408 474 328 Email: [email protected] Email: [email protected] Thailand — Bangkok Disclaimer WA Business Development Manager Prospect has been compiled in good faith by the Departmentof Industry Department of Australian Trade Commission • Australian Embassy and Resources. Opinions expressed in Prospect are those of the authors and do not necessarily represent the views, or have the endorsement of Industry and Resources 37 South Sathorn Road • Bangkok 10120 • THAILAND the Department of Industry and Resources. The Department of Industry Tel: +662 344 6337 • Fax: +662 344 6360 and Resources has used all reasonable endeavours to ensure the material Email: [email protected] contained in this publication is correct, but it is intended to be general in www.doir.wa.gov.au nature. No representation is made with regard to the completeness or United States — Los Angeles accuracy of the information contained herein. The Department of Industry Western Australian Trade and & Investment Office and Resources disclaims any or all liability for loss or damage whatsoever suffered or incurred resulting from the use of or reliance on information Howard Hughes Centre, 6080 Centre Drive, 6th Floor contained herein. Readers of this publication should make and rely Los Angeles, CA 90045 USA on their own enquiries, research and judgements in making decisions affecting their own or any other person’s interest. Tel: +1 310 216 2827 • Fax: +1 310 216 5632 Email: [email protected] 2 Gold — A go-ahead is given for the $1.8 billion to $2 billion deep development of the Boddington gold mine.
3 LNG — First supplies of Western Australian liquefied natural gas arrive in China.
4 Ethanol — Australia’s first wheat-based ethanol plant, worth about $100 million, could be operating at Kwinana by early 2008.
5 Gas — Renewed interest in monetising the vast offshore gas resources of the Browse Basin.
6 - 16 WA PORTS FEATURE
20 Iron ore — Fast-track plans for the $1.5 billion Hope Downs iron ore project.
22 Mine safety — Worldwide interest in Western Australian-designed and built underground mine rescue chambers.
24 Oil receival facility — Roc Oil links up with Kwinana oil refinery to offload crude oil from its Cliff Head oil field.
25 Record year — Western Australia’s mineral and petroleum output hits a new record of $38.9 billion in 2005.
PORTS — key infrastructure for resources This edition of Prospect takes a look at port infrastructure and its vital link to resources development in Western Australia. Boddington bubbles with excitement
By John Terrell
Department of Industry and Resources
An air of excitement has enveloped the South West town of Boddington since a commitment was given in late February to develop the deeper ore bodies of the Boddington gold mine.
The CEO of the Shire of Boddington, Peter Bradbrook, said local business confidence had risen sharply, and the council was hiring new staff to cope with new housing and infrastructure requirements.
“It is definitely an exciting new time in the history of Boddington,” Mr Bradbrook said.
“We saw the local hardware shop double in size in anticipation of a go-ahead announcement. Applications have been received to establish a pharmacy in Boddington, a new crane hire business has started up, while numerous other commercial queries have also been Going deeper: The Boddington open cut, from which 4.7 million ounces of gold and 6572 tonnes of copper have so far been received.” produced. The deep mining phase is planned to reap more than 11 million ounces of gold and about 200,000 tonnes of copper concentrates per year over a new 15-year mine life. The town’s population of about 1500 is expected to grow another 1000 by Murray & Roberts, was awarded a The operation, which is 66.67 per cent the time the new mine development contract worth $111 million for the owned by Newmont and 33.33 per cent by commences production in late 2008. engineering design, procurement and AngloGold, is expected to produce more This would include a permanent mine construction maintenance phase of the than one million ounces of gold annually workforce of about 650, plus another 350 project. This followed the successful for the first five years, and a total of more ancillary services workers. completion of a pre-engineering contract than 11 million ounces over a 15-year worth $4 million. mine life, with the potential to extend. “We expect that between 300 and 350 new There has been a hiatus in mining at houses will be established in Boddington On top of that, an estimated 200,000 Boddington since the original oxide over the next three to five years,” tonnes of copper concentrate will be Mr Bradbrook told Prospect magazine. gold orebody was worked out, and the operation shifted to a care-and- produced from Boddington annually. On top of that, a 1000-person maintenance phase in December 2001. Resources Minister John Bowler said accommodation village will be that Boddington, along with other established to house the bulk of the The new $1.8 billion to $2 billion flourishing gold mining activity in construction workforce. Boddington development will see the mining and processing of gold and copper Western Australia, could push Australian In April, global engineering firm Aker rich basement rock beneath the existing gold production ahead of rival South Kvaerner, in joint venture with Clough oxide pits. Africa in the next few years.
2 Prospect Australia’s first LNG supplies land safely in China
In an historic moment for Australian “The North West Shelf Venture is proud Premier Carpenter said the LNG supply trade, the first commercial cargo of to have been selected by the People’s agreement also cemented the State’s liquefied natural gas arrived safely Republic of China as the preferred position as Australia’s leading exporter, and on time at a purpose-built supplier of LNG to China’s first LNG with latest trade figures showing Western receival LNG terminal at Cheng project,” Dr Hamilton said. Australia’s share of the nation’s exports Tou Jiao, near Shenzhen, in China’s at 31.2 per cent. In October 2002 the North West Shelf Guangdong Province in late May. Venture and Guangdong Dapeng LNG “The sale of LNG to China is an The 125,000 cubic metre consignment Company Ltd signed a sales and outstanding example of government and aboard the North West Shelf Venture’s purchase agreement for the supply of industry working together to achieve a LNG carrier Northwest Seaeagle departed more than 3.3 million tonnes of LNG common goal,” he said. from the port of Dampier at 4.06 am on per year for 25 years. The deal is worth 18 May — without fanfare. about $25 billion. The Woodside-operated North West Shelf Venture is Australia’s largest resource However, the previous day dignitaries Much of the gas will be used for project, with investment in onshore and from around the country including electricity generation, as well as for offshore oil and gas facilities totalling the Acting Prime Minister Mark Vaile local reticulation networks for industrial, and Western Australian Premier Alan more than $19 billion. commercial and residential consumption Carpenter were on hand to witness the in Guangdong Province and Hong Kong. ship’s loading. The venture is owned by six companies The gas may eventually be used as a — Woodside, BHP Billiton, BP, Chevron, Woodside’s North West Shelf Ventures transport fuel. Director, Jack Hamilton, said loading Japan Australia LNG (MIMI) and of the inaugural cargo to China marked China is now Western Australia’s Shell. The China National Offshore Oil the official start of a 25-year trading second largest trading partner (behind Corporation (CNOOC) is also a member of relationship between partners in the Japan), and the LNG contract will NWS project and its newest customer, further strengthen the State’s expanding the venture, but does not have an interest Guangdong Dapeng LNG Company Ltd. economic relationship with China. in the infrastructure.
Historic shipment: Among dignitaries at Dampier to witness the loading of the first LNG tanker for China were the Acting Australian Prime Minister Mark Vail (left) and Woodside’s North West Shelf Ventures Director Dr Jack Hamilton (foreground).
3 Prospect Refining moments: BP to bring biofuels into the mainstream
Australia’s first wheat-based ethanol plant could be operational at Kwinana by early 2008, adding a new dimension to resources development in Western Australia.
The $100 million plant, to be built and operated by New South Wales-based Primary Energy Pty Ltd, will produce 80 million litres of ethanol a year to blend in a 10 per cent mix with petrol for use by Western Australian and potentially eastern States motorists.
The fuel, to be known as e10, will be sold in BP service stations.
Western Australia’s Minister for Energy Francis Logan described the proposed ethanol plant as the start of an exciting new era in the use of biofuels in Western Australia.
“Using wheat to make liquid fuel is no longer a notion confined to science- fiction stories or chemistry laboratories,” Mr Logan said. “This is now a real concept. Ethanol produced at this plant will be in our cars by 2008.”
The plant will need to go through the normal planning and environmental approvals before construction can begin, but BP Australia is expecting that the plant will be up and running by early 2008.
The project will generate 35 direct jobs, 200 indirect jobs and 500 jobs during an 18-20 month construction phase.
Ethanol is a fermented renewable fuel produced from crops such as wheat and sugar. It is gaining widespread acceptance around the world in countries where it is blended with petrol for use as e10 biofuel: By 2008 Australian motorists will be able to fill up their cars with a 10 percent wheat-based ethanol—90 per a fuel. cent petrol mix at BP service stations. The first supplies of these fuels will be produced at BP’s Kwinana refinery.
In the United States it is now contained equivalent of removing 44,000 cars from tonnes of lower grade wheats, he said. in about 30 per cent of all petrol sold. our roads. This makes it an attractive proposition Other countries including Canada, Brazil, for farmers, providing another market for China, India and the European Union Mr Logan said that as a major grain their produce. are also increasing their use of ethanol producer, Western Australia was in a blends. prime position to use wheat for Mr Logan said the project would be the production of ethanol as an largely energy self-sufficient. Any excess BP Australia says the project will energy source. result in a 200,000 tonne reduction in electricity could be exported to the greenhouse gases each year — the The process will use about 200,000 South-West power grid.
4 Prospect From just browsing to some serious swot on Browse Basin
Pushed into the background for appraisal wells and undertake more most of the last 35 years, the concept definition studies this year. gas–condensate resources of the Ichthys Woodside is optimistic that it can deliver Scott Reef (Torosa) Browse Basin off Western Australia’s Brecknock its first cargo of Browse Basin LNG in Brecknock South (Calliance) Kimberley coast, are now the subject 2011-14. It expects to be able to make a of some earnest re-evaluation final investment decision in 2008-10. Derby by petroleum companies such as Broome Woodside and Inpex. Meanwhile, Tokyo-based Inpex Holdings is eyeing the possibility of an $8 billion With the demand for liquefied natural gas LNG export project involving its Ichthys (LNG) growing strongly — forecasters gas field, located near the Woodside are estimating a global shortage of about fields. 100 million tonnes by 2015 — renewed interest in the Browse Basin could see Ichthys, with a resource of about 10 one of Australia’s almost forgotten trillion cubic feet of recoverable gas, petroleum treasures developed within the could produce up to 6 Mt/a of LNG for the next few years. Japanese market.
Located offshore from Derby, the Inpex says it would prefer to be the Browse Basin is already known to hold sole owner/operator of any future development, but would never rule Bounty below: The aptly named floating drilling rig Ocean more than 30 trillion cubic feet of gas, Bounty which intercepted commercial quantities of gas and sufficient to provide more than 600 Mt out joint venture participation with a condensate during an exploration and appraisal campaign at of LNG. neighbour or an outside investor. Ichthys in the Browse in 2003 and early 2004.
About two-thirds of these resources are controlled by Woodside and its joint venture partners in the Scott Reef, Brecknock and Brecknock South fields.
Woodside discovered gas and condensate at Scott Reef (now known as Torosa) in 1971, the same year as it found North Rankin and Goodwyn in the adjacent offshore Carnarvon Basin. However, the company opted to develop North Rankin first because it was closer to markets in the southwest of the State.
Torosa and the nearby Brecknock (discovered in 1979) and Brecknock South (discovered in 2000 and now known as Calliance) have combined “estimated contingent resources” of more than 20 trillion cubic feet of gas and 300 million barrels of condensate.
Woodside is currently investigating a range of options for a large-scale LNG export operation, costing many billions of dollars. Options under the microscope include gravity-based and floating facilities in the case of an offshore development, the use of nearby islands or bringing the gas ashore for a North West Shelf-styled LNG processing and export facility. The company aims to drill a further four
5 Prospect – key infrastructure for resources
Western Australia is the The following feature provides nation’s largest export State, an insight into some of the and a major reason for this is resources-related activities at Broome the State’s ever–expanding these ports.
Port Headland resources industry. Dampier Port Hedland and Dampier are the largest and second largest tonnage ports in Australia, and have held these positions for Oakajee Geraldton many years.
Fremantle Altogether, there are eight Esperance Bunbury major ports along Western Albany Australia’s 12,500 km coastline, which collectively handle almost half of the nation’s exports by volume and almost 30 per cent by value.
6 Prospect Fremantle investigates island port facilities for Cockburn Sound
A man-made island is likely to Consequently, planning is well advanced of technical assessments looking at be created in Cockburn Sound to to find an alternative site in the port’s economic impact, port operations, provide additional container and outer harbour area to augment facilities water circulation, local and regional general freight handling facilities in the inner harbour. traffic, land use, impact on seagrass for the ever-expanding port of meadows, coastal processes including Four development options are currently marine-based recreation, flora and Fremantle. being examined for the Naval Base– fauna, heritage, visual amenity and public Kwinana area. Three involve a 182- Even though Fremantle’s inner harbour access and amenities. An overarching hectare island that would be linked to has the potential for expansion, continued strategic assessment of these issues is the mainland via a bridge, while the growth in container trade means that it well advanced. fourth involves a stage-one land-backed will eventually reach capacity. development, expanding to an island A recommendation on a preferred option, wharf and freight lay-down area via a taking into consideration environmental bridge under stages two and three. and stakeholder interests, is expected Jervoise Bay Australian to be made by the State Planning Marine City of Road and rail access options are also Complex Cockburn Commission in July or August 2006. being assessed. Either Anketell Road or Rowley Road could be used as a corridor The Minister for Planning is then to link up with the Kwinana Freeway. expected to make a submission to State Cabinet seeking a decision on the Rockingham Highway The Fremantle Ports’ Outer Harbour preferred option. Once the preferred Stage 3 Project is shaping up to be the second option has been identified, a full statutory Proposed Stage 2 Naval largest infrastructure project in Western approvals process will begin, with the aim option 2 Base Australia’s recent history, behind the $1.5 Stage 1 of achieving all approvals by mid 2008. billion Mandurah Rail Project. Construction is expected to start in 2010, While no firm figures are available at this Anketell Road with Stage One due to be completed by stage, the cost of the new harbour project 2017 when Fremantle’s inner harbour is Proposed will run into hundreds of millions of JPPL expected to reach capacity. Town of private port dollars and could be as high as $1 billion. Kwinana Fremantle’s inner harbour, which is a Considerable industry, across- well-designed, deep-draught port, will government and community consultation continue to operate in conjunction with has taken place over the past three Outer harbour: One of several options being considered by the proposed new facilities in the outer Fremantle Ports to augment facilities in the inner harbour. years. There have also been a series harbour.
The port handles about $18 billion worth of trade annually. About 91 per cent (by value) of Western Australia’s total maritime imports come in the form of container trade which has grown by about 11 per cent annually over the past decade.
Also, about 28 per cent (by value) of the State’s exports are generated by the port of Fremantle.
Expansion plans: Container traffic within Fremantle’s inner harbour continues to grow, so much so that plans are in hand to establish additional cargo handling facilities in the port’s outer harbour. 7 Prospect Government favours Oakajee for new Mid West port Since 1976 various planning and engineering studies have concluded that Oakajee is the natural site for a bulk shipping port to complement Geraldton. Its development now has the official endorsement of the Western Australian Government.
The Western Australian Government Currently, two companies are exporting scale downstream resources-based has confirmed Oakajee as the iron ore out of Geraldton — Mt Gibson processing industries, plus support preferred site for a new privately Iron Ltd from its Tallering Peak mine, and services, to be established at Oakajee. Midwest Corporation from Koolanooka. funded deep-water port about 20 km Four of the five member companies of the north of Geraldton. However, there are limitations with port Geraldton Iron Ore Alliance —Midwest facilities at Geraldton, especially with Corporation, Murchison Metals, Gindalbie Premier Alan Carpenter said the respect to the depth of the harbour, Metals and Golden West Resources — are proposed new port development would making it impossible for larger Cape- behind plans to establish a new deep- support the Mid West region’s expanding class iron ore carriers to use the port. water port at Oakajee. iron ore industry. Studies show that developing a • Midwest Corporation is looking to He said studies undertaken by the Mid deepwater port at Oakajee will be export 15-20 Mt/a of hematite ore West Development Commission indicated quicker, cheaper and have fewer from its Weld Range deposit and that several major resource projects environmental and social impacts than about 4.5 Mt/a of magnetite from its could generate up to 60 Mt/a of export expanding the port of Geraldton. Koolanooka deposit. iron ore from the region. For their smaller first-stage projects, • Murchison Metals could export up “The expansion of Geraldton port’s it suits Mt Gibson Iron Ltd, Murchison to 25 Mt/a of hematite ore from the capacity beyond 20 Mt/a will be Metals and Midwest Corporation to use Phase 2 development of its Jack Hills unacceptable from both social and Panamax-size ships to export limited deposit. environmental perspectives,” Mr tonnages of high-grade iron ore from Carpenter said. the already busy port of Geraldton. • Gindalbie Metals has plans to mine magnetite iron ore at its Mt Karara “The two ports will complement each These ships can access customers in deposit, and slurry it as a concentrate other, and both will come under the China via the Yangtze River. However, to a proposed pellet plant at Oakajee. jurisdiction of the Geraldton Port these companies foreshadow larger, The plant aims to produce 7 Mt/a of Authority.” second-stage projects that cannot be accommodated in Geraldton and they pellets for export. The next step will be to consider a view Oakajee as the only viable option • Golden West Resources could export report from a government steering for using larger Cape-size ships to up to 10 Mt/a of hematite iron ore committee which will examine the design deliver bigger tonnages to their overseas from its Wiluna West deposit. process, timing of construction and the markets. operational management of a deepwater The fifth company in the alliance is Mt An added bonus with Oakajee is the huge port at Oakajee. Gibson Iron. undeveloped industrial estate adjacent to The demand for Western Australian iron the port. Comprising a gross core area of Alliance chairman Clive Brown said ore is soaring, and that includes resources 1135 hectares with a 5310 hectare buffer costs for developing Oakajee were yet from the State’s Mid West region. zone, there is plenty of room for large- to be determined, but it would run into hundreds of millions of dollars.
The project will also involve more than 400 km of rail infrastructure.
While various options are being considered, Mr Brown is hopeful that both the rail and port infrastructure will be operating by 2010 to take advantage of favourable marketing opportunities that are predicted to be driven by expanding demand in China and India.
Mr Brown said another priority was to secure all necessary approvals for what is shaping up to be the biggest series of resource development projects in the Mid West’s history. Position, position, position: A massive (currently unoccupied) 1135 hectare industrial estate is available for export and service industries at Oakajee in Western Australia’s go-ahead Mid West region.
8 Prospect 4HE .EW &ORCE