PILBARA REPORT 2012 For further information please contact: Regional Development Australia Pilbara Suite 5/7 Morse Court Welcome Lotteries House PO Box 1404 Karratha WA 6714 Phone (08) 9144 0651 Fax (08) 9144 0652 Chief Executive Officer: [email protected] Chairman: [email protected] PILBARA PILBARA Contents Your Invitation 2 Summary of Key Investment Opportunities 4 1 The Pilbara in Context 7 2 The Economic Context 8 3 A Mandate for Investment 13 4 Key Local Plans 14 5 Resource Sector Investments 16 6 The Regional Investment Opportunities Analysis 18 7 Funding the Future 24 8 An Investment Transformation 25 9 The Enabling Environment 26 10 Economic Diversification Perspectives 28 11 Housing and Land: Investment Prospectus 31 12 Power: Investment Prospectus 32 13 Water: Investment Prospectus 34 Contacts for further investigation 36 PILBARA REPORT 2012 1 Your Invitation This Prospectus outlines a selection of major investment opportunities in Western Australia’s Pilbara region. Read on to explore ways to capitalise on the prosperity and growth of this powerhouse region that is experiencing unprecedented demand for its products, its people and its environment. Share in or lead programmes that help to realise this region’s potential. Add value through investment of capital, expertise, knowledge and personal commitment. A snapshot of opportunities within the Pilbara is described here and more comprehensively in the Pilbara Report 2012. This is your invitation to take advantage of a wide variety of infrastructure investments throughout this dynamic region. In 2010-11 Western Australia had the In 2011-12 Western Australia was placed Early projects led by this government The huge growth in resource sector viewed favourably in these times of global This investment prospectus highest per capita gross state product 11th across 93 global jurisdictions as a catalyst have started a fundamental activity has led to a dramatic increase uncertainty. Large economic assets like of $93,593, some 50% higher than the destination of choice for investment in transformation of the look of the major in the workforce required in the Pilbara, airports and roads often have built-in provides an insight into national average of $62,424, with mining, the mining industry by the internationally townships and extensive planning is resulting in an accommodation shortage. monopolistic characteristics. Likewise largely in the Pilbara, representing 33% of respected Fraser Institute. This level of now in place to deliver regional cities Consequently, the region has experienced certain infrastructure projects such as the opportunities that the gross state product. The gross regional international regard augurs well for the and major regional centres throughout a boom in airport activity through the utilities invariably offer low elasticity of prevail in the dynamic product of the Pilbara has more than long term future of mining in the Region the Pilbara. significant increase in the number of fly- demand, almost ensuring a market. doubled since 2008-09 to over $14 billion and for the regional economy as a whole. in-fly-out (FIFO) workers and the multitude Pilbara region, the nation’s The demand from extractive industry The scope and scale of development will in 2011-12. The region is responsible for of support services staff delivered to In November 2009 the Western Australian expansion has driven housing prices be determined by all of the components powerhouse. We welcome a major portion of the production, value, mining sites. Government announced Pilbara Cities and rentals to unprecedented levels, of the ‘enabling’ environment. That is, exports and investments of extraction initiative offering a clear mandate for some four times metropolitan Perth. Through this prospectus, Regional in order to enable sustainable growth your enquiries. industries commodities, particularly iron investment in the Pilbara by committing to Moreover, essential infrastructure including Development Australia Pilbara is adding and development, key aspects of the ore and liquefied natural gas (LNG), in WA a $1.2 billion Pilbara Cities Vision that was power, water and waste water services its voice and catalytic capabilities to environment need to be considered, and Australia. formally enacted through legislation in have reached capacity and present present, to the private and public sectors namely political, economic, social, cultural, December 2009. challenges to achieving the aspirational at State, Federal and international levels, technological, (natural) environmental Collene Longmore population targets identified in the Pilbara an invitation to invest in a broad spectrum and legal factors. Specifically for Chairperson, Cities Vision. of asset classes that are not only vital to the Pilbara, this includes legislation; Regional Development Infrastructure Australia’s report to the Council of Australian Governments future growth but can also offer sound processes; institutions (and their roles); Port upgrades including common user Australia Pilbara (COAG) in June 20111 states with respect to the Pilbara: returns on investment. the cost structure for households and facilities are critical elements to be businesses; and, sufficient investments in “The further development of the Pilbara is a vital initiative for the addressed. Suitably sized direct port The Pilbara presents a heightened construction, housing, infrastructure and nation. The opportunity for industry, and the Australian, State and access roads and effective road transport investment opportunity at present. The Diane Pentz economic diversification. local governments to work to increase the wealth created from this connections for freight movement are international investment advisory service Chief Executive Officer region cannot be missed. It is clear that the development of major necessary to underpin economic activity. Preqin2 indicated in its April bulletin that Regional Development infrastructure, particularly ports, transport and freight corridors long term infrastructure investment is Australia Pilbara and energy and water to support this growth requires a holistic response. However, as is apparent from the pressures currently being experienced in the Pilbara, consideration must also be given to supporting social and community infrastructure.” 1 Communicating the Imperative for Action, Infrastructure Australia report to Council of Australian governments, June 2011 2 http://www.preqin.com/item/if-you-build-it-will-yields-come/102/5108 2 PILBARA REPORT 2012 PILBARA REPORT 2012 3 Summary of Key Investment Opportunities $9 billion Land and Housing $26 million Waste management The Pilbara Cities growth plans3 indicate a medium term requirement for more than Critical to the long term growth of the region is the establishment of a suitable Class 15,000 dwellings, predominantly in Karratha and Port Hedland to accommodate the IV waste management and hazardous waste disposal facility. Sites in the Shire of projected residential population in these two locations. Roebourne and Town of Port Hedland are currently under investigation for this purpose. A facility of this nature carries an estimated development cost of $18 million. If the total demand for dwelling units forecast to 2015 is satisfied (8,614) this will require an average of 1,435 dwelling units to be brought to market each year. The Pilbara Planning and Infrastructure Framework also acknowledges the requirement to develop a system of townsite transfer stations and investigate recycling options in The magnitude of the land and housing programme required to meet the Pilbara Cities service hubs. vision is estimated to be in the order of $9 billion, delivering approximately 35,000 new dwelling units through to 2035. $1.69 billion Power supply $350 million Airports Major changes to the existing North West Integrated System (NWIS) are imminent. An Airports throughout the region are experiencing a dramatic rise in patronage as a result of immediate additional supply source of at least 100MW is required to meet short term resources sector activity and a reliance on FIFO workers. Upgrades are required at all major demand through to 2015. Medium term demand estimated to be in the order of 350MW locations to handle increased passenger loads. Karratha Airport is handling over 900,000 will require investment of at least $930 million in power generation capacity. passengers per annum and critical passenger parking, terminal and airside improvements are valued at more than $100 million. The Port Hedland stage 2 development in the Presently Horizon Power is required to wheel its power across systems owned by others Master Plan, scheduled for the period 2021-2031, is for further terminal expansion and with varying transmission capacities. Transmission system upgrades and interconnections apron expansions, plus a major development to upgrade a taxiway to Code E. Essentially require both short and medium term investment estimated at $760 million. this means the airport will be able to accommodate larger aircraft and, thus, longer flight services. This stage is valued at $49.4 million. Newman airport requires extensive expansion including a new terminal and a second runway (an estimated $60 million is required immediately). Onslow airport also needs upgrading; cost estimates for these works are currently being prepared. $1.5 billion Water supply >$500 million Ports The schemes servicing Karratha and Port Hedland are already at capacity and new supply is Port expansion programmes