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 led by major resource companies are ongoing, yet there is some urgently needed to meet burgeoning demand. Current projections indicate the need for in uncertainty around which players will proceed with developments in the Port Hedland outer excess of $1.5 billion for capital investment in the West Pilbara Water Supply Scheme with harbour and the Anketell Port project. A new Pilbara Port Authority will be created to oversee almost half of this sum required in the period to 2015. significant growth at Port Hedland, Dampier, Anketell, Cape Lambert and Cape Preston. A new desalination plant of up to 15GL on the Burrup Peninsula is promoted as the most Port Hedland’s Lumsden Point has been identified as a possible location for a marine- reliable short term source focused on Karratha, supplemented by the development of based Common User Facility (CUF) consisting of wharves, lifting lay down areas, and repair, water extraction from the Bungaroo Valley (noting that this system requires extensive maintenance and load-out facilities. The project would be modelled on the successful Australian Marine Complex CUF at Henderson (Perth), enabling companies to work closer to upgrading). Significant investment opportunities lie in this essential services sector. their developments. Funding of $5 million has been committed to undertake a feasibility study for the CUF.
$65 million Waste water management >$1 billion Roads The second Karratha Waste Water Treatment Plant (WWTP) plant is at capacity and needs an Significant road transport improvements are required, including the upgrade of the North estimated $30 million of works for upgrading to cope with increased flows. An $8 million West Coastal Highway (NWCH) to national highway status, thus, creating a new major temporary Packaged Treatment Unit has been installed to cope with immediate demands supply chain link. Improved port access roads will be required and additional east west from an additional 1,250 housing lots. $106 million has been allocated for the relocation of linkages connecting inland towns such as Newman, Tom Price, Paraburdoo and the myriad the Port Hedland WWTP to South Hedland, including the cost of returning treated effluent to of mine sites to the NWCH and the ports. Port Hedland for re-use in irrigation. These works have the potential to release land (up to Itemised improvements include road access around Wedgefield and duplication of the 2,500 lots) for development. Further waste water conveyance improvements are required in Redbank Bridge in Port Hedland, and the Karratha western bypass to Dampier road. A new Port Hedland and Newman at an estimated cost of $35 million. coastal road connection from Karratha to Anketell is estimated at $200 million.
3 Karratha City of the North Growth Plan, Port Hedland Port City Growth Plan
4 PILBARA REPORT 2012 PILBARA REPORT 2012 5 1 The Pilbara in Context
Encompassing 507,896 The Pilbara grew from a few thousand in 1966 to around 41,000 square kilometres, the in 2006 and an estimated 55,000 in 2011. Under the Pilbara Cities initiative, the overall resident population of the region is planned Pilbara spans the breadth to grow to more than 140,000 by 2035. of central Western Australia from the coast to the Driven primarily by progressive expansion Northern Territory. Figure 1: Projected Population Increase in the Pilbara in the mining sector, this aspirational (Source: Pilbara Planning and Infrastructure Framework) The region is the size of population increase represents an average annual compound growth rate of around Past Growth PICC (business as usual) Pilbara Cities (aspirational) France, however it currently 5%. The Pilbara also hosts a substantial 160,000 non-residential population made up has a population of only 140,000 generally of industry fly-in-fly-out (FIFO) some 60,000, generating construction and production workforces. 120,000 over 20% of Australia’s In 2010, the Pilbara’s resource related FIFO workforce was estimated at 15,500 100,000 export earnings with just and is expected to rise to around 33,700 by 2020. 80,000
0.2% of the population. Population The growth rate shown in Figure 1 (right) 60,000 indicates an exponential rise in the 40,000 resident population through to 2035. A flat line growth of 3,500 people moving to 20,000 the Pilbara each year would be necessary to achieve the planned target of 140,000 0 people. This targeted growth rate must be 1966 1972 1978 1984 1990 1996 2002 2008 2012 2018 2024 2030 2036 supported by ongoing economic activity Year and diversification, together with the provision of infrastructure, community services and affordable housing within Pilbara communities. 1.1. EMPLOYMENT
An industry estimate of employment Figure 2: Employment Composition Comparison between Pilbara and whole of WA growth from the Pilbara Industry (Source: Developed from ABS 2006 Census - Pilara region and WA State employment data) Community Council (PICC)4 puts the regional employment growth rate at WA Pilbara 28% between 2010 and 2015. The PICC estimates that FIFO employment will Export/driver (mining) increase by 83% over the same period, and by a further 23% to 2020. The Retail majority of the minerals and energy workforce required over the coming years will be required for projects located in Consumer the Pilbara: 34,000 in 2012 and 21,000 in services 2015 (above 2009 workforce). This would Producer be a 65% increase on the 2009 Pilbara services workforce by 2015. This estimated growth indicates a continuation of the upward Sector Employment Knowledge intensive trend in employee numbers shown in consumer services Figure 2 (right). Knowledge intensive producer services 0 50 100 150 200 250 300 350 Employment (%)
4 Regional Development Australia - Preliminary Pilbara Regional Plan - August 2010
6 PILBARA REPORT 2012 PILBARA REPORT 2012 7 2 The Economic Context
The contribution of the Pilbara to the Western Australian economy is growing, and in The substantial pipeline of turn, the Western Australian share of the Australian economy is increasing. The Pilbara’s investments in the resources contribution already exceeds all other regions by 50% on a per capita basis. sector continues to underpin healthy levels of economic activity and the prospect of For the financial year ending June 2010 strong export growth the State of Western Australia (WA) had a recorded Gross State Product (GSP) of in the future. $188 billion. Western Australia makes up 15% of Australia’s Gross Domestic Product and the contribution is set to increase. As a consequence, demand for labour in the State has been strong, resulting in solid employment and earnings growth, and an enviable unemployment rate that is almost the lowest in the nation. As shown in Table 1 (below), Gross State Product growth was 4.75% in 2011, the second highest in the nation, and is forecast at 4.25% in both 2012-13 and 2013-14. In April 2012, WA was rated the best performing State in the nation. Table 1: Key WA Statistics
2.1.THE RESOURCES SECTOR IN 08/09 09/10 10/11 11/12 12/13 13/14 WESTERN AUSTRALIA Actual Actual Budget Estimate Estimate Estimate The substantial pipeline of investments in Gross State product (GSP) and Selected Components the resources sector continues to underpin %%%%%% healthy levels of economic activity and the prospect of strong export growth in Real Gross State product growth 0.7 4.3 4.0 4.75 4.5 4.0 the future. According to Deloitte Access Real State final demand growth 4.4 3.5 5.25 5.75 5.25 3.75 Economics’ Investment Monitor (as at Business investment growth 10.5 1.25 12.0 10.0 8.0 4.0 September 2011) the total value of Dwelling investment growth - 4.2 3.25 6.5 3.5 5.0 5.5 expected business investment in WA was $268.4 billion. Projects ‘under construction’ Public investment growth 8.1 18.5 0.5 3.75 -3.0 -10.5 valued at $84.8 billion represent more Key economic Statistic Forecasts than a quarter of the national total. The Employment growth (% p.a.) 3.2 0.3 3.55 2.5 2.5 2.5 ‘pipeline’ of projects (those listed as ‘committed’ or ‘under construction’) total Unemployment rate (%) 3.7 5.0 4.75 4.75 4.5 4.25 $137.4 billion, representing over a third of Wage price index growth (% p.a.) 5.2 3.3 4.25 4.25 4.5 4.5 the national total. Av. weekly earnings growth (%.p.a.) 5.2 5.5 4.5 5.25 5.75 5.75 Over the past five years, private new State population growth (% p.a.) 3.2 2.6 2.3 2.2 2.2 2.1 capital expenditure by the resources industry has grown on average by 21%. Other key economic forecasts and assumptions Western Australia attracted the bulk Oil price (US$ per barrel) 68.9 75.0 85.6 87.9 88.8 89.0 of mineral and petroleum exploration $US / A$ (cents) 74.6 88.3 97.1 92.1 85.8 79.6 expenditure in Australia in 2010–11, drawing in 54% and 72% respectively. Iron ore price ($US per tonne) - 61.7 107.4 96.5 85.7 74.9 Iron ore royalties (A$ m p.a.) 1933 1720 2676 2970 3062 2929 Petroleum royalties (A$ m p.a.) 21 30 40 42 43 41
8 PILBARA REPORT 2012 PILBARA REPORT 2012 9 2.2 THE ECONOMY OF THE PILBARA Table 2: Pilbara Economic Structure and Contribution to the Economy of WA
Estimated Gross Regional Product (GRP) of INDICATOR PILBARA REGIONAL WA WESTERN INDICATOR PILBARA REGIONAL WA WESTERN the Pilbara in 2008-09 was over $7 billion. AUSTRALIA AUSTRALIA By 2009-2010 the Pilbara’s GRP was over Gross Regional Product (2010-11) Manufacturing (2006-07) $12 billion, an increase of some 70%. In 2010-11, as shown in Table 2 (right), GRP Gross Regional Product ($millions) 14.04 49,113 216,600 Number of Locations 104 2,227 9,982 was estimated at $14.04 billion - another % of State Total 6.5 29.8 100.0 % of State Total 1.0 22.0 100.0 substantial increase, with growth rates GRP per capita ($) 342,498 84,109 78,275 Number of Employees 577 17,207 74,319 exceeding those in the fast growing Source: Department Regional Development and Lands Asia region. % of State Total 0.8 23.2 100.0 Agriculture (2008-09) Turnover ($millions) 2,277.0 9,554.5 4 5,047.5 The Pilbara is responsible for a major portion of the production, value, exports Total Agricultural Production (value) 67,094,134 6,800,536,760 7,176,183,742 % of State Total 5.1 21.2 100.0 and investments of extraction industries Source: Australian Bureau of Statistics Source: Australian Bureau of Statistics and the Department of Regional Development and Lands commodities, particularly iron ore and Regional Commodity Production Building and Construction (2009-10) liquefied natural gas (LNG) in the state (2010-11) Total Approvals (value) 1,080,729 4,070,557 13,107,194 and Australia. Value ($millions) 80,522 101,127 101,164 % of State Total 8.2 31.1 100.0 The Pilbara accounts for % of State Total 79.6 99.9 100.0 Total Non-Residential Approvals ($’000) 790,660 1,852,787 6,134,375 Source: Department of Mines and Petroleum with further estimates by the Department of Regional almost two thirds of the Development and Lands *Regional sub-totals exclude petroleum % of State Total 12.9 30.2 100.0 Residential Building Approvals ($’000) 290,066 2,217,770 6,972,823 commodity exports of the Petroleum Value ($millions) 21,293.2 % of State Total 4.2 31.8 100.0 State by value, which is % of State Total 29.9 Average Residential Building $457,517 $277,951 $277,614 Approval (value) almost 20% of the total Forestry (2008-09) Source: Australian Bureau of Statistics Total Production ($ Value) 0 82,797,000 93,136,000 value of merchandise Retail (2008-09) 5 % of State Total 0 88.9 100.0 exports of Australia . Source: Forest Products Commission (previously CALM) Estimated Retail Turnover ($millions) 490.0 5,843.4 2 5,435.9 Fishing (2008-09) % of State Total 1.9 23.0 100.0 Source: Based on ABS State Retail Turnover. Regional estimations by RDL Total Catch by Value ($ ‘000) 9,545 249,518 279,972 Tourism (2007-09) - Based on three year average % of State Total 3.4 89.1 100.0 Nº visitors Domestic (‘000) 248.6 4,239.9 6,487.6 Total Catch by Weight (tonnes) 2,264 24,039 25,425 Source: Department of Fisheries Nº visitors International (‘000) 36.3 444.0 1,083.5 Exp domestic ($millions) 207.4 2,000.3 3,100.3 Exp international ($millions) 41.5 352.3 1,672.0 Source: Tourism WA with further estimates by the Department of Regional Development and Lands. Totals may not add due to rounding. *Sum of regional averages
5 Regional Development Australia - Preliminary Pilbara Regional Plan - August 2010
10 PILBARA REPORT 2012 PILBARA REPORT 2012 11 3 A Mandate for Investment
The Pilbara region of Western Australia plays an important role in the economic development of the nation and is a principal driver of Western Australia’s growth. The Pilbara has been experiencing rapid economic growth in recent times and this is expected to continue. Consequently, the Pilbara generates strong employment in the region along with significant indirect employment in Perth and other parts of Australia given that the bulk of the workforce operate on a ‘fly-in/fly-out’ basis. The mining activity and employment 6 8 The region is primarily known for iron ore Figure 3: Iron Ore Quantity up to 2010 (Source: DMP and ABARES) demand is placing strain of the existing economic and social infrastructure . With this and petroleum products, and is responsible for over 95% and 99% respectively Rest of Australia Western Australia demand comes a myriad of investment opportunities. of exports of these commodities from 500 Western Australia. The quantity of iron ore The launch of the WA Government’s production up to 2010 is shown in Figure 3 ‘Blueprint for Pilbara Cities’ in November (right). In 2010-11 the Pilbara’s commodity 400 2009 by the Premier heralded the production was valued in excess of $80 commitment to a new Pilbara. The billion comprising iron ore (68%), crude initiative has been generally well received oil (15%) and LNG (11%). This represents across the Pilbara and wider community, 300 80% of the total state production7. the resources sector and other major stakeholders. The creation of the Pilbara The Pilbara services the Cities Office within the Department of 200 Regional Development and Lands has Million tonnes of offshore Carnarvon Basin, been coupled with a range of detailed Australia’s largest known oil planning activities, in particular, the development of the Pilbara Planning 100 and gas reserve that earned and Infrastructure Framework and the Pilbara Infrastructure Priorities Report. $22.8 billion in 2010 (21% (These were produced by the WA Planning 0 Commission and provide an agenda for the of WA’s total mineral’s and 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 physical development of the Pilbara). petroleum value). The essence of the Premier’s This represents 97% of Western Australia’s announcement was that Karratha and Port petroleum production (crude oil and Hedland would become major cities of condensate, LNG, natural gas and LPG) Figure 4: Value of Minerals and Petroleum by Region in WA: 2010-11 (Source DMP) the future under a ‘ground-breaking’ State New schools and TAFEs; hospitals and medical centres; in 2010. Up until recently, all LNG from Government initiative to encourage more 2% leisure and entertainment facilities; shopping and retail Western Australia originated from the 9% people to live and settle in the Pilbara. The Northwest Shelf Venture’s (NWSV) project Premier stated that the framework was precincts; employment and indigenous enterprise 2% at Karratha. In 2010-11, LNG reported now in place to transform the region by 3% opportunities; large-scale land releases; and affordable output from the NWSV increased by almost Pilbara creating modern higher density centres, 8% to 17 million tonnes and the value of 5% State Offshore Petroleum supported by all the services and facilities living initiatives, all supported by significant improvements enjoyed in other Australian cities. Funding sales rose by 25% to $8.7 billion. Figure Commonwealth Offshore and upgrades to energy, water and waste management 4 (right) illustrates the significance of Petroleum and resources from Federal, State and minerals and petroleum in the Pilbara, local governments as well as private Peel services are part of the blueprint. which represents more than half the sector investment, would bring a series of State value. Mid West important infrastructure and community amenity upgrades to key towns in Wheatbelt of strategic projects; collaborating with The Pilbara Development Commission, the The Pilbara has the second largest gold the Pilbara. Goldfields-Esperence mine in Australia. Copper and manganese 22% a range of government, industry and Pilbara Cities Office and the WA Planning are also being mined. Deposits of nickel Other The Pilbara Cities Office has initiated community stakeholders to transform Commission/Department of Planning and uranium may be developed in the or assisted in the launch of over one the region in a sustainable way and are at the forefront in working with the future. The Pilbara has the second largest 57% hundred projects since its establishment. offer housing affordability, infrastructure Pilbara’s Regional and Local Governments solar salt fields in the world behind China 0.5% Its mandate is to coordinate a holistic upgrades, new health and education to align and connect their respective plans (with large commercial ventures operating approach and lead the development facilities and local business development. and strategies. out of Onslow, Dampier and Port Hedland). The Pilbara produced roughly 15% of the value of the state’s pearl production at $13.5 million in 2008-09.
6 Regional Development Australia - Preliminary Pilbara Regional Plan - August 2010 8 Communicating the Imperative for Action, Infrastructure Australia report to COAG, June 2011 7 Western Australian Economic Profile, February 2012, Department of State Development
12 PILBARA REPORT 2012 PILBARA REPORT 2012 13 4 Key Local Plans
4.1 SHIRE OF EAST PILBARA The main townsites are Newman, 4.2 TOWN OF PORT HEDLAND 4.3 SHIRE OF ASHBURTON landfill and transport. Key Marble Bar and Nullagine, and the community and public The Shire of East Pilbara became the Shire’s Administration Centre is located The Town of Port Hedland has two of the With an area nearly half the size of Victoria infrastructure will be built largest Shire in the world when created in Newman. The Shire area also contains main residential centres in the Region, Port (105,647km²), the Shire has some of the or upgraded including the through an amalgamation in 1972, and numerous Aboriginal communities Hedland and South Hedland and the remote world’s largest open cut mines, pastoral upgrading of the town’s comprises an area of over 379,571 km² including Jigalong, Punmu and Parngurr. aboriginal community of Yandeyarra located leases and cattle stations and a thriving water and electricity (larger than the State of Victoria). Its Aboriginal communities are also located about 130 km south of Port Hedland. It fishing industry all set against a beautiful supplies, road access and The major industries include iron ore population is estimated to be 10,500, with in Nullagine (Irrungadi community) and comprises an area of 11,844km², with an and ancient arid tropical landscape. community facilities and services. export, oil, natural gas, salt, nickel, fishing major industries in the Shire of mining, Marble Bar (Pipunya and Goodabinya estimated population of 20,200. There are The majority of the area of the Shire Development of the nearby Ashburton and tourism. Lying offshore from the pastoral and tourism. communities). also pastoral stations located throughout of Ashburton is divided into pastoral the area. Both Port and South Hedland properties amongst which are the towns North Strategic Industrial Area as a home Shire is the famous Dampier Archipelago The town of Newman is proposed under provide a range of community services, of Onslow, Pannawonica, Paraburdoo for major liquefied and natural gas comprising 42 islands, islets and rocks, the Pilbara Cities initiative to become including cultural, recreation and shopping and Tom Price. The majority of the Shire’s processing projects – and the arrival of lying within a 45km radius from the town a sub-regional centre of 15,000 people facilities. The population of Port and South population live in these four towns. new families to support their operations of Dampier and Point Samson. Coupled by 2035. The Pilbara Planning and Hedland, as the Pilbara’s Port City, is – are expected to drive up the population with world listed rock art (more than one The Shire has an established salt industry, Infrastructure Framework describes expected to grow to 50,000 by 2035. from 700 to 2,200 by 2016, with a total million petroglyphs have been identified), Newman as the major service support based at Onslow which is also to be the population of around 4,000 by 2022. this area has a natural beauty and hub for a number of mining operations The main industries are iron ore processing home of the recently announced $29 considerable tourism potential.
in the East Pilbara and as a sub-regional and export, salt production from extensive billion Chevron Wheatstone Project. 4.4 SHIRE OF ROEBOURNE evaporation ponds for export, shipping This project is expected to create The Karratha City of the North Plan service and tourism centre. There are The Shire of Roebourne comprises an area of manganese and other minerals and 6,500 jobs at peak construction and aspires to endow the Region with vastly opportunities to develop the town as a of approximately 15,197km2, having its livestock production. The Port Hedland Port 300 new operational jobs. The project improved infrastructure and amenity, sub-regional distribution centre, which offices in Karratha, a modern town that Authority (PHPA) is the largest tonnage port announcement was heralded as an and offer more affordable and diverse is located strategically along the Great is recognised as one of the major centres in Australia and the largest iron ore and exciting milestone in Onslow’s history and styles of housing. This is to be achieved Northern Highway and services the needs in the Pilbara. The Karratha/Dampier bulk mineral export port in the world. In the will see the return of industry and a port through a three-phase strategy that will of the indigenous settlements located settlements are expected to grow to 2010/11 year the Port facilitated trade of near to the area first developed in the guide the development of future housing, throughout the East Pilbara. 50,000 as a key Pilbara City under the 199 million tonnes, worth over $40 billion. late 1800s. Substantial employment and open spaces, commercial activities, tourist Pilbara Cities blueprint. There are excellent opportunities to industry participation opportunities for the accommodation, entertainment and retail There are extensive local government plans develop a tourism industry (gateway to State and the transformation of Onslow, as There are five other town sites located areas, as well as service infrastructure, and strategies including the Pilbara’s Port Karijini and Karlamilyi National Parks and well as cementing WA’s status as a major within a 50km radius, with industry-based transport, education and community City Growth Plan, Port Hedland Hotspots the Canning Stock Route); supply chain global energy supplier, are predicted. settlements at Dampier and Wickham, facilities. Similar infrastructure planning is Report, South Hedland Town Centre completion; and a hub for a horticultural the historic towns of Roebourne and now required for Dampier, Roebourne, and Development Plan and Hedland’s Future This rapid growth poses a number of industry based on mine de-watering. Cossack, and the coastal retreat of Point Point Samson. Today 2010 that describe the development planning issues, including how to meet Samson. The Shire’s resident population is priorities for Port and South Hedland critical infrastructure requirements for estimated to be 22,900 people or 38% of in detail. housing, power generation, water supply, Pilbara people.
14 PILBARA REPORT 2012 PILBARA REPORT 2012 15 5 Resource Sector Investments
5.1 IRON ORE: • Hancock Prospecting’s 55Mtpa Roy Hill produce 16.3 million tonnes of LNG per to be located at Ashburton North 12 trains, each with a capacity of 4.3 Mtpa, Rapid growth in iron ore EXPANSIONS AND DEVELOPMENTS 1 mine is scheduled to come on line year, with export earnings in the vicinity kilometres to the west of Onslow. The together with a domestic gas plant. in 2012. This will be followed by the of $10.1 billion in 2008-09; plant will initially comprise two LNG Supplied from the Wheatstone and and LPG/LNG will drive Pilbara mining company growth targets company’s Central Pilbara project. • Woodside‘s Pluto Project – commenced trains, each with a capacity of 4.3Mtpa, large off-shore gas fields, this Chevron are large and include: export growth over the Committed iron ore projects will producing LNG in 2011, with the together with a domestic gas plant. project will eventually have a 15 Mtpa • Rio Tinto Iron Ore anticipates an increase production capacity by 195Mtpa commissioning of the first LNG Supplied from the Wheatstone and off- processing capacity. next three years, and expansion from 220Mtpa to 330Mtpa representing a 2010 value of $22 billion processing train with a capacity of shore gas fields, it will eventually have The total capital expenditure of committed in 2016; by 2014. Proposed iron ore projects would 4.3Mtpa. Woodside is planning the a 15Mtpa processing capacity. or new projects is $128 billion with new LNG plants will be • Fortescue Metals Group recently potentially lift export capacity by another construction of a second and third LNG • Chevron’s Gorgon Project - Chevron is projects having a start up date through to operational from 2014- expanded production to 55Mtpa. 321Mtpa at a 2010 value of $43.6 billion processing train at the Burrup Pluto developing the Gorgon Gas Fields and 2015. Projects under consideration with Further expansions include 120Mtpa in by 2018. Note that the progress of Outer LNG Park; is on schedule to produce and export a start date up to 2016 have a further 15, bringing gas to the Stage 1 and 220Mtpa in Stage 2 (this Harbour development at Port Hedland and • Chevron’s Gorgon Project – is developing LNG at its processing plant on Barrow substantial capital expenditure. the Anketell Port project are uncertain at Island. The plant will comprise three forefront. By 2016-17, gas will require a new ship loading facility – the Gorgon Gas Fields and is on 5.3 EXPORTS AND FOREIGN see next point); present as iron ore companies consider schedule to produce and export LNG at 5 Mtpa processing trains, eventually exports will have tripled, their investment options. producing 15 million tonnes of LNG EXCHANGE EARNINGS • North West Iron Ore Alliance (Atlas its processing plant on Barrow Island. per year. Production is anticipated to while sales of iron ore will Iron, Brockman Resources and FerrAus) The plant will comprise three 5Mtpa For 2013-14 and 2014-15 strong export 5.2 OIL AND GAS: commence in 2014 and end between aspires to a capacity of 45Mtpa processing trains, eventually producing growth is forecast to continue, buoyed by have almost doubled and EXPANSIONS AND DEVELOPMENTS 2054 and 2074. by 2013; 15 million tonnes of LNG per year. continued expansions in the iron ore sector Examples of committed projects are: Production is anticipated to commence • Chevron’s Wheatstone Project - an LNG and the commissioning of the Chevron will be up 70% compared • CITIC Pacific anticipates a steady in 2014 and end between 2054 and processing plant is now confirmed Gorgon LNG project in 2014-15. Exports are magnetite production of 27.5Mtpa • North West Shelf Venture – with the with 2010-11. 2074; and, to be located at Ashburton North 12 subsequently forecast to grow by a solid at Cape Preston of which 6Mtpa are completion of its fifth processing train kilometres to the west of Onslow. The 6.5% per annum in 2013-14 and 2014-15 pellets; and, (4.4Mtpa capacity), the venture can • Chevron’s Wheatstone Project – an LNG processing plant is now confirmed plant will initially comprise two LNG
16 PILBARA REPORT 2012 PILBARA REPORT 2012 17 6 The Regional Investment Opportunities Analysis
There are a number of major asset classes that go beyond the “business as usual” development model and which also have an impact that is region-wide. In the rapidly evolving Pilbara landscape new demands and new investment opportunities will present themselves at every turn.
The absolute necessities, such as the Table 3: Regional investment opportunities supply of housing, power and water, are detailed further in sections 11, 12 and Regional initiatives Investment scale High Profile Locality Specific initiatives 13. There are also societal fundamentals ($) Town of Port Hedland such as health and education services; Housing and Land Development $9 billion inspirational community initiatives such Port Hedland Aboriginal Arts & Cultural Precinct $40 million as entertainment, sporting and cultural Power supply South Hedland Community Centre & Library $18 million precincts; and, entrepreneurial aspects New generation capacity $400 million Relocation of the Port Hedland Turf Club $25 million such as recreational marinas, solar energy Fully Interconnected transmission system > $600 million and biofuels projects. Creation of new playing fields in South Hedland $8 million Water supply Shire of Roebourne New desalination plants (Karratha and Port Hedland) $2 billion Roebourne Community Aquatic Centre $9.5 million New borefield development (Cape Preston) To be costed Community library $12 million Potable Water Upgrade Port Hedland $63 million GP SuperClinic $23 million Waste Water Treatment Plant #2 Karratha Upgrade $30 million Karratha Leisure Complex $16.3 million Waste Water Conveyance Port Hedland and Newman $36 million Shire of East Pilbara Road developments Town hall/cultural building $40 million Northwest Coastal Highway To be costed Upgrade/expansion sewage treatment plant $5 million Duplication of the Karratha to Roebourne Road To be costed Lions Park redevelopment $5 million Karratha to Tom Price Road $300 million New Recreation Precinct $50 million Port Hedland Road upgrade and duplication of Redbank Bridge $90 million Shire of Ashburton Karratha Airport eastern access Road $16 million Tom Price Sporting Precinct Upgrade $9 million There is consensus that NWCH to South Hedland link Road $22 million Tom Price Day Care Facility $8 million the time is now and the Dampier Port Access Road upgrade - Karratha western bypass $85 million Tom Price Village Green Development $28 million Karratha to Anketell/Wickham Coast Road $200 million place is the Pilbara. What Paraburdoo Community and Sporting Hub $16 million Airport development is required are visionary Onslow Industrial Estate $10 million New Karratha International terminal $55 million Onslow Ring Road $10 million investors that can step Karratha Runway upgrade to A300 capacity $30 million Opportunities for economic diversification $134.8 million Enhanced apron standing area $15 million beyond the boundaries Business Incubators in all 6 major townships $106 million New Port Hedland terminal $40 million and develop innovative Bio-fuels Project $12 million Expansion of Newman Airport terminal and new second runway $140 million financing and asset Hi-Tech Greenhouse $12 million Onslow Airport upgrade To be costed Aquaculture fish farm $3.6 million packages that will over Port development Fish processing factory $1.2 million the next twenty years Cape Lumsden Common User Facility > $150 million Tertiary education developments $100.7 million Waste management transform the vision for UWA Pilbara feasibility Study $0.7 million Regional Class IV waste management and hazardous waste $18 million the region into a reality. University facility developments (Karratha and Hedland) $100 million disposal facility The following outlines Marina developments a portfolio of potential Spoilbank Marina and Residential Precinct in Port Hedland $176 million investment sectors. Dampier Marina $50 million
18 PILBARA REPORT 2012 PILBARA REPORT 2012 19 6.1 LAND AND HOUSING Table 4: Short-term Future Housing Demand in Pilbara Towns (2009-2015) 6.2 POWER Table 5: Current Supply and Projected Demand (as of 2012 to Horizon Power customers) Source: Pilbara Planning and Infrastructure Framework Forecasts within the two Pilbara Cities The North West Interconnected System Source in MW Up to 2011 2012 to 2015 Medium term growth plans9 indicate a medium term (NWIS) capacity is forecast to reduce Current unmet demand Future demand 2009-2015 to 2022 requirement of more than 15,000 dramatically in 2013. Rio Tinto Iron Ore (dwellings) (dwellings) RTIO 70* *RTIO generation dwellings to accommodate the projected has constructed a new power station residential population in these two Additional future Total future demand capacity taken off line Town Total near Karratha to meet its own needs locations. Additional dwellings will be Apparent Latest demand 2009-2015 2009-2015 ATCO 86 86 unmet and proposes to discontinue use of its required outside of the twin cities, most demand demand demand Low High Low High old generation facilities at Dampier and Alinta 45* *Existing PPA notably in Newman and Onslow. Short growth growth growth growth Cape Lambert. These facilities and their expires 2012 term housing demand in Pilbara towns is generation capacity will be lost to the Karratha 613 918 1531 560 1125 2091 2656 Total Supply 115 86 86 shown in Table 4 (right). NWIS. Other Power Purchase Agreements Port Hedland 503 899 1402 443 1799 1845 3201 (PPAs) are due to expire in 2012, leaving Demand 108 170 350 If the total demand for dwelling units Newman 151 283 434 -45 580 389 1014 Horizon Power with uncertain supply and forecast to 2015 is satisfied (8,614) this Shortfall by end of period 0 -84 -264 increasing demand. BHP Billiton Iron Ore will require an average of 1,435 dwelling Onslow 34 71 105 3 808 107 913 may construct its own power station in units to be brought to market each year. Tom Price 78 181 259 12 212 271 471 Port Hedland and release its draw from Table 6: Potential Supply Options from 2012 to 2022 Data collected from the four local Roebourne 54 93 147 41 212 188 359 Alinta’s Boodarie facility. This capacity may authorities shows the total number of Total 1433 2445 3878 1014 4736 4892 8614 then be available for a Horizon Power Expansion Options Comment By 2015 By 2022 building approvals issued in the 4 years PPA. Current supply to, and projected ATCO Expands Karratha Station 64 64 since 2008 to be 3,094; almost 50% demand from, Horizon Power customers is to maximum capacity short of the forecast supply requirement Figure 5: Average residential property rental and availability in Port Hedland shown in Table 5 (below). An immediate which some analysts are now saying is additional supply source of up to 100MW Alinta Needs gas supply and 85 85 significantly underestimated. Average rental cost Number of rentals available is required to meet short term demand new PPA $2200 100 through to 2015. Potential supply options Housing and land prices continue to be New generation Unidentified provider 120 $2000 are shown in Table 6. stressed by shortage of supply. In the 90 Or New PPA Unidentified provider 120 $1800 first quarter of 2012 there were only 18 80 Generation is only one part of the Total supply 235 355 residential lots offered to the market $1600 electricity equation and the transmission 70 Shortfall 0 0 across the Pilbara. Large land release $1400 network is also critical in delivering supply programs are now being developed and 60 to the customer network. At present the $1200 the ensuing challenge, and opportunity, 50 transmission system is a mix of public With supply certainty reduced to about 80 MW via ATCO after 2012, a further 270 MW will be to construct suitable dwelling units $1000 and private ownership. Horizon Power 40 is conservatively forecast to be needed by 2022 from a number of alternative options. in a short time frame. $800 is required to wheel its power across Figure 6 (below) illustrates predicted power supplies and demand in the absence of 30 systems owned by others with varying Figure 5 (right) indicates the impact $600 private sector investment. transmission capacities. of this housing shortage as it affects $400 20 10 rental accommodation. Port Hedland $200 10 There is currently a significant amount Figure 6: Power Supplies and Demand - Pilbara (assuming no private sector investment) is perhaps the hardest hit in terms of of underutilised generation capacity in Expansion of proposed Port Hedland plant Expansion of ATCO plant supply limitations and price escalation $0 0 the Pilbara resulting from numerous Horizon Port Hedland Horizon Karratha (80MW) with property rentals reaching as much 2005 2006 2007 2008 2009 2010 2011 2012 self-generation facilities without network Alinta Port Hedland (175MW) Demand NWIS peak MW as $4,000 per week for a high end Year connection. If these assets could be family home. accessed to make more efficient use of Demand NWIS winter MW existing capacity, less new generation 500 The Pilbara’s Port City Implementation LandCorp regularly produces regional investment would be required and line Plan has identified the opportunity for hotspot land supply reports. All major 450 losses could be reduced. A considerable approximately 19,000 dwellings to be townships within the Pilbara Port Hedland investment in transmission capacity would delivered on new development sites have hotspot reports providing 400 power station be required to transport the power to the across a number of growth precincts in land and housing supply and load centres. 350 Port and South Hedland. demand analyses and describe the ATCO power station expansion economic outlook, employment It is apparent that there are a number 300 The Karratha City of the North Growth and population projections, and of options and alternative scenarios, Plan identifies sufficient land areas for infrastructure provision. but the one certainty is the increasing 250 development for the accommodation level of demand and the imperative for of 50,000 people. The plan shows 200 an expedient investment decision. The New power station development concentrated north of the Western Australian government is working Port Hedland Karratha hills with variable densities from 150 to establish the Pilbara Power Project R12 to R160. (referring to residential Board to oversee procurement of power 100 housing density codes, which describe from the private sector. It is also discussing the average land area required for the the potential to work in collaboration with 50 construction of a dwelling on a block the resource sector to share the costs of land). 0 of future power infrastructure needs. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 This will provide an opportunity for private investment.
10 9 Karratha City of the North Growth Plan, Port Hedland Port City Growth Plan Source of graph draft PIPF (unpublished) Dept of Planning
20 PILBARA REPORT 2012 PILBARA REPORT 2012 21 6.3 WATER 6.4 WASTE WATER 6.6 CRITICAL TRANSPORT SERVICES A new Pilbara Port Authority will oversee the scene for private sector investment $4.9 million upgrading the terminal. It significant growth at Port Hedland, over the medium to long term. Some remains inadequate. The Shire is currently The schemes servicing Karratha and Port The second Karratha waste water 6.6.1 Roads Dampier, Anketell, Cape Lambert and specific projects are outlined below. undertaking essential electrical and water Hedland are already at capacity and treatment plant (WWTP) plant needs The state government is in the process Cape Preston. supply improvements totalling $20 million new supply is urgently needed to meet upgrading to cope with increased flows Port Hedland International Airport of developing a regional freight strategy as it revises the previous master plan. burgeoning demand. Current projections and carries an estimated cost of $30 A Common User Facilities (CUF) North West which will have a major inter-jurisdictional Port Hedland International Airport indicate the need for in excess of $1.5 million. There may be an opportunity to Report (April 2011)11 has been prepared Key questions for the Karratha airport focus. Concerned solely with freight accommodates flights to and from Perth, billion for capital investment in the West set up a reuse facility to supply treated to identify potential locations and the type are its elevation to international airport movements (no passenger transport), Karratha, Broome, Darwin, Brisbane, Pilbara Water Supply Scheme with almost wastewater for industrial purposes such of facilities and infrastructure needed to status and the potential construction of a the strategy will address supply chain Melbourne and Bali. The main passenger half of this sum required in the period as dust suppression and road construction. support the growth and development of new terminal on the eastern side of the issues throughout the state. At present the transport aprons can accommodate up to 2015. This will reduce the costs of plant the oil and gas, minerals, defence, housing, main runway. An estimated $100 million Pilbara is served primarily by the Great to 5 aircraft under a power in power out upgrades, as well as reducing the amount building and construction industries. is required to provide Karratha with a Demand in Karratha is expected to rise Northern Highway (GNH) and a new major arrangement (meaning that the aircrafts of new scheme water required. WaterCorp serviceable international airport with from around 10GL per annum to as much supply chain link is proposed by upgrading A CUF, consisting of wharves, lifting and lay park at the airport and depart under their is looking at these options at present. improved connections to the town centre. as 33GL per annum by 2020. Port Hedland the quality and connections along the down areas, repair and maintenance, and own power, without use of any towing anticipates a similar escalation in demand The relocation of the Port Hedland WWTP North West Coastal Highway (NWCH). load-out facilities, will enable companies vehicle). Current passenger numbers are 6.6.4 Rail bringing total demand to more than 60GL to South Hedland has the potential to work closer to their developments. in the vicinity of 300,000 per annum with The strategy will seek to elevate the All activity in this sector is currently driven per annum in less than a decade. to release land (up to 2,500 lots) for This is necessary to meet the increasing forecasts predicting a rise to between status of the NWCH to that of national directly by the resource companies that, development. A significant developer demand for such infrastructure as more 460,000 (low growth) and 595,000 (high A new desalination plant of up to 15GL on highway, paralleling the Great Northern for the most part, operate lines to carry contribution to the project would be resource projects are initiated. The facility growth) per annum by 2014. A master the Burrup peninsula is promoted as the Highway though the mid section of the ore to ports. At some point in the future, required. The project has recently been would also have significant economic plan for the redevelopment of the airport most reliable short term source focused state. Any moves to increase incoming consideration will need to be given to funded at a cost of $45 million including diversification potential encouraging the has been prepared by the Town of Port on Karratha. The desalination plant will freight handling at ports will require re-energising general cargo freight lines the cost of returning treated effluent water development of local industries to service Hedland and proposes two stages of need to be supplemented with the improved port access roads, lay-down, from the south to the north. Consideration to Port Hedland for re-use in irrigation. these projects. redevelopment, totalling in the vicinity of of integrated freight planning has been development of water extraction from the warehousing and logistics centres to be $90 million. This upgrade and expansion Port Hedland’s Lumsden Point has been initiated by Infrastructure Australia. At a Bungaroo Valley noting that this system 6.5 WASTE MANAGEMENT established. These are large and capital programme is only partly funded and requires extensive upgrading. Significant intensive developments with a clear identified as a possible location to develop conceptual level, there is the possibility There is currently minimal recycling of presents a significant investment investment opportunities lie in this commercial opportunity. a marine-based CUF. The project would of having rail links from Perth, through waste in the region. The next decade opportunity. essential services sector. be modelled on the successful Australian Geraldton up to the Pilbara and potentially will require a comprehensive waste The need for improved port access roads Marine Complex CUF at Henderson (Perth). Karratha Airport from Kalgoorlie to the Pilbara, eliminating Water Corporation are negotiating with recycling and disposal plan. Also critical will extend to beyond the immediate The Pilbara Cities Office has committed $5 the requirement for freight from the east The Shire of Roebourne’s Karratha Airport Rio Tinto Iron Ore for ongoing supply is the establishment of a suitable Class proximity of the ports to feeder roads. It million to undertake a full feasibility study coast to travel into the north west via Perth. master plan 2009 is currently under from Bungaroo and the Department of IV waste management and hazardous will also see a call for additional east west for the CUF. The impact on roads, the negative carbon review. This airport is already exceeding Water is working to firm up a potential waste disposal facility. Sites in the Shire linkages connecting inland towns such as footprint and escalating fuel costs should 6.6.3 Airports passenger traffic levels forecast for 2016 50GL per annum supply from the West of Roebourne and Town of Port Hedland Newman, Tom Price, Paraburdoo and the require a re-appraisal of the competiveness Canning Basin Sandfire project to service myriad of mine sites to the NWCH and and is struggling to meet the transport are currently under investigation for A State Aviation Strategy is currently being of rail as an alternative or multi-modal Port Hedland. the ports. requirements of over 900,000 passengers this purpose. New Energy Corporation is developed, driven by the rapid growth of option in combination with road freight. planning a waste to energy plant in the per annum. 6.6.2 Ports the resources sector and its reliance on Boodarie Industrial Estate in Port Hedland. FIFO services. The Strategy will provide a In recent years the Shire has upgraded This project features a generation capacity Extensive port development is planned policy framework and clear direction for the main runway to handle airside of 15MW of energy, a waste capacity of up including expansion to the outer harbour investment in aviation infrastructure and movements and has recently spent to 100,000 tonnes per annum and 30 full at Port Hedland and the development of services in Western Australia. This will set $7.34 million on car park expansion and time jobs. Anketell Port to service the $5.7 billion Aquila Resources Project and other parties.
11 http://www.commerce.wa.gov.au/scienceinnovation/PDF/Publications/CUF_North_Report_Apr.pdf
22 PILBARA REPORT 2012 PILBARA REPORT 2012 23 7 Funding the Future 8 An Investment Transformation
Conservative estimates place the GRP of the Pilbara at $14.04 billion.
Over the period 2008-09 to 2010-11 Figure 7: Pilbara GRP Scenarios the rate of growth of GRP in the Pilbara has been higher than the fast growing Series 1: Transformation Growth Scenario Series 2: Low Growth Scenario economies in Asia. The Pilbara should 30000 continue to experience high rates of GRP growth in the next 5 to 6 years mainly 25000 as a result of an exceptional increase in resource sector investments and production, which should have strong 20000 multiplier effects on the other sectors of the economy. 15000 AS mn Some of the key economic facts that, 10000 while often publicised, are only now beginning to gain serious traction in the minds of the public and private sectors, 5000 7.1 ROYALTIES Table 7: State Mining Royalties from the Pilbara are detailed below: • By 2018 the export value of major 0 Most WA royalties are collected from 1 234 5678910 Royalties Actual Actual Budget Forward Forward Forward minerals, primarily iron ore, and oil companies operating in the Pilbara. Years 2008-09 2009-10 Estimate Estimate Estimate Estimate and gas, could be up to $150 billion. Total royalties were over $3.8 billion in • With a conservative growth estimate of more permanent work force, and local 2010-11 2011-12 2012-13 2013-14 This is not a certainty as quantities and 2010 and in 2011 exceeded $4.9 billion. 5% per annum the Pilbara population production and services, the faster the Iron ore 1,933 1,720 2,676 2,970 3,062 2,929 prices may vary significantly – the latter Additional royalties are collected by the will have exceeded 80,000 by 2020. If Pilbara economy will grow. (A$ m p.a.) is difficult to forecast. Nonetheless Commonwealth government. Onshore all the major projects come to fruition the value of the Pilbara economy to The high growth scenario (taking into mining royalties were approximately $2.39 Petroleum 21 30 40 42 43 41 and the constraints to growth are WA and Australia is likely to increase account the high rate of growth from billion in 2010. Table 7 (right) shows the (A$ m p.a.) removed this population could reach substantially. 2008-09 to 2010-11 and high levels of royalties for iron ore and petroleum from 100,000 by that date. Pilbara resources. Approximately 70% One concept would be the conversion companies. The significant difference • The Pilbara currently accounts for capital investment thereafter until at least • The Pilbara currently generates about of all WA mining royalties are from the of the Pilbara Cities initiative into a that is required is for the development of almost two thirds of the commodity 2016-17) is possible, even with a short $5 billion of royalties for the State Pilbara. Following the announcement of development bank model with a regional these assets to be driven primarily by a exports of the State by value, which term fall in commodity prices. Over the (this is about 75% of the total resource an increase in State Agreement royalty sovereign fund underpinning investments. combination of public need and positive is almost 20% of the total value of ten year period 2013 to 2022 GRP is likely industry royalties collected by WA). payments effective 1 July 2012 and 2013 This model would allow greater rigour return on investment, rather than as merchandise exports of Australia. This to increase from about $14.5 billion to these returns will increase. in project appraisals but also a one-stop struts under the resource sector. New contribution will increase significantly • Even with a significant drop in about $27 billion. Over the same period shop concept for streamlined project models of ownership, investment strategy over the next 5 years commodity prices, in current dollar the contribution of the Pilbara economy to For the 2011-12 financial year, the terms these royalties are unlikely to the WA economy (GSP) is likely to increase mobilisation. Public-private partnerships and development objectives need to • The project pipeline for expansion State allocated $1.2 billion to Royalties drop below $5 billion per annum, and from 7% to about 11%. could be facilitated through such a model. be defined. and new investment into mining and for Regions with about $345 million are more likely to increase. support infrastructure by the resource earmarked for projects in the Pilbara. 7.2 PUBLIC-PRIVATE PARTNERSHIPS Proposals include resourcing the The low growth scenario is predicated on industry is estimated to be over $100 • Approximately 10% of these royalties Pilbara Cities Office as a fully fledged the public utility infrastructure investments As the Pilbara enters a new significant Much of the development that has billion over the next five years, building are currently earmarked on an annual development bank for the Pilbara; not taking place on schedule and land growth curve, evidenced by the escalation taken place in the Pilbara can already upon the current substantial investment basis for public sector projects in the developing a substantial land bank to release being delayed. This would of investment and production by mining be conceptualised as private-public levels Pilbara. create liquidity in the housing market; and, constrain the deepening of the local companies and offshore gas facilities, it partnerships. Resource companies have encouraging domestic and international • The number of new construction jobs • The impact of such growth on GRP is economy, and place ever more reliance is highly likely that even with a fall in a long history of providing essential superannuation funds to buy into during this period is in the order of extremely difficult to calculate because on imports of both products and labour commodity prices, the level of royalties infrastructure and utilities in the region. infrastructure asset developments. 40,000 (mostly FIFO) with about 15,000 the big unknown is how much of the (FIFO), which while probably ensuring the will remain around $4 billion from the Naturally, the primary requirement was permanent new resource industry jobs income and product will be generated resource sector investments take place, Pilbara, for at least the next five years. to fulfil their needs for infrastructure to created by and stay in the Pilbara itself does not in itself equate to significant rises Given the proposed lifespan of Pilbara support mine production, but in so doing, rather than from outside the region in the GRP. • Using the generally accepted multiplier Cities, thought needs to be given to what towns were built and community services (predominantly Perth at present). of 1.8 the resource industry will The impact of the proposed comes next to maintain the level of public were, and are, provided. This continues generate another 10,000-12,000 jobs in Two growth scenarios have been transformational growth on GRP over the good and utility investment required to today with major port, rail and housing support industry and commerce. estimated for this Prospectus, a high sustain the region. next 10 years could be as shown in Figure developments often funded by resources growth scenario and a low growth • The Pilbara as a whole had a 7 (above), if there is a diversification scenario. The greater the success of permanent population of about 55,000 and deepening of the value chains of the the Pilbara Cities Vision in attracting a people in 2011 Pilbara economy.
24 PILBARA REPORT 2012 PILBARA REPORT 2012 25 9 The Enabling Environment
The scope and scale of development will be dependent on the ‘enabling’ environment. That is, in order to enable sustainable changes, key aspects of the environment need to be considered, namely political, economic, social, cultural, technological, (natural) environmental and legal factors. Specifically, this includes legislation; processes; institutions (and their roles); the cost structure for households and businesses; and, sufficient investments in construction, housing, infrastructure and economic diversification.
9.1 SPECIAL ECONOMIC ZONES (EPZ), Duty Free Zones (DFZ), Industrial The creation of an SEZ for the Pilbara by Zones (IZ), free ports and Urban Enterprise establishing new policy, regulation and One enabling mechanism is the creation Zones among other enabling mechanisms. enabling mechanisms, including delivery of a Special Economic Zone (SEZ) to reduce The experience of many successful SEZ of the necessary skills and resources to costs and increase required investments around the globe should be considered bring it into effect, would provide a clear in the non-resources sector. SEZs have to design an effective SEZ for the Pilbara. opportunity to meet these objectives. quite a long history. They have become The overarching purpose of an SEZ is to Such a move would warrant the creation more prevalent over the last two decades maximise economic growth and contribute of an appropriate governance structure and span all regions of the globe. The to the social sustainability of the Pilbara, for the Pilbara, pulling together the International Labour Organization‘s thus assisting with the achievement of the myriad of agencies and organisations database of special economic zones Pilbara Cities Vision. charged with development across the reported 176 zones in 47 countries in region. Considerable investigation The objectives of an SEZ are to: 1986; by 2006 this had risen to 3,500 has been undertaken into a suitably zones in 130 countries. Studies by 1. Ensure continuing large scale structured and empowered organisation. organisations such as the World Bank12 investment in the resources sector to Regional Development Australia Pilbara have stressed the importance of suitable maximise the contribution of the sector has championed the call for ‘one’ body policies as a basis for effective economic to the GRP of the region and the nation; within the region that has the knowledge, 13 stimulation. An article in VOX has recently relevance and authority to conduct high encapsulated lessons learned over the last 2. Adjust the legislative framework to attract business diversification level discussions and decision making. This few decades, noting that it is only recently call was echoed in Recommendation 10 that SEZs have been used as a policy through investment in non resource sector activity; of the 2011 Review of the Functions and instrument. Responsibilities of Regional Development 3. Utilize an economic management Due to the new economic environment Commissions which stated: system that is especially conducive to created under a SEZ, investors can doing business in the Pilbara “Establish a Ministerially endorsed and benefit not only from the wide range mandated working party to strengthen of business opportunities, but also from 4. Provide sufficient essential tax and investment incentives, access infrastructure to support development; the integration and alignment of statutory to a highly qualified labour force, as 5. Improve the processing of investment land use planning, regional development, well as natural and energy resources. applications to reduce costs and speed and local government service delivery An SEZ across the Pilbara would ensure up approval and, therefore, delivery of within existing legislative planning the necessary infrastructure and services investments; frameworks for the Pilbara region.” for manufacturing and industry, attract 6. Reduce the cost structure of the Pilbara, additional diversified investment, including accommodation, services, Combining the functions, powers, and incentivise the development of new transport and communications; resources of the many Pilbara agencies technologies, diversify the economic into one Pilbara Development Authority 7. Diversify the economy and secure Regional Development base, and enhance entrepreneurial and will surely empower and provide greater investment by non extractive industries; technical capacities. In order to achieve responsiveness. This focused approach Australia Pilbara has 8. Encourage local production to meet a transformational change in the way to facilitating the development of the championed the call business is done in the Pilbara, and supply chain needs; region, including the establishment of a given the pace at which government 9. Increase the proportion of residents in special economic zone with development for ‘one’ body within process must keep up with production, the population of the Pilbara consistent bank capabilities, will enable the region it is proposed that an SEZ designation be with the Pilbara Cities Vision; to operate effectively and efficiently. This the region that has the formulated for the Pilbara. 10. Increase skills levels of the working enabling mechanism is critical to optimise knowledge, relevance population; and the Pilbara’s potential. The SEZ category can embrace a wide and authority to conduct range of special zones, including Free 11. Increase employment opportunities. Trade Zones (FTZ), Export Processing Zones high level discussions and decision making. 12 VOX (network of research based policy analysis and commentary from leading economists) - Thomas Farole - Senior Economist in the International Trade Department of the World Bank - September 2011 13 Special economic Zones performance, lessons learned, and implications for Zone development - April 2008 26 PILBARA REPORT 2012 PILBARA REPORT 2012 27 10 Economic Diversifi cation Perspectives
On 16 May 2011, State Cabinet approved an allocation of $30 million to support economic diversification in the Pilbara under the Pilbara Cities initiative.
For employment targets14 to be realised Economic diversification opportunities that • Set up systems that enable investors to matter characteristics and perform an 10.3 BUSINESS INCUBATION There is potential for the farm to promote it is essential that the economies of the have already been identified as having be more responsive to changing market energy evaluation. The bio-fuels produced local employment and skills generation, main Pilbara cities be diversified. This will potential include: demands as well as be less dependent from these crops and trees burn cleanly Business Innovation and Incubation re-generation of marine biodiversity, Australia15 (BIIA) believes that it is time have the added benefit of making the • Tourism; on harsh and/or declining natural and emit 60–80% less greenhouse gas and improvement of the local economy. towns less susceptible to the uncertainties resource bases; emissions than diesel. for the Australian Government to have Predictive models indicate an output in the of global resource commodity price • Aquaculture; another look at business incubation first year of 400 tons rising to 1,400 tons • Integrate the recommended projects so Other benefits include: fluctuations. Economic diversification is as a way of generating wealth and per annum by year 6. Further opportunities • Value Adding to Resources; that they all form part of the system or employment for Australia. The world most likely to be achieved by identifying • Alternative energy at a cost per litre of exist for the establishment of a local supply chain of the sector; and, has moved on with models of business and making use of the region’s • Biofuels and Algae Based Industry; less than half current diesel fuel costs; processing plant. Excess seed production • Improve either the existing operation competitive advantages. These are: incubation that are delivering real from the hatchery could be sold regionally • Agriculture and Pastoral Industry and management systems and/or the • Limited requirements for fuel economic benefit, and Australia is being to other commercial farms. Indicative • Significant reserves of iron ore and Development; supply chains of a variety of products. transportation across large distances; left behind. capital costs of $1.3 million for a 400 ton other minerals - industrial backbone; • Feedstock for pastoralists that will • Engineering Infrastructure Supporting Diversification of the economy is critical Through the Pilbara Development farm and $3.6 million for a 1,000 ton farm. • Major off-shore reserves of oil and gas – help the Pilbara to drought-proof and Oil and Gas and Mining Project to sustainability of the Pilbara. A range of Commission and other regionally based Potentially high Internal Rate of Returns industrial backbone; achieve higher mass on livestock; Development; opportunities that have been identified agencies, studies have now been (IRR) of over 20% are achievable. • Proximity to Asian markets - some four already need to be thoroughly explored, • Tree plantations such as sandalwood; • Solar and Renewable Energy Provision conducted or are being conducted into billion people in the same time zone; though comprehensive feasibility studies. 10.5 RENEWABLE ENERGIES and Energy Efficiency; and, • Production of co-product carbon black the feasibility of establishing a series of • Renewable energy potential - solar, To illustrate the opportunities that could be which has a high current value and business incubators. Site selection and A comprehensive study on renewable wind, wave, tidal and thermal energy; • Industrial Water Efficiency Measures. developed, selected project examples are limited sources of supply world-wide; concept plans exist for Newman reflecting energies for the Pilbara has recently presented below. • Raw natural beauty of the region’s Studies are required to identify the • Alternative economy for a mine a viable operation. A similar exercise been undertaken and provides a detailed ranges and coastline - tourism; Pilbara’s comparative advantage for new 10.1 TOURISM site once it moves towards closure has been undertaken for Karratha and analysis of the issues and opportunities, 16 industries or expansion of sectors in the thereby having sustainable use of built this model is concurrently being applied challenges and risks . The report suggests • Aboriginal culture and heritage - The recreational vessel marinas and Pilbara. These studies can then be used infrastructure; to Tom Price and Onslow in the Shire of that wind power and photovoltaic lifestyle tourism; residential precincts proposed for Dampier to promote the Pilbara to international Ashburton. The model is capable of being solar energy show the most likely • Early settlement and pastoral heritage - and the Spoilbank in Port Hedland are both • Agricultural incubation and learning investors, as an incentive to stimulate translated to other Pilbara locations such competitiveness in the Pilbara. The region lifestyle tourism; in the planning phase. These two projects centres; and, further investigation and investment as Port Hedland and Roebourne. The is regarded by some as the ideal location have a forecast cost of approximately • Use of mine de-water most of which is • Mild dry winter climate - lifestyle in new enterprise opportunities. It is feasibility work done to date indicates for these industries. However, there are a $225 million, and together with extensive currently not used. tourism; and envisaged that support will be required to that these developments present sound number of challenges to overcome before landside facilities, present significant • Abundant land. transition the concepts identified by the Indicative financial benefits include: investment opportunities, providing solid renewable energies become a significant investment opportunities. returns. Indicative investment costs per source of energy, and the increasing use of studies through to project opportunities. • Saving in the region of $20 million per business incubator site range from $5 renewables will need to be incentivised. 10.2 BIO-FUELS year for a medium sized mine site on These investment opportunities should be million to $35 million depending on size fuel costs. Approximate production of 2 To illustrate the potential of renewable selected on the basis that they will make The Department of Regional Development and sophistication. million litres of bio-fuel; a positive contribution towards creating and Lands (RDL) has funded a pilot project energies, consider the case of a new sustainable production systems for these to demonstrate how high energy bio-fuel • Income from feedstock and co-products 10.4 AQUACULTURE solar plant which has recently been with carbon black selling at approx. commissioned in India in an environment sectors in the Pilbara. Accordingly, selected crops can produce High Energy Return on A proposed project is the development of $700/ton. Approx production of 9000T similar to the Pilbara. The 40 MW plant projects aim to: Energy Invested crops on marginal lands off-shore and on-shore based Asian Sea using mine de-watering. The pilot project of carbon black; is on 350 hectares, contains 500,000 PV • Improve or establish the production bass (Barramundi) farms, possibly in the undertaken by AgGrow Energy Resources solar panels, and was built at a cost of just systems and supply chain infrastructure • Total indicative investment requirement Dampier area. The proposed system would has been located adjacent to the Woodie under $150 million. It was co-financed by of existing or potential new products for 140Ha site is between $10-12 be pump-ashore for grow-out with a Woodie mine site in the East Pilbara, the Asian Development Bank. respectively; million depending on location and hatchery facility and associated feed plan. which is about 150km east of Marble Bar. available on-site infrastructure; and, A feed mill is considered to be optional. • Introduce the element of diversification, Indicative costs can be provided along and hence reduced risk, as a strategy The project ran pilot trials on a range of • Moderate to high return on with further detail of data requirements for improving each sector’s production different biomass crops and indigenous investments. for development of such a facility. and profitability; tree species under drip irrigation. The aim was to evaluate their respective dry
14 Pilbara Planning and Infrastructure Framework, Pilbara Regional Planning Committee - 15 Business Innovation and Incubation Australia, Study Tour of New Zealand Incubation 2010 Western Australian Planning Commission, November 2011 16 “Assessment of the potential for renewable energy projects and systems in the Pilbara”, October 2011. Prepared for the Australian Centre for Renewable Energy (ACRE) by Evans & Peck and WorleyParsons. 28 PILBARA REPORT 2012 PILBARA REPORT 2012 29 The Priority Infrastructure Projects 11 Housing and Land: Investment Prospectus
The focus now shifts to the critical projects that are required in the short to medium The housing and land situation in the main Pilbara towns has been an issue of term for the Pilbara region in order to secure the three essential ingredients for increasing concern and continues to be the number one constraint raised by all stakeholders. Using currently available data, Table 8 (below) highlights the achieving transformational growth – housing, power and water. dynamics of the residential market at present.
In a highly distorted market environment Table 8: Pilbara House Prices and Sales it is difficult to quantify what would be regarded as a “normalised” market. The Location Average House Price Average sales per year one comparator would be Perth, where A$000 Dec 2011 (last three years) supply and demand tends to be in relative Port Hedland 1,000 ~ 50 equilibrium and the cost of land and South Hedland 750 ~ 170 housing (all things being equal) are in similar order of magnitude to the average Karratha 850 ~ 170 house price. This is illustrated in Table 9 Newman 700 ~ 40 (right). Other Pilbara towns 870 ~ 60 There are many variables that could All Pilbara Residential Lots 450 ~ 280 impact the costs and prices, but by using (residential land) (land only) this average data, established Perth houses sell for about a 10% premium over the cost of building a new one. In the two main Pilbara towns the premium Table 9: Price Comparisons between the Pilbara and Perth is in the order of 25%. Using the Perth ratio at current market prices, and Land and housing comparisons Pilbara Perth equivalent without adjusting for any economies of Cost of bringing average Lot of 700m2 to $200,000 $150,000 scale reduction in Pilbara building costs, market ready in Hedland and Karratha the average current price for a house in Cost of building average house of 200m2 $440,000 $300,000 Hedland and Karratha should be more in the order of $700,000. Recent data on Cost of building land and house $640,000 $450,000 supply and demand that takes into account Average sale price of houses (Dec. 2011) $800,000 $500,000 all of the proposed, planned and under Average weekly rental for $2,000 $500 construction residential developments in a standard family home Hedland and Karratha, and using Pilbara population growth projections, reveals the following macro level picture shown in Table 10 (right). Table 10: Potential Housing Demand in Pilbara Cities (Dwelling Units)
There are a significant number of Town Existing Forecast Forecast Development Shortfall assumptions and caveats on this outcome Supply Supply Demand required that have been discussed in detail in (2012) (2016) (2016) the broader Pilbara Plan review. The Port Hedland 6,054 11,455 11,440 5,401 -15 figures shown here do not reflect annual dislocations between supply and demand. Karratha 5,680 8,551 9,907 2,871 1,356 However, at the most macro level if Newman 1,859 2,431 3,044 572 613 these projections are achieved then there Total 13,593 22,437 24,391 8,844 1,954 is a possibility of Pilbara house prices stabilising and possibly even reducing towards Perth averages over the next five to ten years. From an investment residential housing sales value of up to residential needs with supporting perspective and again just using average A$9 billion. Inherent to this investment commercial and retail facilities. Estimated current prices the value of the Hedland and potential is the need for a broader mix returns on investment would be moderate Karratha residential construction market of residential offerings, more attention to high with possible IRRs of 20%. (land and house) over the next five years is to appropriate designs for the geography potentially A$7 billion, with an estimated and climate of the region, and integrating
30 PILBARA REPORT 2012 PILBARA REPORT 2012 31 12 Power: Investment Prospectus
Figure 8: Existing and Future Power Demand and Supply Source: Pilbara Infrastructure Priorities 2011 Update Report, (Unpublished)
12.1 OVERVIEW the South West Interconnected System One option is for Horizon (SWIS). It supplies residential, industrial The North West Interconnected System and commercial customers and resource Power to build, own and (NWIS) consists of power networks and developments. It delivers power to over generation capacity owned and operated 43,000 customer connection points, operate a generation plant by multiple parties including BHP Billiton supplying more than 35,000 residential or to underwrite a new Iron Ore, Rio Tinto Iron Ore, Alinta, ATCO properties and 8,000 businesses. It and Horizon Power. It is WA’s second generates only about 13% of the private facility through a largest transmission network with an electricity it supplies from its own assets, installed capacity of 500 MW and 1,200 long-term Power Purchase with the remaining 87% being purchased As an example, to bring the numerous Port Hedland Power Generation Project helping to stabilise long term planning for km of transmission lines. Approximately from privately-owned generators and small miners operating to the east of the new commercial, residential and industrial 75% of the region’s installed generation Agreement (PPA) and The most critical immediate area for renewable energy from Verve Energy. Wickham-Tom Price transmission line onto investors in the region. It could encourage capacity (1,600 MW) is not connected supply is Port Hedland and the objective guaranteed provision of the Horizon Power grid would require some economic diversification activity. to the NWIS. This reflects the fact that Horizon Power’s load in the Pilbara has is to secure a stable supply for existing a major transmission line development resource companies have tended to grown significantly in recent years. gas to that new facility. and future demand with a 120MW power Key risks include: running North-South from Port Hedland develop energy supply solutions to service The current demand supply balance is generation plant. At this point in time to Newman. This could cost in the region • Capital cost to borrowing ratio the needs of individual projects, rather becoming increasingly tight and does Alternatively, there is currently a there is no identified funding solution of $600 million and is in Horizon Power’s than adopting an integrated, coordinated not cater for expansion in the region. At significant amount of underutilised and, therefore, a start date cannot be • Planning process long-term development scenarios. grid-based regional energy development least 90 MW of new generation capacity generation capacity in the Pilbara resulting determined. It is acknowledged that • Security of TEF arrangement strategy. A number of these isolated will be required by 2016 to meet existing from the number of self-generation A number of resource companies are supply will be needed in 2013, although • Long term PPAs generation facilities are predominantly known loads. It is estimated that a total of facilities without network connection, and planning or constructing new generation the project is anticipated to take 3 years IRRs would need to be provided by small-scale and diesel-fired. 350 MW of generation and transmission consequently with excess levels of reserve plants, for example Citic Pacific (450MW) for completion. A range of funding a feasibility study, but preliminary upgrades will be required to meet the capacity. If these assets could be accessed and Rio Tinto Iron Ore (250MW). These mechanisms could be considered including Horizon Power is a vertically integrated indications are that they would be in the power requirements of Karratha and Port to make more efficient use of existing are currently being built independently public-private partnerships. The current electricity provider responsible for 5-10% range. A range of stakeholders rank Hedland over the next 10 years. Horizon capacity, less new generation investment of network system requirements and estimate for the cost of the plant, plus generation/procurement, transmission, this project as a high priority. Power is presently evaluating a range of would be required, although investment in include substantial reserve capacity. all ancillary infrastructure works, is in the distribution and retail of electricity to options to procure this capacity. transmission capacity would be required to Existing and future power demand and order of $400 million. customers in regulated areas outside transport the power to the load centres. supply is shown in Figure 8 (above). A new power plant would increase the supply capacity to Port Hedland, and through the NWIS to the Pilbara region,
32 PILBARA REPORT 2012 PILBARA REPORT 2012 33 13 Water: Investment Prospectus
Capacity of utility infrastructure in the Pilbara is a major short-term issue that needs to be resolved as a matter of priority.
The supply of water and energy in Figure 9: Initial Water Supplies and Demand for Karratha17 (includes Karratha, There is a strong possibility that the Figure 10: Water Supplies and Demand Port Hedland18 Karratha and Port Hedland has become Wickham, Roebourne, Point Samson, Dampier, Burrup and Cape Lambert) existing Karratha water scheme may have critical to the extent that proposed growth to rely on a new desalination plant to cannot be accommodated. In short, Karratha population Existing BFPL desalination upgrade add to existing supplies with a capacity Port Hedland population Efficiency savings neither town will be able to support a (Pilbara Cities population growth scenario) Efficiency savings of 15GL that is required to meet demand (Pilbara Cities population growth scenario) population increase to 25,000 by 2020 Bungaroo Borefield Harding Dam & Millstream groundwater until 2022. Current demand is above Desalination plant Existing scheme supply without extensive, additional investment. Desalination plant Existing scheme supply the sustainable yield of the existing Existing groundwater update Desalination Onslow, although smaller in size, is in a 35 30000 West Pilbara System. The most reliable 30 30000 Projected plant Projected similar position. water short term source option is a new 15GL Upgrade water 30 demand 25000 desalination plant constructed on the 25 25000 The Pilbara Regional Water Plan 2010 Desalination existing demand plant cost Burrup Peninsula. This will fulfil the borefields 2030 - provides a strategic and long term 25 Bungaroo 20 borefield expected demand for water until 2022. 20000 approach to sustainable water resource 20000 The desalination plant will need to be planning and management for the Pilbara 20 15 15000 supplemented with the development of region. Potable Water use across the 15000 15 water extraction from the Bungaroo Valley. (GL/a) Water 10 10000 Pilbara falls into two distinct categories: (GL/a) Water The existing system requires upgrading. population Projected
water delivered through water supply 10000 population Projected 10 5 5000 schemes to towns and ports, and water 13.2 PORT HEDLAND INVESTMENTS managed through ‘self supply’ at mine 5 5000 The current BHP Billiton water allocation 0 sites. Water associated with mining falls 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 could be increased from 7.5GL to 15GL into both of these categories and accounts 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 to supply additional needs until 2016. for approximately 70% of managed water. Thereafter, it is possible that additional The increasing scarcity of water resources, water could be sourced from the West 13.3 WEST PILBARA SCHEME 13.4 PORT HEDLAND AND NEWMAN 19 particularly in coastal areas, will create re-use storm and waste water, as well as water available from this source will be Canning Basin, at an estimated capital cost AND PORT HEDLAND WASTE WATER CONVEYANCE uncertainty for the State, the community providing green spaces for community needed by the mining company. of $400 million. If this is not the case, then Transfer of water from sites in the East The Port Hedland wastewater projects and industry. While short term ground enjoyment. Water sensitive urban design a 5GL desalination plant may be needed A potential borefield exists near Cape Pilbara region that have surplus supplies include wastewater conveyance projects in water supplies may be adequate, long approaches must be tailored to the to secure supplies until 2020 with a capital Preston, which could be developed to is also being investigated. This requires a Port and South Hedland, which need to be term water supply requires a strategic climatic conditions of the Pilbara. cost of up to $500 million. supply the West Pilbara Water Scheme, full feasibility study to determine capital advanced to service growth, but for which approach to cater for growth in demand Most of the water used by coastal towns although an 80km pipeline would be An upgrade of part of the Port Hedland costs and cost effectiveness related to the funds are currently not fully available. A from industry and commerce - future and for port water supply, in terms of required to connect the source to the water supply and conveyance system is different volumes of supply. Additional similar expansion is required in Newman. demand increases may be met in part by volume, is delivered through the West scheme. The pipeline could convey also required. The demand for this project investment opportunities may arise from The estimated capital cost is $35.8 mine de-watering in the Pilbara. Pilbara Water Supply Scheme and the surplus water from the Citic Pacific is being driven by the abnormal rate of investigations and studies being carried million. This funding demand is being Matching sources and supplies to meet Port Hedland Water Supply Scheme. mining Cape Preston desalination plant mining development in the Port Hedland out by the Water Corporation. For example driven by the heightened rate of mining demand, and at the same time ensuring Inland towns are serviced by specific currently producing 50GL per annum of and East Pilbara Shires. The Port Hedland additional supplies to Port Hedland development in the Port Hedland and East the best water management outcomes, local schemes. process water with an ultimate capacity water projects include upgrade of the could be sourced from a new bore field Pilbara Shires. Wastewater treatment has should form the focus of water supply for 100GL per annum. This would assist supplying up to 6GL per annum from a not been listed as the Water Corporation 13.1 KARRATHA INVESTMENTS transfer main from the Yule groundwater planning. There will be a requirement to in supplementing existing supplies source, storage tanks and distribution suitable location on the De Grey River has already funded these requirements. identify and utilise new water sources. In Karratha it appears that water from until 2014. Water supplies for the Shire network improvements that have had to aquifer and a possible groundwater option In addition, the design and structure the Bungaroo Borefield development by of Roebourne are shown in Figure 9 be deferred due to insufficient funds. The exists in the Canning Basin. of housing and development will need Rio Tinto Iron Ore will only be available (below). This includes Karratha, Wickham, capital cost is estimated to be $63 million. to consider water efficiency through until 2014. Thereafter the 2ML per annum Roebourne, Point Samson, Dampier, Burrup Water supplies for Port Hedland are shown maximising opportunities to harness and currently available will be lost as all of the and Cape Lambert. in Figure 10 (above right).
18 17 The growth scenario used for water demand is based on the Pilbara Cities forecast of 25,000 people in The current demand is currently 9.5GLpa as BHP are not using their full entitlement. Karratha by 2020. This approximately corresponds to the Water Corporation high growth scenario. This Source of graph draft PIPF (unpublished) Dept of Planning 19 scenario corresponds to Department of Water high growth scenario anticipated through Pilbara Cities. Priorities discussed with Department of Planning and Department for Regional Development and It is also worth noting that the supply assumptions assume both ground water and desalination. There Lands – a full feasibility study will be required is a possibility that all future supply is sourced from desalination.
34 PILBARA REPORT 2012 PILBARA REPORT 2012 35 Contacts for Pilbara Regional Council Small Business Centre East Pilbara further investigation [email protected] [email protected] Ph: 08 9467 2456 Ph: (08) 9173 2335 Regional Development Australia Pilbara Level 1, 414 Murray Street, 6 Anderson Street, [email protected] PERTH WA 6000 PO Box 685, Port Hedland 6721 Ph: (08) 9144 0651 Lotteries House Town of Port Hedland Karratha and Districts Chamber Morse Court [email protected] of Commerce and Industry Karratha 6714 Ph: (08) 9158 9300 [email protected] McGregor Street Ph: (08) 9144 1999 Pilbara Development Commission PO Box 411 Port Hedland 6721 Unit 3/24 De Grey Place [email protected] PO Box 10, Karratha WA 6714
Port Hedland Office Shire of Roebourne Ph: (08) 9173 8400 [email protected] Newman Chamber of Shop 2/6 Wedge Street Ph: (08) 9186 8555 Commerce and Industry PO Box 544, Port Hedland 6721 Welcome Ave, [email protected] Karratha Office PO Box 219 Karratha 6714 Ph: (08) 9175 5996 Ph: (08) 9185 0600 Lot 1403 Mindarra Drive Cnr Searipple and Welcome Roads PO Box 611, Newman 6753 Shire of East Pilbara PO Box 294, Karratha 6714 [email protected] Newman Office Ph: (08) 9175 8000 Port Hedland Chamber of Commerce Ph: (08) 9173 8400 Kalgan Drive, [email protected] Unit 1/46 Iron Ore Road PMB 22 Newman 6753 Ph: (08) 9173 1737 PO Box 630, Newman 6753 5 Wedge Street PO Box 95, Port Hedland 6721 Shire of Ashburton Pilbara Cities Office [email protected] [email protected] Ph: (08) 9188 4444 UWA Pilbara Ph:1300 72 2255 (1300 PC CALL) Poinciana Street [email protected] PO Box 567, Tom Price 6751 Ph: (08) 6488 2188 Karratha Office 460A 35 Stirling Highway 5 Sharpe Avenue, Crawley 6009 PO Box 888, Karratha 6714 Small Business Centre West Pilbara Perth Office [email protected] Level 2, 140 William Street Perth 6000 Ph: (08) 9144 4668 PO Box 1143, West Perth 6872 Unit 2/24 De Grey Place, PO Box 1568, Karratha WA 6714
Prepared by CCS Strategic in association with Imani Development and Turner Design.
36 PILBARA REPORT 2012 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