WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE

March–May 2004 $3 (inc GST)

Print post approved PP 665002/00062 post approved Print WESTERN AUSTRALIAN OFFICES Department of Industry and Resources Mineral House • 100 Plain Street • EAST PERTH WA 6004 Tel: +61 8 9222 3333 • Fax: +61 8 9222 3430 www.doir.wa.gov.au Investment Services FROM THE MINISTER 168–170 St Georges Terrace • PERTH Western Australia 6000 Postal address: Box 7606 • Cloisters Square PERTH Western Australia 6850 Optimism with LNG Tel: +61 8 9327 5555 • Fax: +61 8 9222 3862 Email: [email protected] NG is vital as an emerging energy source at a time when there INTERNATIONAL OFFICES is concern about the longer-term sustainability of supply of Europe petroleum, issues about security of energy supplies generally, Government of Western Australia L and the need for the world to progress to less greenhouse-intensive European Office • 5th floor, Australia Centre Clive Brown, MLA Corner of Strand and Melbourne Place and polluting forms of energy. Minister for State LONDON WC2B 4LG • UNITED KINGDOM The Western Australian Government is optimistic that several Development Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637 Email: [email protected] new LNG projects can be developed within the next two decades. India — Mumbai To maximise opportunities in LNG and related sectors, the Western Australian Trade Office Western Australian Government is focusing on four strategic areas 93 Jolly Maker Chambers No 2 9th floor, Nariman Point • MUMBAI 400 021 INDIA — developing a strong and competitive economy; providing Tel: +91 22 5630 3979/74/78 • Fax: +91 22 5630 3977 supportive infrastructure to projects; ensuring Government Email: [email protected] facilitation optimises outcomes for business, Government and the India — Chennai Western Australian Trade Office - Advisory Office community; and developing long-term relationships between all players as the basis for 1 Doshi Regency • 876 Poonamallee High Road ensuring mutually beneficial outcomes. Kilpauk • CHENNAI 600 084 • INDIA Tel: +91 44 2640 0407 • Fax: +91 44 2643 0064 Our vision is that Western Australia becomes a world-class energy hub incorporating LNG E-mail: [email protected] and gas processing industries, and where the skills and expertise of those industries that Indonesia — Jakarta support our LNG sector — specialised engineering, manufacturing, equipment suppliers, and Western Australia Trade Office c/- Australian Trade Commission • Australian Embassy maintenance contractors — are recognised both domestically and internationally. JI H R Rasuna Said Kav C15 - 16, Kuningan This means we are not only looking at supportive physical infrastructure, but knowledge JAKARTA 12940 • INDONESIA Tel: +62 21 2550 5331 • Fax: +62 21 522 7103 infrastructure as well. E-mail: [email protected] Western Australia is also taking a long-term strategic view by participating in the hydrogen Indonesia — Surabaya economy. Perth will soon be one of only 10 cities world-wide to participate in a global trial of Western Australian Trade Office Graha Pena 17th floor • Jalan Ahmad Yani 88 hydrogen-powered buses. SURABAYA 60234 INDONESIA The State Government’s in-principle approval of the Gorgon gas processing facilities on Tel: +62 31 829 9979 • Fax: +62 31 829 9975 Email: [email protected] Barrow Island is a great example of how we are working with industry and the community to Japan — Tokyo sustainably develop Western Australia’s natural resources. Western Australian Government Office We will continue to develop commercial relationships across a broad spectrum of issues, Australian Business Centre 28th floor, New Otani Garden Court and with a wide range of stakeholders, especially at events like the LNG 14 conference in Qatar 4-1 Kioicho, Chiyoda-Ku • TOKYO 102-0094 JAPAN in March, which I will be attending. Tel: +81 3 5214 0791 • Fax: +81 3 5214 0796 Email: [email protected] Japan — Kobe Western Australian Government Office 6th floor, Golden Sun Building • 3-6 Nakayamate-dori FROM THE DIRECTOR GENERAL 4-Chome Chuo-Ku • KOBE 650-0004 JAPAN Tel: +81 78 242 7705 • Fax: +81 78 242 7707 Email: [email protected] Realising the value Malaysia Western Australian Trade Office he underlying asset value of Western Australia’s resource base 4th floor, UBN Tower • 10 Jalan P Ramlee KUALA LUMPUR 50250 MALAYSIA has been highlighted through massive capacity expansions Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177 by the iron ore industry, securing its future as an economic Email: [email protected] T powerhouse. Middle East Western Australian Trade Office • Emarat Atrium BHP Billiton, Hamersley, Robe and Portman have between them PO Box 58007 • DUBAI • UNITED ARAB EMIRATES Tel: +971 4 343 3226 • Fax: +971 4 343 3238 committed about A$3.5 billion to further development, with BHP Jim Limerick E-mail: [email protected] Billiton flagging an additional A$6.7 billion investment in its WA Director General People’s Republic of China — resources portfolio of projects over the next five years. Department of Industry Western Australian Trade & Investment Promotion and Resources Shanghai Representative Office • Room 2208, CITIC Square 1168 Road West • SHANGHAI 200041 Much of the increased iron ore demand and resultant increased PEOPLE'S REPUBLIC OF CHINA project investment has been instigated by China, which last year surpassed Japan as the Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889 world’s leading seaborne trader of iron ore. Email: [email protected] People’s Republic of China — Hangzhou This edition of Prospect focuses on the boom which is China, and, in particular, the roles Western Australian Trade & Investment Promotion Hangzhou Representative Office played by the WA resources industry in cementing further and future contracts with that Room 910 • World Trade Office Plaza country. Zhejiang World Trade Centre 15 Shuguang Road • HANGZHOU 310007 It shows that the WA iron ore industry has the resources and ability to meet China’s PEOPLES REPUBLIC OF CHINA Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295 demand over the long term, as it did during the earlier days of the 1960s and 1970s with E-mail: [email protected] the growth in the Japanese steel industry. Taiwan WA Business Development Manager Western Australia’s commercial ties with China are close. So too are the government-to- Australian Commerce & Industry Office government relationships, in particular those with the Zhejaing Province where WA has a Australian Business Centre Suite 2606, International Trade Building sister-state relationship. #333 Keelung Road Section 1 • TAIPEI 110 TAIWAN Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707 The Department of Industry and Resources is looking to build stronger commercial ties Email: nicholas.mckay@austrade,gov.au with Zhejiang, including undertaking an Energy Options Joint Study to examine the Thailand WA Business Development Manager feasibility of utilising LNG in the province. Australian Trade Commission • Australian Embassy 37 South Sathorn Road • BANGKOK 10120 • THAILAND Tel: +662 287 2680 Ext 3307 • Fax: +662 287 2589 E-mail: [email protected] in this issue 8

InIn thisthis edition,edition, ProspectProspect focusesfocuses onon China,China, aa countrycountry withwith aa boomingbooming economyeconomy andand oneone thatthat presentspresents hugehuge opportunitiesopportunities forfor aa resources-richresources-rich StateState likelike WesternWestern Australia.Australia. TurnTurn toto pagespages 8–178–17 forfor moremore details.details.

special feature CHINA

2 LIQUEFIED NATURAL GAS 20 BURRUP PENINSULA Western Australia, with its vast natural gas resources, is An insight into the development of infrastructure on the a strong contender to supply LNG to markets on the Burrup Peninsula where a number of big gas processing west coast of the United States. projects are planned.

4 SEISMIC SURVEY 22 CEREAL STRAW Offshore seismic survey program begins to map the A cooperative of Jerramungup farmers is assessing the boundaries of Australia’s biggest gas field, north of potential for a major new integrated industry based on cereal Onslow. straw pulp, bio diesel, eucalyptus oil and power from biomass. 5 PETROCHEMICALS Good progress is being made with the foundation 23 WASTEWATER petrochemical industry on the Burrup Peninsula, a The Kwinana industrial strip is about to host the biggest A$630 million ammonia plant that will serve markets in wastewater recycling plant in Australia. Asia. 25 SUBSCRIPTION FORM 6 GRANITE Green granite from a quarry at Jerramungup makes its 36 RESOURCES MAP way to London for a stunning feature at a new Australian War Memorial.

18 GRIFFIN VENTURE A look at the success behind BHP Billiton Petroleum’s floating production storage and offtake vessel, the Griffin Venture, which has been now been operating for 10 years.

Front cover: A worker inspects rolls of Prospect ISSN 1037-4590 steel at the Baosteel steel Western Australian Prospect magazine is published quarterly by the Western Australian Government’s Department of Industry and plant in Shanghai. The Resources (DoIR) and Ray Burns Media. plant uses high-grade iron Editorial management: John Terrell, DoIR Communications & Marketing Division. Tel: (08) 9327 5555 • Fax: (08) 9327 5500. ore from Western Australia Advertising management: Ray Burns Media, PO Box 1230, South Perth Westerm Australia 6951 Tel: (08) 9227 6688 • Mobile: 0408 474 328 • Email: [email protected] for much of its feedstock. Prospect has been compiled in good faith by the Department of Industry and Resources from information and data gathered in the course of the magazine’s production. Opinions expressed in Prospect are those of the authors and not necessarily those of the Department of Industry and Resources. No person or organisation should act on the basis of any matter contained in this publication without considering, and if necessary taking, Department of appropriate professional advice from other sources. The Department of Industry and Industry and Resources Resources, its employees and contracted personnel undertake no responsibility to any person or organisation in respect of this publication. www.doir.wa.gov.au ABN: 69 410 335 356

Prospect March–May 2004 1 Liquefied Natural Gas Western Australia poised to tap into giant US market

estern Australia is an early favourite BY MARK DIXON LNG export opportunity as proponents such to help fill a massive requirement DEPARTMENT OF INDUSTRY AND RESOURCES as Chevron turn their focus further south, to for liquefied natural gas (LNG) in the State of Baja in Mexico. W a new phase of maturity for the Western the western United States in the wake of its New terminals could be built in Baja and Australian energy sector through the creation energy crisis and projected increases in linked through to the US national grid via of a new, reliable and major market. demand. existing or new pipelines. Mexico has also That would also provide a more stable Key players in the North West Shelf (NWS) expressed great interest in taking Australian market for the NWS producers, largely development, including BHP Billiton, LNG for its own under-nourished energy eliminating the cyclical nature of current ChevronTexaco and Shell, are already needs. environment, particularly demonstrated targeting the region, with plans to construct Baja gas requirements are currently met through the seasonal nature of markets such the first LNG receival terminals on the US west from the US, but construction of a terminal in as Korea. coast. that region could see gas provided first to LNG imports into the US currently Industry analysts say that Western Mexico, with the surplus being sold into amount to just 2% of total gas demand, a Australian LNG could be fed into the US California. figure projected to rise to at least 8% by 2010. system at highly competitive prices. This US gas distributor Sempar Energy is In 2002 LNG, imports amounted to 4.8 Mt. would create valuable diversity for Western joining forces with Shell in a A$750 million They were expected to reach 11 Mt in 2003 Australian LNG exports, which are currently receival terminal in Baja, with Western (the equivalent of four North West Shelf LNG dominated by Japan and will soon be Australian gas regarded as a front-runner for trains) and are expected to increase to 46 bolstered by a long-term supply arrangement meeting supply requirements. Mt/a by 2010. Current gas demand in the US with China. ChevronTexaco has also announced plans is in the order of 22 Tcf, which is equivalent to The US export concept has been given for a A $940 million terminal 13 km off the about half of the currently identified total added muscle by the State of California’s push coast of Baja, with commissioning expected resources of the Greater Gorgon gas fields. for cleaner and more reliable energy sources. in 2007. President of the company’s global gas By comparison, Australia consumes about In fact, Governor Arnold Schwarzenegger says division, John Gass, said it would allow the 1 Tcf per year. Western Australia’s total gas California’s wholesale power market must be tapping of the "world-class" Gorgon field. resources are currently more than 120 Tcf. reformed to attract new energy investment, Premier Gallop and his deputation met There are, of course, hurdles to overcome and is currently considering an Energy Baja California Secretary for Economic in serving the giant US gas market. Not least Commission report, which includes Development, Sergio Tagliapietra, and while are those involving the inherent mistrust in recommendations on improving California’s inviting the Secretary to Western Australia to California about any form of gas. Much of natural gas industry. see first-hand the proven track record of local this is based on the locals’ Western Australia’s Premier, Dr Geoff LNG developments and supply, he stressed miscomprehension of the differences Gallop, last year headed a high-level the State’s stability and security. between LNG and liquefied petroleum gas. delegation to the United States that held Mr Tagliapietra said that while Mexican The recent explosion and loss of life at the several meetings in California and Mexico, LNG receival terminals and associated Skikda LNG processing plant in Algiers has promoting the concept of LNG importation developments had their detractors, largely also tainted the till-then exemplary safety from the North West Shelf. based on a disastrous LPG fire in Mexico City record of the industry and fuelled fears in the And the United States Secretary of Energy, in 1984 in which 500 people died, the US of potential terrorism targets at both Spencer Abraham, told an LNG roundtable Government had the numbers to ensure the terminals and shipping facilities. conference in Melbourne in January he would proposal would proceed. All of this has heightened concern be "most pleased" to have Australia supply a While Mexico represents an exciting new regarding the construction of essential LNG substantial part of US import needs. step, it is the United States market which is receiving terminals on the Californian coast. He recommended that Australia pursue creating a sense of urgency — on both sides BHP Billiton is overcoming one obstacle American businesses now in the bid to play an of the Pacific. through the proposed construction of a important role in meeting future energy In Perth, the Western Australian Chamber A$900 million Cabrillo terminal, a requirements. Senator Abraham said he of Minerals and Energy has stressed that the permanently-moored floating storage and wanted to see Australia as a prime supplier, State must strike while the iron is hot. conversion facility 30km offshore from and to be part of the solution to the US In the United States, the key National Ventura County. An undersea pipeline into problem. Petroleum Council, which advises the the existing system would then the From an Australian production viewpoint, Secretary of Energy, has highlighted the need natural gas to supply centres on the Gorgon could come on stream in 2008 at an for urgent action to overcome supply mainland. optimum time, while monetisation of shortages. The Cabrillo development could be the resources in the massive Browse development, Senator Abraham told the Melbourne ideal fillip for the major BHP-Esso scheduled for 2015, are well positioned to take conference that pressure was being applied to Scarborough gasfield on the outer offshore advantage of the steadily escalating American regulators to expedite their tasks to address Carnarvon Basin. demand. the supply issue. He pledged to clear Ironically, the anti-construction It all points to an exciting and lucrative blockages or address issues where they were environment could also instigate a further window of opportunity, which could establish noticed. 2 Prospect March–May 2004 Unloading: Within a few years LNG tankers like this one could be delivering large volumes of gas from Western Australia to the US west coast.

Prospect March–May 2004 3 Big seismic program to size up IO/Jansz

major seismic program has begun to delineate Australia’s biggest gas field, Aadjacent to the already massive Gorgon reserves. The Jansz and interconnecting IO fields hold an estimated 20 trillion cubic feet of gas, representing 40% of the discovered gas resources in the deeper waters of the Carnarvon Basin, which has emerged as one of the world’s major natural gas provinces. IO/Jansz, and the adjoining Chandon prospect, will be the subject of one of the biggest 3D seismic surveys carried out in Australia, by the -going seismic survey vessel Viking II, which is working in local waters for the first time. The Chandon part of the project is of an exploratory nature, but the potential of IO/Jansz is already largely understood. The excitement generated by its discovery highlights the striking progress that has been made on deepwater exploration and development in recent years. Sizing up the field: The seismic survey vessel Viking II at work off Western Australia’s The area was first identified as having a northwest coast, as it gathers data to help define Australia’s biggest gas field in the IO/Jansz and adjoining Chandon areas. potential for hydrocarbons a quarter of a century ago and a number of exploration representing one of the most leases were granted on or near what is significant global repositories of known as the Exmouth Plateau. energy. Two wells drilled in what was then very It is 150 km from Barrow deep water, on sites west of the IO/Jansz Island, the proposed site of an gasfield, found indications of gas. Wells LNG plant to serve the Gorgon drilled in the area over the next decade were project, which is 80 km from disappointing and exploration moved back IO/Jansz. to the shallow coastal waters. The 3D seismic program More than 20 years ago there was no being carried out by the Viking II market for Western Australian LNG, and covers 3600 square km, which production technology from water depths of includes the Chandon prospect, more than 1000 metres was still being on a scale necessary to survey developed. The gas found in the two initial such a big area. wells were low in condensate, an economic Multiple strands (each one disadvantage, especially when compared providing data from below the with the condensate-rich North Rankin and seabed) will mean the vessel can Goodwyn fields in shallower waters. cover a width of 700 metres on In the last decade, the expanding LNG each "pass", recording an sales from these fields, and the development immense amount of information of deepwater technology, revived interest in for later interpretation. Even at the Exmouth Plateau area. this rate, the survey will take five Fourteen years after the previous months and cost between A$20 program, a series of wells was drilled and in million and A$30 million. 1996 there was intense competition among Modern 3D seismic provides companies in a new round of permit an accuracy that is a magnitude releases. 2000 square km and the gas column is 400 greater than could be achieved in the past The Jansz-1 well was drilled four years metres thick. decades with two-dimensional surveys. ago in a water depth of 1321 metres. The 20 Tcf of estimated recoverable As one geologist describes it, the Another well drilled 18 km away reserves represents an immense asset to difference is like that between a photograph intersected the same reservoir and a total of Western Australia, offering another sharply in focus, and one that is blurred. four wells have delineated the field as huge opportunity for the development of LNG by world standards — it covers an area of markets, with the State’s gas fields already

4 Prospect March–May 2004 Burrup Peninsula Cornerstone ammonia plant on track

he first major industry within the Most of the newly created gas processing precinct Australian production Ton the Burrup Peninsula, a A$630 would go to a DAP plant million ammonia fertiliser plant, is on target in Orissa, the biggest of to begin production in the third quarter of its kind in the world. next year. The company said A number of elements of the project were the Burrup site had been completed on schedule in the three months chosen ahead of others to the end of December, with more now well in Trinidad and advanced in the next phase of construction. Venezuela because of Burrup Fertilisers has achieved the low sovereign risk in remarkable progress, with work beginning on Australia, an attractive the project less than three years after the gas price and the ability initial proposal for what will be one of the of Oswal to own the world’s biggest ammonia plants. entire project. Site preparation work was completed in When construction October 2003, along with the installation of Taking shape: A January 2004 concrete pour for boiler foundations began in April last year it site road sealing and the hand over of the of the A$630 million ammonia plant on the Burrup Peninsula. was seen as the first of a prepared desalination plant area. number of Services for the construction facilities and petrochemical ventures • a dedicated power plant with two 20 MW the installation of the stormwater drainage likely in the Pilbara. Negotiations to launch steam turbines and two gas-fired system were also completed. several others are proceeding. auxiliary boilers; The pouring of concrete foundations for Burrup Fertilisers chairman, Pankaj Oswal • two 40 000 tonne capacity atmospheric the pipe rack and the warehouse progressed said in Perth late last year that if the project pressure double-wall, double-integrity with more than 2000 cubic metres of concrete was launched on schedule and within budget ammonia storage tanks; being poured. the group could also build a urea and • loading facilities at Dampier ; Construction of the ammonia storage area ammonium plant in Western Australia, at a • effluent treatment plant; and commenced with the excavation for the ring- cost of A$1.3 billion. • associated support facilities. beam foundations for the two 55-metre Development of the ammonia plant will With a capacity of 760 000 tonnes of diameter ammonia storage tanks. Work has add yet another dimension to Western ammonia a year, it will be one of the biggest started on erection of the plates and Australia’s already broad portfolio of resource plants of its kind in the world. It will provide insulation under the tank base. development projects and industries. feedstock to meet an increasing demand for Telecommunications have been installed, Development of the ammonia project has fertilisers in Asia, particularly India. and the site was prepared for the cyclone been accompanied by the Western Australian The project is being built for the Delhi- season. Government’s A$134 million multi-use based Oswal Group to help meet India’s By the middle of this year work will have infrastructure package on the Burrup rapidly expanding demand for fertilisers. begun on the processing plant, the heart of Peninsula. This will include the upgrading of As one of the world’s biggest consumers, the venture. the Port of Dampier, the establishment of India’s current consumption is expected to The facility will comprise sophisticated multi-user infrastructure corridors, new and increase by 50%, to 36 Mt/a, in the next infrastructure including: realigned roads, and the installation of inlet decade. Oswal has a turnover of A$2 billion a • a 2200 tonne per day capacity ammonia and outlet pipes for water desalination. year and supplies about one sixth of India’s plant; Gas, at a rate of at least 73 terajoules of gas urea and diamonium phosphate (DAP) from • a closed-circuit seawater cooling system per day, will be supplied to the plant from the two plants. and single cooling tower; Harriet Joint Venture production hub on • a demineralisation water plant; Varanus Island.

Prospect March–May 2004 5 Jerramungup granite makes a striking memorial in London

"Next, a powerful gas-powered jet burner ne of London’s newest landmarks, BY MIKE FETHERSTON is used to heat the rock to make the initial the Australian War Memorial at GEOLOGICAL SURVEY OF WESTERN AUSTRALIA Hyde Park Corner, features a crack along lines of drillholes around and O under the block. Then a cracking agent spectacular wall of green granite sourced from a quarry in the Great Southern slurry, known as ‘expandite,’ is poured region of Western Australia. down every seventh vertical drillhole. The gumleaf-green granite, known in "Over one to two days, an exothermic the construction industry as Laguna reaction occurs in which gas is released Green, was chosen for the memorial by with sufficient pressure to complete the Sydney architects Tonkin Zulaikha Greer relatively even cracking process along whose design was chosen from a field of drillhole lines. 12 Australian companies invited to "Hydraulic jacks are then used to move submit entries by the Australian the block 150–250 mm out from the quarry Government. wall to a point where the hydraulic arms of Assisted by artist Janet Lawrence, a heavy earthmoving machine can be inserted in the gap between the block and Tonkin Zulaikha Greer’s design features a Photo courtesy Zulaikha Greer Pty Ltd. Neil Mackenzie, Tonkin gracefully curving wall, rising to 3.4 metres, Green granite: The Australian War Memorial in London the wall. Hydraulic pressure is applied by after the dedication ceremony. with its two arms sweeping out an earthmoving machine and the huge block boomerang-like for about 50 metres on number of four metre-deep benches have is toppled over, landing softly on its side on a either side of a centrally located dedication been cut to access the unweathered pile of rubber tyres. area. Designed to encapsulate the breadth dimension stone. "In this position, a slab drill divides up the of the Australian landscape in the style of Previous drilling has shown the rock to big block by drilling rows of holes 125 mm mountains and waves, the pale-green extend uniformly over many hectares, apart to produce rough-cut, rectangular 10 granite wall appears to form a natural indicating the presence of a substantial tonne blocks. The blocks are loaded, two at a amphitheatre merging into the resource of quality dimension stone in the time, onto a semi-trailer or into a shipping surrounding lawns. immediate area. container for dispatch to dimension stone For the construction of the monument, Fresh rock exposed in quarry faces suppliers." a team of 25 Australian stonemasons indicates the granite body is generally Laguna Green’s attractive pale-green travelled to London to spend a number of massive with only occasional joints and thin colour, combined with its demonstrated months assembling the thousands of veins at widely spaced intervals. Colour is physical properties indicate that it is a high- meticulously finished panels and blocks of mostly a uniform pale-green, extending over quality, strong and attractive dimension Laguna green dimension stone specified in relatively large areas. In addition, physical stone suitable for use in buildings and the design plans. Most panels are finished testing of samples has shown the rock to have monuments. The Australian War Memorial with a matte sheen, while some of the a high flexural and compressive strength, and project in London required approximately bigger, highly polished blocks bear the low water absorption properties. 190 tonnes of Laguna Green, and it has also memorial’s dedication plaques. Matte- Owner/manager of Wales Quarries, Craig been exported for use in construction finished panels forming the walls record Wales, explained the initial steps involved in projects in Japan, China, Taiwan, Indonesia, the 47 battle sites where Australian military the extraction of a 150 tonne block from the and New Zealand. personnel fought. Superimposed upon quarry face. Currently, the Geological Survey of these are about 24 000 place names from "A granite block of this mass measures Western Australia is carrying out an where Australian servicemen and women about 10 metres long, four metres high, and investigation of Western Australia’s hailed. A periodic flow of water across the 1.4 metres thick," he said. dimension stone resources to promote wall highlights these names, evoking "No explosives are used in the process, to interest in the State’s large untapped memories of the suffering and loss felt by preserve the structural integrity of the rock potential for this material. The investigation all. from both macro fractures, which may cause will cover historic, current and newly Australian Prime Minister John Howard blocks to split during processing, and micro discovered dimension stone sites comprising and Her Majesty the Queen officially fractures which may reduce the rock’s granite, dolerite (‘black granite’), limestone, opened the memorial at the local time of strength in later life. sandstone, marble, and other suitable rocks the Remembrance Day observance at "In the first instance, a line of four-metre throughout the State. As a result of these 11am on the 11th November 2003. vertical drillholes, spaced 125 mm apart, is studies a series of mineral resource bulletins Meanwhile, granite from the Wales drilled parallel to the quarry face, about 1.5 on dimension stone will be published. quarry some 20 km south of Jerramungup, metres back from the edge. Each end is then For further information contact Mike about 150 km northeast of Albany, drilled using the same spacing. Finally, on the Fetherston Ph: +61 8 9222 3322, continues to be extracted. quarry floor, horizontal holes 200–300 mm Email: [email protected] At this site, the granite is situated on a apart are drilled under the rock mass to be gently sloping hillside into which a removed.

6 Prospect March–May 2004 A Bright Future Planned for Investors in Victoria Petroleum N.L.

Victoria Petroleum N.L. looks set to increase oil production after joining the ranks of Australia’s oil producers. Participant in onshore North Perth Basin 5 MMBO Jingemia Oil Field production testing at 2000 bopd in 2004.

4 Development drilling program in Jingemia Oil Field with aim to increase production to 4000 bopd in 2nd half of 2004

4 Largest exploration acreage holder in South Australia and Queensland Cooper/Eromanga Basin

4 Five well drilling program in South Australia Cooper Basin in mid 2004 against industry background activity of 27 wells in 2004

4 Industry exploration success in SA Cooper Basin of 43%

4 Australia and US net oil production of 100 bopd in 3rd Qtr 2003 with 14 wells planned in 2004

4 Exploration drilling well funded with $5 million cash on hand at start 2004

CONTACTS John Kopcheff Managing Director Chas Lane Exploration Manager PHONE 08 9220 9800 FACSIMILE 08 9220 9801 E-MAIL [email protected] ADDRESS Level 36 Exchange Plaza, 2 The Esplanade, Perth Western Australia 6000 VICTORIA PETROLEUM ASX CODE: VPE FOR MORE INFORMATION PLEASE VISIT www.vicpet.com.au

DHA - VP0100 China China 8 China’s industrial expansion: what it means for Western Australia

he emergence of China as a major BY KURT SIBMA industrialised economy and important DEPARTMENT OF TREASURY AND FINANCE Tsource of world economic growth has become increasingly apparent in recent times. consumption, 21% of crude steel consumption, China’s rapidly expanding economy and 28% of iron ore consumption and 8% of nickel growing influence on global commodity consumption.2 markets is having a very large impact on Reflecting the strength of demand for economic activity in Western Australia and industrial raw materials and its own relatively creating a wealth of mutual opportunities for limited natural supply, import growth in China producers and exporters. has surged in recent years. In the year to China has had one of the fastest growing September 2003, total imports were valued at economies in the world over the past decade, US$381.2 billion — an increase of 38.8% from a with official data indicating that gross year earlier.3 domestic product (GDP) has increased at an China’s industrial expansion has not only average annual rate of 9.3% over this time. been important for local producers in terms of This exceeds the OECD average of 2.6% creating strong demand for export volumes, growth per annum and reflects the range of but it has also played a large part in driving the economic and institutional reforms recent upswing in many commodity prices. In undertaken by Chinese authorities since 1978 the December quarter 2003, the Western to transform China into a modern, market- Australian commodity price index expanded by based economy. Given that GDP per capita is a robust 28% in US$ terms — the largest still quite low in comparison with more increase in more than three years. This has developed economies, it is likely that China provided a very timely cushioning effect for will continue to experience high rates of many of the State’s exporters in circumstances economic growth in the years to come. where the A$ appreciated by more than 30% in Economic reforms in China have 2003 against the US$. occasioned a significant change in the Commodity price index structure of the Chinese economy, with the Western Australia manufacturing and service industries Index (2000–01 = 100) Busy marketplace: Shoppers crowd a shopping 140 centre in Ghangzhou, capital of China’s southern expanding relative to traditional sectors such 130 USD AUD Guangdong province, where much of Western as agriculture. The manufacturing sector has 120 110 Australia’s LNG exports to China will be consumed. been the standout performer in recent times, 100 with industrial production up 24.7% in the 90 80 year to September 2003, taking annual average 70 WA exports to China 1 growth over the past five years to 15.4%. 60 $ Billion Per cent 60 50 4.5 Industrial production and imports 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 4.0 50 Source: WA Department of Treasury and Finance China — annual average growth 3.5 40 Percent Percent In 2003, China surpassed Korea to become 3.0 30 30 60 Imports (RHS) Industrial Production (LHS) Western Australia’s second largest merchandise 20 25 50 2.5 export market (after Japan). China now 2.0 0 20 40 accounts for 13.1% of the State’s exports 1.5 Annual Value -10 15 30 Annual Growth (valued at A$4.2 billion), up from a 6.1% share a 100 10 20 1998 2000 2002 5 10 decade ago. Over the past five years, China has Source: ABS

0 0 accounted for more than a third of the State’s WA commodity exports to China -5 -1 0 total merchandise export growth, with annual $ Billion 1996 1997 1998 1999 2000 2001 2002 2003 1.8 Source: Thomson Financial Datastream Year to October 2003 growth averaging 24.8%. 1.6 Not surprisingly, trade in resource 1.4 This has transformed China into a major 1.2 commodities forms the mainstay of this 1.0 global consumer, producer and trader of relationship, reflecting Western Australia’s 0.8 many mineral commodities. In 2002, China 0.6 enormous natural resource wealth and its 0.4 accounted for 17% of world aluminium 0.2 0.0 items* Confidential

position as an efficient, low-cost and relatively Petroleum Wool Pig iron consumption, 20% of world alumina Iron ore close-by producer.

*Consisting mainly of alumina 1. Source: Thomson Financial Datastream. Source: ABS 2. Source: Deutsche Bank. 3. Source: Thomson Financial Datastream.

Prospect March–May 2004 9 To date, iron ore producers have been one growth in this area and a relative paucity of of the main beneficiaries from China’s international supply have set nickel prices WA–China industrial expansion. Heady demand from soaring — reaching levels not seen since the China’s steel industry, already the largest in late 1980s. association goes the world, has fuelled growth in iron ore China’s growing energy demands are also exports of 14.4% per annum over the past five adding another dimension to our rapidly years, taking the total value of exports to expanding trading relationship. In recognition back to 1984 A$1.7 billion in the year to October 2003. of the environmental implications of its After growing by an estimated 20.3% in current reliance on coal as the prime energy 2003, the Australian Bureau of Agricultural source, authorities in China are aiming to and Resource Economics (ABARE) is increase the share of cleaner sources of energy forecasting that crude steel consumption in such as natural gas. China currently plans to China will increase by a further 10.5% in 2004 double its gas consumption by 2010, implying — implying a very positive outlook for world an annual growth rate in demand of almost iron ore trade. 15% per annum. 5 The increase in iron ore volumes has This transition has already provided driven up freight rates, which account for a significant benefits for local producers. In 2002, significant component of the total cost of iron the North West Shelf consortium successfully ore to consumers. This has created an bid for the A$25 billion Guandong LNG supply Common interest: Australia’s Devonian additional incentive on the part of Chinese contract, which will see the 5th LNG train reef expert, the Geological Survey of producers to source iron ore from more established at the North West Shelf project Western Australia’s Dr Phillip Playford proximate suppliers such as Western joint venturer’s LNG operations on the Burrup (right) discusses with Chinese geologists the characteristics of an outcropping Australia, compared with the world’s other Peninsula. More recently, a proposal for a LNG Devonian reef in Guangxi Province during major producers in Brazil and South Africa. contract of similar magnitude from the Gorgon his 1988 visit to China. Recent growth in the Chinese steel joint venture was entered into with the China industry has precipitated a flurry of activity in National Offshore Oil Corporation (CNOOC) he Department of Industry and Western Australia’s resource and energy and publicly endorsed by authorities in China. Resources has had a strong association with China as far back as sector over the past year, with local producers Although trade in mineral and energy T January 1984 when the then Minister for accelerating capital investment plans and commodities exports is likely to remain a key Minerals and Energy, the Hon David Parker, announcing a series of (mine, rail and port) feature of Western Australia’s relationship with visited Qinghai Province. capacity expansions in a bid to satisfy China in the short term, opportunities also At the time, he made an offer to the growing demand. exist for local firms in the mining services and province’s governor to send two senior In line with the expansion of the Chinese technologies arena. With China seeking to staff from the Department of Mines to aluminium industry, Western Australia’s develop its own mining industry, demand for assess the mineral resources of Qinghai and potential ongoing cooperation in terms second largest export item to China, alumina, specialised equipment, technology and other of mineral exploration and development. has also experienced very strong growth in mining services is likely to expand significantly Subsequently, the then Assistant Director recent times. Consumption of aluminium in in coming years. General of Mines in Western Australia, Dr China surged by an estimated 28% in 2003 in Indeed, with an increasingly open and Phillip Playford, and the Supervising order to meet growing demands in high sophisticated economy, the range of Geologist, Precambrian Geology Branch, aluminium consuming industries, including opportunities for Western Australian business Geological Survey of Western Australia, Dr John Myers, visited Qinghai Province, in the construction, packaging and transport, and extends across a large array of industries — northwest of China near Tibet, in 1985. large scale upgrading of power networks.4 although success in any is not guaranteed. Dr Playford recalls it being a fascinating trip With China’s relatively low per capita Demand for professional services should grow to an area where some of the local people resource endowment and burgeoning as markets expand, while higher disposable had never before seen a European. industrial demand, the outlook for alumina incomes will generate heightened demand for "We were treated like royalty, usually with demand remains very healthy. Local education- and tourism-related services. The police escorts whenever we travelled in producers are also likely to benefit from provision of telecommunication services is public," he said. ongoing strength in alumina prices with another area of potential growth though "We noted that while 95% of the region’s global aluminium consumption rising at a international competition and barriers to entry economy was based on pastoralism, it was time of limited international alumina supply. will present ongoing challenges. also fairly rich in lead and zinc resources, with good potential for many other mineral As evidence of the tightness of this market, Overall, the robust medium-term outlook resources including petroleum." spot alumina prices increased by a for growth in the Chinese economy bodes well In 1988, Dr Playford made a return visit to considerable 85% in 2003 to the highest level for Western Australian industry. Although China for a study and lecture tour under the in more than three years. trade in mineral and energy commodities will Australian Academy of Science and Demand for a host of other base minerals dominate interaction between the two Academia Sinica Exchange Programme. has benefited from China’s strong industrial economies in the near future, Western growth. In particular, export volumes of Australia’s commercial partnership should also nickel have risen in concert with growth in mature and extend into direct investment and the Chinese stainless steel industry. Rapid the provision of high-quality services.

4. Source: ABARE. 5. Source: Department of Foreign Affairs and Trade (DFAT).

10 Prospect March–May 2004 At this speed, you can knock off early and head straight to the pub! The face of innovation

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BY BILL PRESTON Chinese imported ore demand. For the past DEPARTMENT OF INDUSTRY AND RESOURCES three years the percentage has been around 40% and the quantity of ore shipped to China WA iron ore shipments to China in 2003 was just under 60 Mt. In addition much of the State’s HBI production is destined for China. While there may be a small growth in domestic iron ore production in China, and providing imported ore prices and freight rates do not render them uncompetitive, the bulk of China’s increased demand will be met by imported ores. With a steel consumption In Western Australia, about A$3.5 billion in expected to reach 270–280 Mt in 2004 and investment is being pumped into capacity perhaps 300 Mt by 2005, and with only expansions by existing producers BHP around 30 Mt of net imports, iron ore imports Billiton, Hamersley, Robe and Portman, not can be expected to grow quite substantially. to mention the number of prospective new On a worldwide basis, CVRD of Brazil has industry players and additional capital that forecast that seaborne-traded ore could grow will be required should many of these new to an all-time high of 565 Mt in 2004, an projects go ahead. Both Hope Downs and the increase of around 50 Mt on last year. Fortescue Metals Group are talking of In 2003, China, with around 145 Mt of investment of A$1–1.5 billion for full imports, surpassed Japan as the world’s greenfields developments for mine and leading seaborne trader in iron ore and, with infrastructure. the growth patterns predicted, will be the In 2003, Hamersley Iron celebrated 30 major focus for any increased demand for the years of trade with China. Shipments from foreseeable future. To quote CVRD again, Western Australia commenced in 1973 with within the next five years it is estimated that about 1.5 Mt/a for each of the first five years China will provide two-thirds of world growth of supply. Western Australian sales have in demand for iron ore. Building up: Considerable iron and steel will continued to meet a significant, but variable, Western Australia is well placed to meet go into China’s unprecedented development proportion of the progressively increasing this demand with proximity and hence phase, such as on this construction site in significant sea freight advantages over its , about 120 km east of Beijing. The competitors Brazil, South Africa and India. In good news is that China is importing a lot of addition, the expansion potential for high-grade iron ore and hot-briquetted iron from Western Australia to fuel this growth. competitive value-in-use ores from Western Australia is large. Developments underway, or hina’s economic growth is providing planned to an advanced stage, could lift impetus for a strong demand for iron production from around 207 Mt in 2003 to an Cand steel products in the region. installed capacity exceeding 250 Mt/a by the A significant challenge for iron ore end of 2005, and around 300 Mt within three producers to date has been to analyse whether to four years. If many of the new projects increases in raw material requirements will be proposed are developed, the levels could sustained sufficiently to warrant the massive significantly exceed these tonnage forecasts. mining investment to underpin this new Ground breaking: Vice President Shanghai Apart from a few strategic investments, in demand. With China now implementing its Baosteel Group Corporation, Mr He Wenbo the past, Chinese imported ore supply has plans for modernisation and standard of living (second from right, pointing), examines project relied to a large extent on the spot and short- plans for the Eastern Ranges iron ore mine in targets within a 2020 timeframe, the term contract marketplace. The Channar Western Australia’s Pilbara region along with Joint Venture, established between Hamersley conclusion is in the affirmative. Worldwide Mr John Wood (first from left), Senior Project activity in growing iron ore production Manager Rio Tinto Iron Ore Major Projects Iron and the Chinese Metallurgical Import capacity has confirmed how seriously Group and other members of the BaoHI and Export Corporation (CMIEC) in 1987, is producers are now taking the ongoing growth Ranges Joint Venture Management one of the first of the overseas strategic Committee.The picture was taken on the 18 in demand. Even so, for 2003 and 2004, the investments undertaken by Chinese Feb 2003 at the ground breaking ceremony for

enterprises. capacity to supply will not have caught up with the Eastern Ranges mine. the demand.

12 Prospect March–May 2004 Global Recruitment Mining Oil & Gas Construction

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Western Australia Queensland Nevada China 8

The significant role that China plays in the market, and particularly in the growth in demand, has focused current efforts on long- term ore supply security to the many A growing sister-state relationship individually small and diverse, but collectively large, iron and steelmakers in China. With a estern Australia established a sister-state relationship with supply situation at the present time of W Zhejiang in 1987. At that time, Western universally full order books, Chinese consumers Australia and Zhejiang were both the are now looking to cement their future supplies fastest-growing economies in their either through further direct investment or respective countries. The two states long-term contracts. are highly complementary to one another in that Zhejiang’s population is Western Australia has been active not only in more than 25 times that of Western securing contracts, but also in joint venture Australia and, with only one-fifth of the investments. Baosteel is participating in the size of WA, Zhejiang lacks resources. recently commissioned mine development on On the other hand, Western Australia is the Paraburdoo Eastern Ranges deposits. It well known for its size and has an abundance of resources. holds 46% with joint venture operator Complementary interests: Western Australian Zhejiang has a population of 46 million. Hamersley Iron. Premier Dr Geoff Gallop catches up with Zhejiang With a total GDP of US$92 billion, Governor, Mr Lu Zushan, during a visit to Hangzhou Record deal Zhejiang is the third largest provincial in August 2003. In a recent record agreement with four of economy in China. The province’s strengths include the first and now two China’s biggest steel makers, BHP Billiton will of China’s few deep-water for the supply US$9 billion worth of iron ore to China country’s rapidly growing resources imports. Historically, Zhejiang was known as the land for over the next 25 years. fish and rice and was particularly famous for its silk and tea. Its traditional industries include Wuhan Iron and Steel Corp, Tangshan Iron light industry, textile and machine-building industry and some of its major industries include and Steel Group, Maanshan Iron and Steel building material, chemical, electronics and medicine. The province has a strong entrepreneurial culture; in fact nearly 90% of its companies are privately owned and operated. Company and Jiansu Shagang Group will take a 40% stake in the Jimblebar iron ore mine in WA Zhejiang’s strength in private sector economy is well recognised throughout China. Today, Zhejiang entrepreneurs, particularly from and , can be found throughout China. and commit to take12 Mt/a of ore per year. Yiwu Small Commodity Market and the annual Yiwu Expo in the middle of Zhejiang, with The agreement has a direct positive flow- 40 000 permanent stands and increasing, attract 200 000 traders and visitors daily from through for Western Australia, which is set to China and around the world Ningbo and , benefitting from its deep-water ports, are reap an additional A$15 million a year in becoming China’s important centres for importing energy and mineral resources and steel and royalties. Known as the Wheelarra joint venture, petrochemical industries. the arrangement is expected to open further Zhejiang is certainly Western Australia’s most important receival port for iron ore, barley, canola and wool. Ningbo’s Beilun Port has recently been added to a opportunities for BHP with its Chinese partners. capable of handling the import of live animals, including dairy cow breeding stock from BHP Billiton chief executive Chip Goodyear Western Australia. Over the years, both regions have maintained regular exchanges at the said the Chinese companies had, for the first highest level and exchanges have been conducted in many fields including culture, education time, ensured a stable, long-term supply of iron and agriculture. ore to their own operations. "(It) will underpin a Zhejiang has 18 sister-state/province relationships. Its relationship with Western Australia is major export agreement between Australia and considered the most active. In 2002, Western Australia and Zhejiang celebrated the 15th China and will cement an ongoing economic anniversary of the sister-state/province relationship. Events to commemorate the celebration included Zhejiang enterprises exhibiting at Perth Royal Show as part of the inaugural Guest partnership between BHP Billiton as a leading Nation project; bilateral visits by the Executive Vice Governor Mr Lu Zushan (now Governor) and supplier of raw materials and China as a major Minister Clive Brown, Zhejiang Female Artists exhibited their work at the Hellenic Gallery of the industrial nation," he said. Perth Museum and Perth Art Group Connection Visual II exhibited in Zhejiang province. Wheelarra is also expected to provide a In 2003, Vice Governor Dr Zhong Shan and Deputy Party Secretary Mr Zhou Guofu each led a launching pad for other businesses, notably delegation to Western Australia. During Vice Governor Zhong’s visit, a cooperative metallurgical coal and manganese. Memorandum of Understanding was signed between Hamersley Iron and Hangzhou Iron and Steel to supply iron ore to its new steel mill in Zhejiang. Premier Gallop also visited Zhejiang in Chinese investors have, through stock August 2003 and agreed with Governor Lu to undertake an Energy Options Joint Study to verify exchange activites, also taken shareholdings in the necessity and feasibility of utilising LNG in the province some of the State’s prospective iron ore With the maturing relationship with Zhejiang, the Department of Industry and Resources is developers; for example, Aztec Resources and looking to build stronger commercial ties with the province. In April 2004, the Western Midwest Corporation. Australian Chinese Chamber of Commerce will be leading a mission to China, with the itinerary In summary, Western Australia has an iron to include Hangzhou, Ningbo, Suzhou and Shanghai. Such missions provide excellent ore industry with the resources, initiative, opportunities to profile Western Australia, build relationships and investigate market opportunities. If you wish to know more about the missions and planned activities for China, investment potential and overall please contact Linda Franssen, Manager Market Development Greater China, at the competitiveness to grow to meet China’s steel Department (Tel +61 8 9222 5555 or by e-mail: [email protected]). growth over the medium and long term, just as Further building on Western Australia’s relationship with Zhejiang Province, the Western it did during its early development in the mid- Australian Governor, Lt General John Sanderson, has accepted an invitation from the Zhejiang 1960s and 1970s with the growth in the Japanese Government to visit there in June 2004. He is scheduled to visit Hangzhou, Shaoxing, steel industry. Ningbo as well as Kong, , Shanghai and Beijing.

14 Prospect March–May 2004 COSCO — the bridge over the sea that links China and Australia & a main carrier of LNG from Western Australia to China

On 24 October 2003 at Parliament House of Australia, Capt. Wei Jiafu, President and CEO of COSCO Group, was invited to Canberra to witness the signing of a MOU on the Management and Implementation of the Australia-China Natural Gas Technology Partnership Fund. Also attending the ceremony was President Hu Jintao of the People's Republic of China and Prime Minister John Howard of Australia accompanied by Premier Dr. Gallop of Western Australia. The documents were signed by the Australian Minister of Resource, Western Capt. Wei Jiafu witnessed the signing of Australia's Development Minister, President of China-Australia Partnership Fund Australian LNG and Minister Ma Kai of China's National Development & Reform Commission.

GORGON LNG Project COSCO’s next goal

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Capt. Wei Jiafu & Minister Ma Kai with Gorgon team in Canberra

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pilot training college overseas, in Western estern Australia Australia. Today, most of China Southern flights contributes 40% of have pilots on board who graduated from the Australia’s exports to W school in WA. China, making it the State’s second In 1997, the then China Non-Ferrous Metals largest export market and with the Corp signed a 30-year long-term contract with potential to overtake Japan as our Alcoa for the supply of alumina from Western leading customer. Australia. In the same year, the State This spectacular success is no Government and industry embarked on a accident, with government and program to promote LNG in China that finally industry patiently building resulted in the award in August 2002 of the relationships over many years, country’s first LNG supply contract with many of them through the Western Australia LNG. Australian Government’s energetic China staffers: The people representing Western 2002 will be well remembered in the history trade representatives in Shanghai Australia’s interests in China are (from left) William Wang, of Western Australia’s relations with China as a and Hangzhou. Nancy Zhang, Katherine Zhu, Stella Bu (seated) and BJ Zhuang. William and Stella are based in Hangzhou, while highly successful year in trade. The Western Australian Trade Katherine and BJ are based in Shanghai. In January 2002, Shanghai Baosteel Group and Investment Promotion signed the agreement with Hamersley Iron to Representative Office is located at CITIC During the same month, China’s largest jointly develop East Range iron ore mine. Three Square in the business centre of Shanghai, overseas industrial investment at that time months later Shougang (Capital) Steel joined Rio and is on the same floor as the official WA was agreed between Hamersley Iron and Tinto’s iron-making HIsmelt project at Kwinana. representative in Chaina. China Metallurgical Import and Export Soon after the sales and purchase agreement The office is headed by BJ Zhuang, from Corporation to develop the Channar iron ore for the LNG project was signed in Canberra and the Department of Industry and Resources, mine in Western Australia’s Pilbara region. in Perth in October 2002, the heads of agreement and two locally employed marketing staff, The success that flowed from both these were completed for CNOOC Ltd’s equity Katherine Zhu and Nancy Zhang. events inspired many more Chinese participation in the North West Shelf project. Two other locally engaged staff, Stella Bu companies to establish long-term trade and 2003 saw the momentum maintained. In and William Wang, are located in the investment relationships with various WA January, Beijing Sanyuan Foods Ltd concluded Hangzhou Representative Office. companies. an agreement with Challenge Dairy for a joint Both offices provide free consultancy In 1994, became venture to expand dairy production in Western services to Western Australian companies the first Chinese airline to establish its own Australia. interested in China and Chinese companies looking to do business in Western Australia. The State’s exports to China are dominated by mineral resources, with iron A garden to remember ore the most dominant. Last year was the he significant role played by Chinese in the 30th anniversary of the first iron ore exports Tearly development of most major mineral fields in Australia is to be recognised at the to China from WA, supplied by the Hamersley Australian Prospectors and Miners Hall of Fame Iron Company. in Kalgoorlie. But, the areas of interest have widened It will be in the form of an impressive Chinese greatly, with Western Australia enjoying a Garden of Remembrance that will cost more rapidly growing investment and trade than A$900 000, with funds being supplied by relationship with China. the Simon Lee Foundation, the Western Australian Chamber of Commerce and the The opening up of China to the outside Federal Government. world, part of economic reform in the past 20 During the last year, site works were carried out years, has resulted in a rapid increase in for large ponds and concrete pads to take Secluded tree-lined areas will create a sanctuary demand for mineral resources and now sees Chinese-style buildings, and in January 2004 for visitors to rest and contemplate during their Chinese companies investing overseas. contracts worth about one-third of the total visit to the ever-popular indoor/outdoor tourist Western Australia, being a State with small project cost were signed in Perth to advance the museum. population but rich in mineral resources, is project. Besides local content from Australian builders and suppliers, more than a dozen men from China contributing directly to China’s Architects Tsang & Lee, designers of the Chinese garden in Darling Harbour Sydney, will will travel to Kalgoorlie to assemble the modernisation program. oversee construction of the garden development centrepiece buildings and water features. A significant milestone was achieved in in Kalgoorlie. The garden is due for completion towards the end November 1987, when Western Australia and Red pavilions, rock and water features will of 2005. Zhejiang Province signed an agreement to provide a contrast between Australia’s dry So far, about A$25 million has been spent on the establish a Sister State/province relationship. outback landscape and that of a typical Chinese Australian Prospectors and Miners Hall of Fame The province boasted what was then China’s garden to give visitors a feeling of how strange it which was officially opened in October 2001. only deep-water port. must have felt for Chinese immigrants when they Last year the facility attracted more than 50 000 ventured into remote mineral fields like the visitors from all parts of the world. Western Australian goldfields.

16 Prospect March–May 2004 China 8

In May, CNOOC Ltd finalised its equity deal with the NWS venturers and in DoIR staff recognised in August, Jinchuan Nickel signed a long- term contract with Sally Malay Ltd to achievement awards acquire the entire production from the hile operating from different offices, often a considerable distance apart, Western company’s mine. Another nickel supply Australian public servants Peter Murphy, Linda Franssen and Bin Jun Zhung have been a deal was signed with WMC. Whighly effective team over the last seven years. China International Trust and That’s the number of years the trio has worked together providing State Government support for Investment Corporation, through its the North West Shelf Project’s successful bid to supply LNG to China’s Guandong Province. subsidiary in Australia, invested in Aztec Their outstanding public service, sustained focus and keen desire to achieve positive client Resources, which is redeveloping the outcomes were officially acknowledged recently with their success in the "group involved in a historic Koolan Island iron ore mine. special project" category of the StateWest Achievement Awards. Finally, in October, during the historic While each award member now works for the Department of Industry and Resources, their duties visit to Australia by Chinese President Hu have been undertaken on behalf of the Western Australian Government from several buildings Jintao, CNOOC Ltd signed an agreement spread between Perth, East Perth, West Perth and Shanghai, and for much of that time across two different departments. with the Gorgon participants for equity Mr Zhung, or "BJ" as he is popularly known, has been the Western Australian Government’s trade investment in the Gorgon project and the representative in China for many years. sale of LNG to China. Mrs Franssen received an additional individual merit award for a government employee working in Further Chinese investment in the a non-managerial position. Western Australian resources sector in the She believes that in a rapidly changing world, commercial opportunities in Western Australia have near future could include iron ore mines never been greater. and iron ore processing and paper pulp "With the Government and the Department of Industry and Resources committed to long-term production. partnerships, Western Australians stand to benefit through more jobs and local content from the Such investment enables Western signing of the big LNG supply agreement with China," Mrs Franssen said. Australian companies to secure markets Thought to be the largest, single-trade contract between China and Australia, the winning deal and China to have a secure long-term (worth A$25 billion over 25 years), coincided with the 30th anniversary of the establishment of source of supply of key industrial diplomatic relations between China and Australia and the 15th anniversary of Western Australia’s resources. sister state relationship with Zhejiang province.

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Prospect March–May 2004 17 Griffin–Chinook–Scindian project A reliable producer 10 years on

t’s the kind of project that resource developers dream about — one that pays License WA-10-L Oil field for itself many times over, and is still a Griffin I Gas field hearty producer today. Oil pipeline WA-12-L The Griffin–Chinook–Scindian oil and gas fields’ development, approximately 68 km offshore from Onslow, is still going strong despite initial forecasts that it would be Onslow wrapping up operations this year. Instead, it Tugbridgi appears it will continue production for at least another 10 years. Exmouth Owners BHP Billiton Petroleum (Australia) Pty Ltd 45% (operator), Mobil Exploration & Producing Australia Ltd 35% and Inpex Alpha Ltd 20%, celebrated the project’s 10th anniversary of production in January 2004. 0 km 50 The Griffin–Chinook–Scindian project cost the Joint Venture Partners A$720 million. This included exploration expenditure, set-up ARTICLES BY PROSPECT EDITOR JOHN TERRELL WHO RECENTLY VISITED THE GRIFFIN VENTURE OPERATION costs to bring the three fields into production OFF THE NORTHWEST COAST OF WESTERN AUSTRALIA. and A$229 million for the Griffin Venture, a floating production, storage and Despite a fire on the offloading vessel (FPSO). Griffin Venture in 1997, Since January 1994, the operation has an cumulative oil production excellent safety record from the Griffin–Chinook overall, achieving two –Scindian project had three-year periods reached 152 million barrels without a lost-time to the end of November injury among an average 2003, worth in excess of crew size of 35. US$5 billion (based on the Cyclones are an current oil price of US$35 occasional threat to the per barrel). ship. However, once a By November 2010, cyclone warning is when the three fields are received, the Griffin due to end their productive Venture simply life, they are expected to disconnects from a riser- have produced an turret system and sails estimated 170 MMstb. around the cyclone until Oil production peaked the storm passes. at 80 000 bbl/d, averaging Morale on the ship is 64 000 standard barrels of remarkably high. This oil per day between 1994 can partially be and 1996. attributed to the Additionally, significant generous remuneration amounts of natural gas have and benefits provided by Photo by Roger Buddrige been drawn from the FPSO veterans: BHP Billiton Petroleum workers Brenden Payne, Bob Scott, Dave Clifton BHP Billiton, but also the Griffin–Chinook–Scindian fieldsand over Bill the Warren last who have served on the Griffin Venture since its commissioningculture of teamworkin 1994. the company actively decade. Collected using a seabed gas- encourages. Marine personnel can live anywhere in gathering system, the gas is processed aboard major success stories," said Australian Australia. Some commute from as far away as the Griffin Venture and piped ashore and fed Operations Leader, Andy Oliver. Queensland, New South Wales and Tasmania into the Dampier-to-Bunbury Natural Gas "It has and still is enjoying excellent with all travel costs to and from the Griffin Pipeline to supply major industrial customers production and safety records, while at the Venture being met by BHP Billiton. like Alcoa of Australia in the State’s southwest. same time serving as an important training To reach the Griffin Venture, workers first "The Griffin Venture operation has ground for BHP Billiton’s other global catch a Qantas link jet from Perth to Barrow certainly been one of BHP Billion Petroleum’s operations." Island, and then undertake a 23-minute

18 Prospect March–May 2004 helicopter flight, landing on a helideck at the eastern state of Australia said he usually stern of the FPSO. indulged in two overseas holidays per year. It’s home away from Onboard the Griffin Venture there are While working onboard, crewmembers are home for Caribbeans three distinct work groups — production, well looked after by the catering staff, who maintenance and marine. The most can accommodate most dietary requirements common roster is two weeks on three weeks and offer a nutritious menu. In addition free off, although this can vary. time can be spent on the Internet e-mailing For example, the Marine Department loved ones at home or relaxing watching enjoys a roster comprising three weeks on, movies or television. three weeks off, three weeks on, followed by It is no wonder that 16, or nearly half the six weeks off. One crewmember, who resides total crew, have been onboard the Griffin in the Blue Mountains west of Sydney, said he Venture since it was commissioned in 1994. fits in plenty of golf and bushwalking during his leave breaks. A workmate from another Photo by Roger Buddrige How an FPSO works Griffin adventure: West Indian visitors Kurt Lyall and Andre Lewis during their training period in Western Australia, ahead of their first major work assignment at home on the Greater Angostura project in Trinidad/Tobago.

est Indians love coming to WAustralia. Generations of cricketers have proved this over the last half-century, fitting in comfortably with the Australian way of life, displaying their ample sporting talents and personalities along Hook up: The floating production, storage and offloading vessel, Griffin Venture, with one the way. of 287 oil tankers that have hooked up to the FPSO's stern over the last 10 years to load Now, in a different field, a group of petroleum and despatch oil supplies to BHP Billiton Petroleum's global customers. trainees from Trinidad/Tobago has taken a shine to the workplace and lifestyle Down he Griffin Venture is a purpose-built refrigerated to remove condensate which is Under, as part of a special training program Tdisconnectable floating production, storage added to the stabilised crude oil. being undertaken by BHP Billiton Petroleum in and offloading vessel, more commonly known The treated gas is subsequently warmed and Western Australia. as an FPSO. It was constructed by Samsung compressed for export to onshore facilities at The six trainee operators/maintainers are here Heavy Industries in South Korea and Onslow via a subsea pipeline. It is then fed commissioned in January 1994. for six months to enhance their skills, before into the Dampier-to-Bunbury Natural Gas returning home to work on one of BHP Of 99 800 deadweight tonnes, the 240-metre Pipeline and sold to markets in the State’s Billiton’s latest petroleum projects, off the long double-hulled ship resembles a mini oil southwest. northeast coast of Trinidad, where production refinery with a 54 metre-high flare tower, Shuttle tankers moor astern of the Griffin is due to commence in December 2004. kilometres of piping, plus pressure vessels, Venture to offtake crude oil through a floating pumps, meters and other equipment. Other trainees from Trinidad/Tobago have hose. been sent to BHP Billiton Petroleum's largest Below decks are numerous storage chambers, So far, a total of 287 tankers have hooked up operated asset, at Liverpool Bay in the United plus a series of control rooms, an engine to the Griffin Venture to take on oil cargoes, Kingdom, which comprises the integrated room, gas-fired power station and generally of 100 000 tonnes each. development of five offshore oil and gas fields accommodation quarters. During the highly productive early years of the in the Irish Sea. But, perhaps the ship’s most striking feature Griffin Venture’s working life, tankers called at While the Greater Angostura project in is a bow-mounted disconnectable turret that a rate of about one per week. Now, they are Trinidad/Tobago involves a production allows the Griffin Venture to lock-on to a pipe- arriving at an average of one every month. platform, the processing method where oil, like seabed riser. However, it is still a very profitable business gas and water are separated offshore at a The sophisticated mooring system allows the for BHP Billiton and its partners. central point, is similar to that on board the Griffin Venture to weathervane around the Western Australian-based floating production, turret riser, allowing hydrocarbons and storage and offloading vessel Griffin Venture, reservoir water to be fed aboard the where some of the West Indians are receiving FPSO from flowlines and wellheads their training. below. Among them are Kurt Lyall and Andre Lewis, The production process begins who have learned plenty about the company’s with water being separated culture in terms of safety and general from the valuable operations processes. hydrocarbons, cleaned and "The people here have made us feel at home, then pumped back into and, overall, we have very much enjoyed our the sea. The oil is stay here," said Kurt. cleaned, cooled and stored in seven While not at work (two weeks on, one week at double-hulled cargo BHP Billiton Petroleum’s Perth office and one tanks that can hold week off), the West Indian pair has relished up to 750 000 the opportunity to watch some live cricket and barrels of oil. soccer matches, including the one-day international between Australia and India, and In-coming gas is Hydrocarbon heaven: A depiction of the subsea layout of the dehydrated, and then Griffin–Chinook–Scindian operation. numerous soccer matches involving Perth Glory.

Prospect March–May 2004 19 The Burrup — on the threshold

Three decades ago, a everal features strike first-time visitors to BY DEPARTMENT OF INDUSTRY AND RESOURCES PROJECT MANAGER, Sthe Burrup Peninsula, near Karratha. MURRAY JORGENSEN, WHO REGULARLY VISITS THE BURRUP PENINSULA TO major solar salt field From a distance, the landscape gives an COORDINATE INFRASTRUCTURE IMPLEMENTATION MATTERS WITH OTHER began operating there. impression of being a barren wasteland, GOVERNMENT AGENCIES AND STAKEHOLDERS. Two decades ago, natural almost useless for anything. gas was piped ashore However, on closer inspection much lies and processed at in and around the tidal flats and rich red Woodside’s gas plant, rocks that have piled up and shattered over some for export as millennia of scorching summers. liquefied natural gas Whether it’s a kangaroo on the hop, a sun- (LNG), and some for the baking python, a patch of Sturt’s desert peas, domestic market in the a cluster of smooth white-trunk Coolibah Perth–South West area trees, or some Aboriginal rock art, there’s via a 1500 kilometre generally always something to arouse one’s pipeline. curiosity. Apart from This is "the Burrup" — a unique place that expansions to the today has the potential to become Australia’s Woodside gas plant and most strategic industrial site and a construction of another powerhouse of the nation’s economy. pipeline to transport gas Surprise, surprise: First impressions can be deceiving. This is what The first sign of industrial activity on the a motorist driving towards the Burrup Peninsula sees first. Many to Port Hedland, no new Burrup was associated with the export of iron interesting features lie beyond. industries have operated ore in August 1966, nearly four decades ago. on the Burrup since the mid-1980s. However, the current development of a fourth LNG train at the Woodside facility will BHP Billiton — the big Australian boost throughput by 40%, heralding a new era for the Burrup. This expansion, plus a possible fifth LNG train, will provide oil producer abundant feedstock for numerous gas-based HP Billiton has a huge profile on the world’s mineral stage and, in fact, is the world’s downstream processing industries that are Blargest diversified resources company. queuing up for development. They include Little known is the fact that petroleum is the company’s biggest single commodity earner, industries that will produce chemicals such accounting for US$1178 million, or 34% of BHP Billiton’s total earnings of US$3481 as ammonia, urea, methanol and dimethyl million for the year ended 30 June 2003. ether — all of which the world, particularly This compares with US$1045 million for the company’s global carbon steel materials Asia, is hungry to receive. business including iron ore, US$581 million for aluminium, US$299 million for diamonds With them, these projects bring and other speciality products, US$286 million for base metals and US$190 million for challenges, because the Burrup is also a coal. valued recreational area for local residents, it BHP Billiton is also Australia’s largest oil and gas producer, and is ranked eighth globally in this sector (Source: PFC Energy, October 2003). Its petroleum production is sourced from has tourism potential, it is home to some many places in the world including Australia, the United Kingdom, the United States, unique species of flora and fauna, and it is a Pakistan, Algeria and Bolivia. repository for a rich concentration of Its interests in Australia include a one-sixth ownership of the giant North West Shelf project Aboriginal rock art. offshore from Dampier (oil, gas, condensate and LNG), significant joint venture interests in Accommodating all these competing uses the Bass Strait (oil, condensate, LPG, natural gas and ethane), Laminaria/Corallina in the for the land is not an easy task, but a key Timor Sea (oil), and the Griffin project (oil and gas) offshore from Onslow. milestone in three decades of planning for In Western Australia, the offshore area of the Carnarvon Basin remains a key focus area the region was the preparation of the Burrup for BHP Billiton Petroleum exploration. BHP Billiton Petroleum is the operator of exploration permits WA-255-P, WA-155-P(1) as well as retention lease WA-12-R (Macedon–Pyrenees Peninsula Land Use Plan and Management fields) and production licenses WA-10-L and WA-12-L (Griffin–Chinook–Scindian complex). Strategy in the mid-1990s. Last year discoveries included Stybarrow (WA-225-P) and Ravensworth-1 (WA-255-P (1) and This plan won a citation for excellence in Crosby-1 (WA-12-R) in the Exmouth Sub-Basin of the Carnarvon Basin. planning from the national body of the Royal BHP Billiton Petroleum is also operator of five blocks in the outer Browse Basin, a frontier Australian Planning Institute, plus a special basin with high potential and little prior exploration. commendation for industrial planning from The company has matured considerably since BHP began in the petroleum business in the the WA Division of that institute. It identified late 1950s, when it gained title to explore a vast area of frontier territory in Bass Strait, a total land area comprising 32% of the encompassing three offshore sedimentary basins. In a very short time, BHP was Burrup as being suitable for industrial participating in the amazing run of discoveries in one of them — the Victorian Gippsland purposes, with the remaining 68% to be set Basin, catapulting the company to the forefront of Australia’s oil and gas industry. aside for heritage, recreation and tourism purposes.

20 Prospect March–May 2004 Sites for new gas-processing projects are Iron Ore clustered in several industrial precincts, with the first project, Burrup Fertilisers’ ammonia plant (now under construction), occupying a Price rises help lift 70 ha site in the King Bay–Hearson Cove precinct. All new projects on the Burrup will be required to meet stringent standards for local confidence protecting Aboriginal heritage and environmental values during construction ising iron ore prices have not only and operation. been a boost for most people The separation of the Burrup from the Rassociated with the iron ore mainland also presents a range of challenges industry in Western Australia, they in relation to the availability and capacity of underline the asset value of the State’s existing infrastructure, which until now has massive iron ore resources. only had to satisfy the demands of relatively Western Australia currently has some of small-scale operations since the the largest uncommitted iron ore resources establishment of Hamersley Iron’s and in the world, with about 34 billion tonnes Woodside’s operations. of high-grade resources (above 50% Fe), In some cases, the existing infrastructure plus massive untapped primary banded iron-formation (30–35% Fe) still in the can be upgraded. For example, the Water Photo courtesy Robe River Huge asset value: Western Australia has 34 Corporation has refurbished and brought ground. These include defined resources only, with potentially a whole lot more iron billion tonnes of uncommitted high-grade iron back into operation two large storage tanks ore resources. ore waiting to be proved commercially for potable water situated at the end of Village advantage over its main iron ore export rivals exploitable. Road. These have been unused since the Brazil, South Africa and India. Production of iron ore exceeded 200 Mt removal of Woodside’s 1500-man Therefore, the potential to develop new in Western Australia for the first time in construction village a decade ago, while iron ore projects in Western Australia is 2003, with this output being worth about Western Power is considering ways of enormous. A$5 billion. strengthening the power supply to the area. One challenge is to find ways to value add The size of these resources, plus In other cases, new infrastructure is Western Australia’s impressive iron ore Western Australia’s proximity to growing required, and the State Government has resources, with projects like Rio Tinto’s markets in Asia, can only enhance the committed more than $185 million towards a HIsmelt’s pig iron plant at Kwinana and BHP State’s reputation as a premium location range of projects that will support new gas- Billiton’s hot briquetted iron plant at for ongoing investment in mining and processing industries. The first to be Boodarie, near Port Hedland. completed was the east–west service corridor, downstream processing opportunities. a heavy-duty gravel formation to facilitate the After a 9% increase in April 2003, global installation of aboveground pipelines and iron ore giants Rio Tinto and BHP Billiton conveyors to transport products from the successfully negotiated an 18.62% increase Boon for WA project sites to the port. in the price of iron ore fines with Japanese Two other projects under construction on steel mills from 1 April 2004, effectively minerals behalf of the Water Corporation are a raising the bar for all such trade within The Western Australian resources and seawater supply and brine return pipeline Asia. Similar increases will apply for lump products. energy sector, as Australia’s most system which will supply very large volumes important in scale and value, stands to be Despite a 25–30% appreciation in the of seawater as cooling water to the new gas- the major beneficiary of the nation’s processing industries, and a desalination value of the Australian dollar over the past agreement with the United States over plant on Burrup Fertilisers’ site that will draw year, buoyant iron ore prices have sparked free trade. a relatively small proportion of seawater from about A$3.5 billion worth of expansions to The Australia/US Free Trade Agreement the seawater supply pipeline to manufacture numerous iron ore operations in Western has been hailed as enhancing the mineral industry’s unfettered access to global high-quality process water for Burrup Australia. Many greenfields iron ore projects plus markets to sell products, and buy its Fertilisers’ ammonia plant. inputs and capital to support At the port, dredging of a new channel and resources that were previously considered development. marginal or conceptual are also under the berthing pocket commenced in January, and It provides increased access for important is due to be completed in April. Following microscope in Western Australia. Among Western Australian commodities such as that, a new bulk liquids export jetty will be them are undeveloped resources on nickel and alumina, and removes duties on imported capital equipment. built a few hundred metres south of the Koolan Island, the Southdown iron ore existing Dampier cargo wharf. This will deposit northeast of Albany, and a little "This is just the fillip the Australian minerals industry was looking for from facilitate the export of the first shipment of known resource in the remote East Kimberley. these trade negotiations," said the liquid ammonia from the Burrup Fertilisers Minerals Council of Australia’s chief plant at the end of 2005. Since iron ore mining started on a large executive, Mr Mitchell Hooke. scale in Western Australia in the 1960s, the By then a significant new dimension — The United States’ Trade Representative and dynamism — will have been added to the State has built an enviable reputation as a Mr Robert Zoellick, welcomed the deal, industrial development of the Burrup reliable and innovative supplier of quality describing it as "the most significant Peninsula. iron ore products to Asian markets. immediate cut in industrial tariffs ever With international freight rates on the achieved in a US free trade rise, Western Australia holds a competitive agreement.”

Prospect March–May 2004 21 New straw project in the wind at Jerramungup

JERRAMUNGUP DISTRICT FARMERS KNOW WHAT IT’S LIKE TO BATTLE THE VAGARIES OF AGRICULTURE.

SOLDIER SETTLERS WHO FIRST INHABITED THE LIGHT-SOIL PLAINS AT THE SOUTHERN END OF THE WESTERN AUSTRALIAN WHEATBELT EARLY LAST CENTURY BASED THEIR LIVELIHOOD MORE ON SHEEP GRAZING THAN CROPPING. HOWEVER, OVER A SUCCESSION OF DECADES, LIFE WAS MORE OF A STRUGGLE THAN A SUCCESS.

IN FACT, IT WAS ONLY AFTER THE 1989–92 Fields of straw: A farmers’ cooperative from the Jerramungup district has engaged consultants to "WOOL CRASH" THAT THEY SERIOUSLY DECIDED TO see if it is feasible to establish a major cereal straw pulp mill, and possibly other allied industries, for their local area. DIVERSIFY INTO WHEAT, BARLEY AND CANOLA TO PROVIDE A MORE RELIABLE INCOME FOR Animal feed pellet plant • A potential gas pipeline link or a THEMSELVES AND THEIR FAMILIES. The plant could have an input of up to 25 substantially upgraded local power 000 t/a of canola meal, the by-product from facility. TODAY, THEY ARE SEEKING NEW WAYS OF KEEPING the bio-diesel plant, hay, lupins and low- Both options proved to be very expensive THEIR PROPERTIES VIABLE. grade grains from which a similar volume of and have therefore not been pursued further. animal feed pellets would be produced for It became evident that a new power plant regional needs. Such a plant could cost should be integrated and use locally available cooperative of five farmers in the between A$4 million and A$10 million, biofuel such as canola straw and biomass Jerramungup district, about 180 km depending on size. Currently, Jerramungup from the oil mallee plant, possibly combined northeast of Albany, is scoping the A district farmers are forced to freight-in their with timber waste from nearby plantations possibility of establishing a major new pellets and other supplementary animal feed (Bremer Bay) and wind power. Potential integrated industry that could produce cereal requirements, with the nearest pellet plant power supply demand could see about 7MW straw pulp, bio-diesel, eucalyptus oil from being about 300 km away at Williams. used by the pulp mill, and 0.5 MW each by mallees, animal feed pellets, hay for export, the bio-diesel, pellet and export hay plants. and power from biomass. Export hay plant Each single project would provide great The farmers have engaged two groups of It is thought that between 8500 and 9000 benefits to the region as jobs are created consultants — Adelaide-based Arisa Limited tonnes of hay, probably oaten hay, would be through direct employment and in support to investigate the viability of a pulp mill, and needed to make an export hay industry industries. All combined, the capital outlay is Perth-based Boshe Group to weigh up the viable. A minimum cost of A$3 million is about A$150 million and about 80 new jobs feasibility of establishing an animal feed envisaged, though this would alter if the plant could be generated. Furthermore, income for pellet plant and an export hay business. were scaled up to 30 000 t/a, depending on local business would improve and towns such These studies have now been completed, what overseas markets can be secured. as Jerramungup could see a reversal of the and a final business plan for the pelletising Product would most likely need to be current negative population growth. plant has also been finalised. containerised, which limits the export Obstacles to speedy development include Elements of the proposal include: options to Fremantle, although the Port of power and water availability. Drilling for Albany is currently looking at gaining a Cereal straw pulp mill water is currently under way and the container-handling facility. Japan and Korea The mill could have an input of 100 000 Department of Industry and Resources is in provide likely export markets for the hay. tonnes of wheat straw per year, for an output close contact with the Albany branches of the of about 38 000 tonnes of short-fibre pulp for Eucalyptus oil extraction plant Water and Rivers Commission and Water use in the production of fine paper or tissue. The proponents intend to produce about Corporation. The Department is also in close It could provide direct employment for 1000 t/a of high-grade eucalyptus oil from contact with two companies specialising in around 50 people and up to 120 people plantation oil mallees. 10 000 hectares biomass for power. Perhaps these obstacles indirectly, and cost A$80–120 million, planted could produce 100 000 t of biomass, can be overcome sometime in 2004. depending on technology. which would be the required tonnage for a For further details, contact: 1000 t/a operation. Eucalyptus oil is in Bio-diesel plant Reinhold Hart demand by the pharmaceutical industry, but Initially, a feedstock of 50 000 t/a of locally Project manager, Department of Industry and lower grades can be used as solvents and grown canola seeds would be needed to Resources additives to motor fuel. produce about 20 000 t/a of bio-diesel. Future Tel: +61 8 9327 5971 expansion to 100 000 t/a is possible Power plant e-mail: [email protected] depending on availability of canola seed. The State Government agencies such as the Or product could be used by regional trucking Office of Energy, Western Power and the Darren Long companies. By-products include glycerine Department of Industry and Resources have CEO, Shire of Jerramungup and potassium sulphate. The former finds assessed a number of energy options in Jerramungup 6337 application in the pharmaceutical and support of an expanded agri-business for Tel: +61 8 9835 1022 cosmetics industry; the latter is a fertiliser Jerramungup. These include: e-mail: [email protected] which can be used by local farmers. • Linking to Western Power’s South West interconnected grid system; and

22 Prospect March–May 2004 New Kwinana water reclamation plant

he biggest treated wastewater recycling plant of its type in Australia Tis now taking shape in the heart of the booming Kwinana industrial strip, providing a graphic demonstration of how serious Perth is about becoming a water-efficient city. The A$25 million facility will start providing water to several industrial customers by late in 2004. It brings with it significant benefits for the Integrated Water Supply Scheme servicing metropolitan Perth and several other areas, the environment and Kwinana industry. The Kwinana water reclamation plant, as it will be known, is being built on a site within international oil giant BP’s Kwinana complex. It will be owned by the State’s Water Corporation with the feedstock treated wastewater coming from the utility’s nearby Woodman Point wastewater treatment plant. Saving water: A section of the Water Corporation’s A$25 million water recycling plant, now under Water from the plant will be treated to an construction on the Kwinana industrial strip, which will avert the discharge of six million litres of even higher quality for use by industry. BP water per day into Cockburn Sound. worked with the corporation to define and scheme by large Kwinana industrial sites that evaluate the project. means that industry receives water, as Dr Gill are the Perth metropolitan area’s biggest Water Corporation Managing Director Jim foreshadowed, that is more suited to its needs public water supply users," said Dr Gill. Gill explained that the project involved the — water that will consistently meet quality "Instead, our customers will receive water construction of a highly sophisticated levels. that is more suited to their operations and filtration and reverse osmosis plant capable The new plant has been endorsed by the will consistently meet quality levels for of processing six gigalitres (million kilolitres) Cockburn Sound Management Council, cooling and steam generation. In turn, that of municipal wastewater each year. Once which represents industry, local government, means about five million kilolitres of water through the process, the corporation will community groups and government each year will be available for residential supply up to five gigalitres of very high quality agencies. Planning involved extensive customers, an absolute bonus given the water, specifically produced for cooling and consultation with all interested parties. The current water situation. The amount to be steam generation, to a group of companies. project itself is an outcome of the Kwinana made available is about two per cent of the Already looking forward to their new water WaterLink Program conducted by the Water total water demand on the scheme, or six supply are Rio Tinto (for use in its HIsmelt pig Corporation to improve water use efficiency days peak summer consumption." iron plant currently also being built); power through recycling and to provide Another immediate benefit of the plant generation company Edison Mission; environmental benefits to Cockburn Sound will be that the amount of industrial chemical fertiliser manufacturer CSBP and and surrounding waters. wastewater discharged into Cockburn Sound BP. The plant is being built by John Holland In another associated move, will be reduced by about six million litres a Pty Limited and Veolia Water Systems, with representatives of government and industry day. Part of the agreement is that this water the design allowing it to be expanded to meet made a commitment to the promotion of will join treated wastewater from the expected future growth demand from water reuse in the broader Woodman Point plant discharged to sea four Kwinana industry. Associated works include Kwinana–Cockburn–Rockingham urban strip kilometres off Cape Peron into the Sepia construction of 10 km of pipeline and a when they gathered for a forum in July 2002. Depression. pumping station. One of their objectives is to identify further Dr Gill said the project had been made The trigger for the project was the opportunities to reuse wastewater from the possible by a major upgrade at the Woodman decision by Rio Tinto — announced by WA’s Woodman Point plant. Water Corporation Point wastewater treatment plant, about 10 Premier Geoff Gallop in May 2002 — to planners estimate that up to 30 gigalitres is km away, which treats and disposes of establish its long-mooted pig iron plant at now available from the plant annually for wastewater from Perth’s rapidly growing Kwinana. That plant needs a lot of high- opportunities that could include irrigation of southern metropolitan area. quality water and the Corporation geared up playing fields, golf courses, parks and The upgrade has increased the plant’s to be ready to produce that water when Rio horticultural operations, in addition to capacity as well as lifting the level of Tinto was ready to commission its plant. further use by industry. treatment to that suitable for recycling. The Dr Gill said the Kwinana water But, for now, Jim Gill has his thoughts reclamation plant will use a desalination reclamation plant was the most ambitious turned squarely to the new Kwinana water process of microfiltration and reverse recycling project yet undertaken in Western reclamation plant and the role it will play in osmosis to further improve the wastewater Australia, switching the focus to the use of boosting the WA Government’s commitment from a level of 830 mg/L of total dissolved treated wastewater by industry. to achieving 20% reuse of wastewater across salts to about 50 mg/L — which is "The plant will greatly reduce demand for the State by 2012. substantially less than that of dam water. It water from the integrated water supply

Prospect March–May 2004 23 Amity Oil Limited

AMITY OIL LIMITED

 New Ventures

Since listing in  Amity Oil has Create Value for our Shareholders grown from an unknown junior to a company that now sits • Increase high margin production comfortably within the top oil and • Build reserve base through gas exploration & production exploration/acquisition companies in Australia • Low opex & capex environments In addition to successful production in Turkey several new Stay Focused & Disciplined exploration production and acquisition opportunities are now • Small number of core areas being investigated to further • Market demand drives gas Amity’s future growth ambitions exploration • Opportunistic acquisitions

wwwamityoilcomau PUT PERTH IN YOUR CONVENTION SIGHTS

ith a lead-time of up to 10 years for some national and international Wconferences, it pays to plan ahead. Even though the Perth Convention Centre won’t be officially opened until 26 August 2004, marketing people associated with the centre are determined to leave no stone unturned in attracting large-scale conferences and exhibitions in the years ahead.

So far more than 200 bookings have been made up until 2011, and interest is growing. The secret is to book early to avoid disappointment.

Industry and resources sector people who may have a direct or indirect influence in the staging of major conferences or similar events have been asked to consider the Perth Convention Centre as a future venue.

The Perth Convention Centre will be a world- class facility, being able to accommodate 2500 delegates in its main auditorium, and has 16 000 square metres of exhibition space available. Spectacular setting: Set on the foreshore of the Swan River in Perth, the Perth Convention and Exhibition Centre is being targeted for numerous major conferences and exhibitions over the Perth is an ideal conference venue for next few years. The secret is to book early. industries that have trading links to Asia. Of course, the host city is also a significant supply centre and administrative hub of a world-class resources sector.

Subsidiary benefits for Western Australia are huge, with convention delegates seen as “super tourists”, because they spend up to six times more than the average tourist. Name  After the official opening and the “WA on Position New Ventures Show” exhibition in late August, the first resources-related event at the Perth Convention Centre will be a global gas Organisation conference, planned for 11–13 October 2004. Create Value for our Shareholders Also, the Australian Petroleum Production Address and Exploration Association Limited (APPEA) have booked the Perth Convention and Type of business Exhibition Centre for its conference in 2005.

For further details contact: Phone number

Dion Bromilow, telephone +61 8 9324 3355 Email [email protected] Please tick the appropriate box Please add me to your mailing list to receive Western Australian Prospect. I would like to take out my subcription for Stay Focused & Disciplined one year at c $12 (incl. GST) c two years at $22 (incl. GST) c three years at $32 (incl. GST) My cheque made out to the Department of Industry and Resources, is enclosed or please debit the amount to my credit card using the following details: Type of card: c Visa c Bankcard c Mastercard

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Prospect March–May 2004 25 the big picture8

Global recovery on the back of the US and China Exports lead Japan’s tentative recovery Since mid-2003, global recovery has firmed on the back of the United Exports continue to lead Japan’s tentative recovery, reflecting booming States (US) and China. Recent data suggest that economic growth in the Chinese demand and increasing demand from the US. As a result, Japan is US is broad-based and sustainable, also providing impetus for Japanese expected to have grown 2.3% in 2003 and experience growth of a similar and European exports. In China, growth has remained very strong and, magnitude in 2004. Encouragingly, capital spending is now also contributing given the moderate growth recorded in most of the world largest to the expanding economy and profitability and business confidence is rising. economies, Chinese growth has contributed significantly to global growth. On the down side, deflation continued in 2003 with consumer prices falling Strong Chinese demand has in particular stimulated export growth in for the fifth consecutive year and there is little evidence yet that growth in the other Asian economies, including Japan. export industries is flowing through to the domestic economy. Household With growth forecast to increase in the US and remain strong in China, spending and labour markets remain flat, though there are some signs that import demand in these two economies is expected continue to sustain the service sector is picking-up. export-led recovery in 2004, resulting in a further pick-up in global growth, The export-driven recovery has taken place despite the yen appreciating to around 4%. Due to the relative size of the European Union, a forecast almost 8% against the US$ between September and January and 12% over improvement in European growth will be a significant factor for raising 2003. The appreciation has been slowed by Japanese intervention of historic global growth. proportions, which has seen Japan’s US$ reserves increase more than 40% However, in the view of the global recovery’s reliance on the US, a major over 2003 to a record of US$ 674 billion. risk to the outlook appears to be the large US current account and budget Japan has pledged to keep selling down the yen in order to protect the export deficits and their potential to destabilize financial and currency markets. sector, but a further appreciation still poses a risk to the recovery. Not A further US$ depreciation leading to an erosion of European and withstanding these concerns, in the short term, it appears that increasing Japanese export competitiveness has the potential to stamp-out the external demand for Japanese exports outweighs the impact of the export-led recovery, particularly in Europe, which has a relative large share appreciation on Japan’s competitiveness. In the medium-term, moribund of exports to the US. Even at the current levels, the US$ depreciation is domestic demand and the structural problems in the financial sector continue increasingly raising concerns in Europe, Japan and in Australia’s export to pose a threat to sustainable growth in Japan. sector. Currently, there appears to be little sign of change in the key factors that Non-Japan Asia benefits from Chinese growth drive the US$ lower. The current account deficit of the US continues to China continues to be the powerhouse of Asia. The Chinese economy grew in widen and the financial markets do not expect the Federal Reserve (the excess of 9% in 2003 and although growth is forecast to slow it is expected Fed) to raise interest rates until the second half of 2004. Consequently, to stay well above 7% in 2004. Despite being a significant competitor to the US$ may continue to decline albeit at a slower pace. The imbalances other Asian economies, Chinese demand also provides significant import in the US do, however, appear to be somewhat countered by the relative demand. Chinese import demand increased by about 50% over 2003 and is high growth forecast vis a vis other major economies and should provide expected to continue to grow strongly over 2004, providing stimulus for some support for the US$ when the recovery is firmly on track and exporters in other Asian countries. interest rates begin to rise from their historically low levels. Largely reflecting import demand from China and the US, Australia’s other Another uncertainty is the spread of the avian flu virus, which is yet to main Asian trading partners are also forecast to grow at solid rates, well spread from human to human, but which could result in a Severe-Acute- above 5% on average over 2004. Respiratory-Syndrome (SARS)-like impact during the first half of 2004. SARS stifled growth in much of Asia during the first half of 2003. The export-led nature of recovery poses a risk if the driving economies should falter. In the short-term there is little sign of this, although domestic Robust US recovery structural issues, such as the financial sector and the balance sheets of government enterprises, need to be addressed in China over the medium The recovery in the US is clearly gathering momentum and most observers term. appear to believe the recovery is broad-based and sustainable. Following estimated growth exceeding 3% in 2003, the economy is forecast to grow A further depreciation of the US$ is also an issue for this region, particularly by up to 5% in 2004. due to the ’s link to the US$. The flexibility to the Chinese currency is an interesting issue for 2004 (and beyond) given the view that the yuan is being A key driver for the recovery gathering momentum is the very expansionary increasingly under-valued due to its US$ peg. This has resulted in both monetary and fiscal policy setting. Despite weak labour market political (most recently at the G7 meeting in February) and economic pressure performance in 2003, consumer spending has remained strong and to increase the flexibility of the currency. Increasing import prices and the consumer sentiment is rising. Importantly, business investment is also inflow of foreign currency could force China to reconsider its exchange rate expanding spurred by profit growth due to cost-cutting and improved labour regime to address the potential for overheating of the economy. If such a re- productivity. High and rising business confidence points to further growth. alignment in accordance with economic fundamentals take place in an orderly The remaining laggard among the economic indicators is employment fashion it is likely to improve the global economic outlook by assisting more growth. However, while the 112 000 jobs created in January were below sustainable growth in China, and spreading the adjustment burden from the market expectations, it was the highest growth in three years and forward US’s trade deficit. labour market indicators are positive. The household survey measure of employment and the Institute of Supply Management’s employment European recovery a slow process indices for both the service and the manufacturing industries have European growth is forecast to pick-up modestly with growth of 1.8% in 2004 experienced significant growth during the December quarter. Finally, both and business confidence and consumer sentiment is rising. However, the the Fed and, less surprisingly, the federal government expect strong recovery is tentative and, so far, almost entirely dependent on external employment growth over 2004. demand. This has taken place despite the massive euro appreciation against Improved labour market conditions are likely to further bolster domestic the US$. However, in the context of continued lack of domestic growth, consumption, which has been a key driver for growth. And, with the nascent recovery could be stifled by a further appreciation of the euro. Even economic recovery beginning to lift share and house prices, tax cuts and if the euro remains at its current relatively high level for a prolonged period of continued low interest rates household budgets have improved. High time it may threaten European recovery, as the euro’s strength appears household debt continues to be of some concern. entirely unrelated to fundamentals and more a result of the depreciating US$. A key issue will be the timing and magnitude of the Fed’s change of the Germany, the European Union’s (EU’s) largest economy, typifies the problem monetary policy settings, with a tightening expected in the second half of of the EU as a whole, particularly the euro-zone. While there are some 2004. The Fed’s Monetary Policy Report in February 2004 indicates that positive signs resulting from external demand, the domestic economy the Fed is unlikely to raise interest rates soon. remains flat particularly in regard to business investment and employment. Importantly, German exports have so far held up despite the appreciating euro.

26 Prospect March–May 2004 Economic trends

Compiled by DoIR’s Economic Analysis Branch

The United Kingdom (UK), the EU’s second largest economy, has performed relatively well and is forecast to outperform the euro-area, due to strong s domestic demand and the pound suffering less of an appreciation. However, Chart 1: Real GDP growth even in the UK, concerns about an appreciating currency are emerging, and per cent per cent UK’s performance is also exposed to lacklustre European demand for its g 6.0 6.0 g. exports. The Bank of England nevertheless revised its growth forecast up in 5.0 5.0 February, with growth expected to exceed 3% in 2004. 4.0 4.0 he The European Central Bank (ECB) has publicly expressed concern about the 3.0 3.0 euro’s appreciation, and is more likely to keep interest rates unchanged with 2.0 2.0 an appreciating euro curbing inflation. Also on the positive side, are tax cuts in Germany and France and in the medium term, moderate German labour 1.0 1.0 market reforms. The de-facto breakdown of the Stability and Growth Pact with 0.0 0.0 the suspension of the sanction mechanisms in November 2003 should also -1.0 -1.0 assist recovery. ric -2.0 -2.0 % -3.0 -3.0 Western Australian economy continues to perform well US Euro-zone Japan The Western Australian economy grew at a solid 3.9% in 2002-03 driven by -4.0 -4.0 ort Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 relatively strong domestic demand and exports. With a recovering world Source: RBA economy supporting the export sector, record level of residential building work, as well as several years of strong business investment in the resources sector in the pipeline, the State should continue to grow at a healthy rate. The State Mid-Year Financial Projections Statement forecast growth of 4.5% in ue 2003-04 and marginally slower growth in the following year. The main risk to the outlook appears to be the potential impact of a further appreciation of the A$. While export volumes are unlikely to be significantly affected in the short term, and commodity price rises and increased demand in have offset recent A$ appreciation, export incomes in some sectors, including d the resources sector, are likely to be squeezed by a further strengthening of Chart 2: Global sharemarkets the A$. If the A$ remains at a high level for a sustained period of time this Index: June 1999=100 may also begin to impact investment behaviour. s US Japan Euro-zone Australia 110 How much will the appreciating A$ impact the economy? 100 The A$ has appreciated more than 30% against the US$ over 2003 and some market forecasts have the A$ remaining in the upper US$0.70s until mid- to 90 late 2004, when it may peak in the low US$0.80s. 80 The context of the A$ appreciation, should however, be noted. The A$ came ld 70 from historically low levels, particularly in the light of Australia’s strong economic fundamentals and relatively high interest rates. In addition, the 60 global economic outlook is improving, benefiting exports and commodity 50 prices (with Chinese demand being a key driver) and therefore providing further support for the A$. 40 y Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Finally, a range of events that are unrelated to Australia’s relative an Source: RBA performance has also provided support the A$. This includes the downward g pressure on the US$ from its large current account deficit and a number of large A$ bond issues. In addition, the A$ has also appreciated strongly re against the Asian economies, most notably China, that link or manage their currencies to the US$. The Reserve Bank of Australia’s latest Statement of Monetary Policy e- illustrated this showing that the A$ in average terms has appreciated around rly 60% in trade-weighted terms against its main Asian trading partners, compared with only around 10% against the US$ since the A$ float. However, Chart 3: Exhange rates against A$ relative to other major currencies the A$ is below its post-float averages. TWI, Yen US$, Euro 85 TWI Yen US$ Euro 0.85 Sectors exposed to the A$ are increasingly ringing the alarm bells. Although the A$ appreciation will dampen growth and particularly export earnings, the 80 0.80 4 impact is likely to be significantly lower than might otherwise be the case due 75 0.75 to commodity price rises, increased demand in US$ denominated exports, falling import prices (especially prices for manufactured imports) and hedging 70 0.70 nst (contrary to previous years exporters should now benefit from their hedging 65 positions). 0.65 n 60 In the medium term, the more significant risk would be if the A$ remains 0.60 of 55 strong for an extended period of time, undermining profits and, in turn, the 0.55 business investments that have been a significant driver for Western $. 50 Australia’s economic growth. 0.50 m 45 40 0.45 Feb-99 Aug-99 Feb-00 Aug-00 Feb-01 Aug-01 Feb-02 Aug-02 Feb-03 Aug-03 Feb-04 Source: RBA

Prospect March–May 2004 27 the big picture8

Chinese economy set to maintain growth in 2004 Commodity markets are set for further growth in 2004 following strong Chinese economic growth during 2003. China’s National Bureau of Statistics recently reported that last year’s growth of 9.1% was the fastest since 1997, and predicted that the economy would grow at more than 7% in 2004. Reflecting its ongoing growth performance, China is now a key driving force for global commodity markets. For instance, its consumption of alumina as a percentage of global consumption has risen from 14% in 2000 to 21 percent in 2003. More broadly, China’s rapid growth in demand for raw materials has been the primary driving force behind a strong rally in commodities during the past year.

Shipping market remains tight Spot ocean shipping prices have surged in recent months on the back of strong resources demand. According to AME Mineral Economics, spot rates for the two key vessel categories that deliver dry bulk commodities such as coal and iron ore, Capesize and Panamax, tripled during the previous 12 months. The surge in shipping rates has been a result of global demand for resources underpinned by China’s demand for coal and iron ore to produce steel for its construction programmes. Other factors influencing a surge in prices are an increase in imports of thermal coal by Japan’s power industry while its ailing nuclear power stations lie idle during maintenance.

Oil Prices jump on cold US weather Oil prices jumped 5% in late January 2004, to $35.07. Driving factors in the rise were renewed strength in heating oil and natural gas prices on the back of freezing weather in the United States, particularly in the Northeast region. Other factors that are driving fuel demand are rapid economic growth in China while sabotage at Iraqi oil facilities has delayed production recovery.

OPEC maintains production levels…for now The OPEC secretariat issued a statement in December 2003 that, having reviewed the global oil market situation, including demand/supply expectations for the first half of 2004, OPEC producers had decided to maintain current production levels. Subsequently, oil market participants were concerned that OPEC producers might, in fact, agree to a production cut in the second quarter of 2004 due to concerns of a potentially significant surplus in supply once demand moderated following the end of the northern hemisphere winter. However, more recently, suggesting the potential for lower oil prices, senior officials from OPEC producing nations indicated that the group was unlikely to cut output at its meeting in early February 2004.

Nickel surges to 14-year highs Nickel prices continued to rise strongly during December 2003, with LME cash prices averaging US$14169.52/tonne, up by a significant 17.2% on the average for the previous month. After rising to US$17700/tonne through to early January 2004, nickel prices experienced a sharp fall on 6 January 2004 mainly due to funds and commodity trading advisers taking profits on the preceding weeks’ sharp gains. Despite the sharp plunge, the outlook for nickel prices remains bright. All indications are that Chinese economic growth will continue for the immediate future, which implies a continued high growth in steel demand and derived demand for nickel. In addition, continued economic recovery in the US, and potentially Europe, could significantly boost stainless steel consumption in these traditionally dominant consuming areas, after a year of stagnation.

Iron Ore price settled with an 18.6% rise In mid-January 2004, both Rio Tinto and BHP Billiton announced price settlements with Nippon Steel for iron-ore deliveries for the contract year commencing 1 April 2004. The resultant price increases were a strong 18.6%. The increases were mainly driven by demand in China. Chinese production of blast furnace iron increased 19% in the first nine months of 2003 while iron ore imports rose 33% during the same period. With China’s appetite for steel and iron ore products showing no sign of easing and encouraging signs of recovery in the US and EU market, iron ore demand is expected to be solid for the short to medium term.

28 Prospect March–May 2004 Gold breaks through US$400/oz The gold price finally broke through the US$400/oz level in November 2003, reaching a peak at US$430.50/oz on 6 January 2004. Gold prices have subsequently hovered around US$420 since the beginning of 2004. Major factors supporting the gold price in 2003 included producer de-hedging, weakness in the US dollar and sustained geo- political risks. Looking ahead with the global economy gradually strengthening, brighter prospects for world economic growth may encourage investors to switch funds from the relative safety of gold towards assets such as equities. Consequently, gold may face pressure in 2004. However, there still exist substantial uncertainties, which could influence gold prices in 2004, including further geopolitical instability, the fate of the European Central Bank gold sales agreement and, importantly, the direction of the US dollar.

Steady rise in aluminium prices Aluminium prices continued a gradual drift upwards in November and December 2003. An important factor in the gradual rise is that the aluminium industry continues to be beset by alumina shortages. AME Mineral Economics expect alumina shortages to keep world primary aluminium production restricted to current levels. Other analysts are predicting a marked upturn of aluminium prices mainly driven by an apparent resurgence in demand in the US. As an indication of this view, Macquarie Bank recently raised its price forecasts for 2004 and 2005.

Copper prices continue strong run Base metal prices have continued to rise in the early stages of 2004, maintaining the strong run experienced at the end of 2003. Macquarie Bank reports that since then copper prices have steadily increased on the back of news that a number of Chilean copper mines suffered short-lived power blackouts after a medium intensity earthquake. Prices have also been supported by better than expected recovery in US metals demand. The weakening US dollar, stronger consumer data and supply constraints are other factors supporting copper prices. Following the trend in the US, demand in Europe also appears to have been stronger in recent weeks.

Lead and Zinc follow the trend Zinc prices have moved along with the positive sentiment towards commodity prices. By mid-December 2003, the LME cash price was at US$980/t, its highest level since May 2001. AME Mineral Economics forecast a Western World refined zinc deficit of approximately 140,000 tonnes in 2004. Similarly, lead prices have also risen markedly, touching US$700/t in mid-December 2003. As with other commodities, China has been the principal driver for global lead and zinc demand growth over recent quarters. Motor vehicle production in China is increasing rapidly, and with it demand for lead acid storage batteries. In addition, industrial demand for uninterruptible power supply batteries, particularly in the telecommunications and finance sectors is also contributing to lead consumption growth.

Pigment market balanced but demand is recovering With producers targeting emerging consumer markets in Latin America, Eastern Europe and India, the outlook for coatings looks bright. Analysts expect there will be greater stability during the next 12-18 months in both the titania and coatings markets, in contrast with the 2001-02 trading period where market sentiment was undermined by contracting demand, volatile oil prices and lingering threats of terrorism.

Zircon in short supply Due to supply pressures, zircon prices for 2004 deliveries have increased by approximately 25% recently, in contrast with rutile prices, which are showing no signs of increase in the near term. On the domestic scene, Brisbane-based mineral sands junior, BeMax Resources NL is set to become a major player in the mineral sands industry after signing a Merger Implementation Agreement with Nissho Iwai Corporation and Sons of Gwalia Ltd on 3 February 2004. The merged group will have a commanding position in the strategically located Murray Basin, regarded as a world- class emerging mineral sands province. Meanwhile, TZ Minerals International Pty Ltd (TZMI) has forecast a 2.8% demand growth for titanium minerals for 2004 and 2005.

Prospect March–May 2004 29 An Emerging Nickel Producer

Sally Malay Mining Limited (ASX code: SMY) An Australian resource company developing the $60 million Sally Malay nickel, copper, cobalt mine in the East Kimberley, with production scheduled to commence in August 2004.

The Company’s ultimate goal is to build a major mining company and provide attractive shareholder returns through a combination of dividend streams and capital growth, while at all times maintaining good corporate governance and operating in a safe, environmentally responsible manner.

For further information please contact: Peter Harold, Managing Director Level 22, Allendale Square, 77 St. George’s Terrace PERTH WA 6000 (t) 08 9225 0999 (f) 08 9421 1008 (e) [email protected] www.sallymalay.com Commissioned Projects Committed Projects for financial year 2003/2004 as at 1 March 2004

IRON ORE PROCESSING IRON ORE GOLD Tallering Peak - Iron Ore Mine Mining Area C - Iron Ore Mine Telfer - Gold Mine (Expansion) NEWCREST MINING LIMITED MT GIBSON IRON LTD BHP BILLITON IRON ORE PTY LTD Feasibility studies for the Telfer expansion have Mt Gibson Iron Ltd commenced mining at BHP Billiton and the State approved the identified a large low-grade resource in excess of 500 Tallering Peak, 130 km northeast of Geraldton, in development of Mining Area C on 3 April 2002. Mt and containing over 26 Moz gold. Newcrest Q3 2003, at the initial rate of 1.0 Mt/a, which will Mining operations at deposit C commenced in commenced construction of the mine extension in increase to an average production of 1.65 Mt/a Q3 2003. The product and capacity expansion late 2002, with commissioning scheduled in the third during the following five years. The first shipment (PACE) project at Finucane Island was approved quarter of 2004 and full capacity to be reached by of ore from Geraldton is expected to occur in Q1 on 19 July 2002. 2005. When production commences it is estimated to 2004. The company is also evaluating the Expenditure: $1b. average 800 000 oz/a of gold and 30 000 t/a of copper possibility of a second mine at Mt Gibson, about Employment: Construction: 500; Operation: 200 over a 24-year period. Newcrest Mining will also 300 km southeast of Geraldton, to be build a new 18 Mt/a processing plant. A major commissioned in mid-2005. This has the potential component of the project will be a 440 km gas to double the company's output to 3 Mt/a. pipeline from Port Hedland to the minesite. Expenditure: $50m. Expenditure: $1.2b. Employment: Construction: 1222; Operation: 620 IRON ORE Significant resource projects underway or planned in Western Australia Koolyanobbing - Northern Expansion - Iron Ore Mine PROJECT VALUE (ESTIMATED A$) PORTMAN LIMITED CONSTRUCTION PERMANENT EMPLOYMENT Portman intends to increase iron ore production at IRON AND STEEL its Koolyanobbing operations to 5–6 Mt/a through HI Yandi mine expansion plus rail and port upgrades $1250m 500 200 the development of deposits located at Mt Jackson West Angelas mine expansion $142m n/a n/a and Windarling, north of Koolyanobbing. The company obtained conditional environmental Hope Downs iron ore mine $1050m 500 300 approval in April 2003 and is proceeding with mine Fortescue (Cape Preston) mine and pellet plant $3000m 5000 1050 and infrastructure development. Mining of the new East Pilbara mine, rail and port $1800m 1000 300 deposits is scheduled to commence late in Q1 2004. Kwinana HIsmelt pig iron and steel plant $800m 320 80 Expenditure: $20m. Koolanooka mine and potential DRI plant n/a n/a n/a Employment: Construction: 120; Operation: 35 Koolyanobbing iron ore mine expansion $20m 120 35 IRON ORE PROCESSING Mt Gibson iron ore mine $50m n/a n/a Kwinana - HIsmelt Commercial Iron Sub total $8112m 7440 1965 Making Plant NICKEL/COBALT HISMELT CORPORATION LIMITED Mt Keith mine expansion $150m n/a n/a HIsmelt Corporation, in a joint venture with Nucor Ravensthorpe mine $1400m 1000 300 (25%), Mitsubishi (10%) and Shougang (5%), Cosmos Deeps $33m 15 55 announced on 24 April 2002 a commercial-scale Lake Johnson – Emily Ann/Maggie Hayes $28m 25 167 HIsmelt process plant at Kwinana, near Perth. The Sally Malay $50m 150 120 first stage of the plant will produce 800 000 t/a of pig Sub total $1661m 1190 642 iron from iron ore fines, coal and fluxes. Construction PETROCHEMICALS commenced in January 2003 with commissioning scheduled to commence in late 2004. Burrup Fertilisers ammonia plant $630m 500 60 Expenditure: $800m. Japan DME — di-methyl ether plant $1000m 1000 150 Employment: Construction: 320; Operation: 80 GTL Resources methanol plant $770m 600 85 NICKEL Dampier Nitrogen ammonia–urea plant $900m 1000 130 Sasol Chevron gas-to-liquids plant (stage 1) $2000m 2500 200 Lake Johnston (Emily Ann/Maggie Hays) Sub total $5300m 5600 625 - Nickel Mine/s (sulphide ore) GAS LIONORE AUSTRALIA (NICKEL) LTD Gorgon project $6000m 2900 600 LionOre Mining is developing the Maggie Hays deposit as an integrated development with its nearby LNG Train-4 and trunkline $2400m 2000 70 Emily Ann mine near Lake Johnston. Construction at Train-5 LNG project $1600m 2000 70 Maggie Hays commenced with the boxcut being Sub total $10 000m 6900 740 completed in April 2003, while the main decline and OTHER ventilation drive portals are currently under Alcoa Pinjarra alumina refinery optimisation $440m 1000 n/a development. Mining at Maggie Hays is planned to Alcoa Wagerup refinery Train 3 expansion $1200m 1500 250 commence in Q4 2004 and will double production Boddington Wandoo gold mine expansion $500m 500 350 from the region to about 1000 to 1200 t/a of nickel. The concentrate will be shipped to Inco Ltd of Collie pulp mill $400m 300 72 Canada under a life-of-mine offtake agreement Kemerton titanium dioxide pigment plant expansion $470m 500 200 negotiated for the Emily Ann mine. Telfer gold mine expansion $1200m 1222 620 Expenditure: $28m. Kalgoorlie manganese dioxide plant $136m n/a 41 Employment: Construction: 25; Operation: 167 Sunrise Dam underground gold project $87m n/a n/a Cosmos Deeps - nickel mine Mt Weld rare earths project $40m 100 35 JUBILEE MINES NL Jaguar base metals $43m n/a n/a A feasibility study based on the Cosmos Deeps ore Various port upgrades $220m n/a n/a reserve of 520 000 tonnes at 7.2% nickel was Ord irrigation (stage 2) project $600m 200 825 completed in April 2001. The company completed West Kimberley irrigation project $1900m 500 3000 open pit mining in July 2003. After an 18 month Sundry projects — at least another $3000m 1500 300 development program, underground mining at Cosmos Deeps commenced in Q2 2003. Based on Sub total $10 236m 7322 5693 current ore reserves, production will continue to TOTAL A$35 309 million 28 452 9665 2008. Exploration drilling is continuing in and around the Cosmos Deeps orebody. n/a = not available or not applicable Cost A$33 m Employment: Construction 15; Operation: 55

Prospect March–May 2004 31 Committed Projects Projects under consideration se as at 1 March 2004 as at 1 March 2004

Sally Malay - Nickel Project AGRICULTURE the Bayer liquor stream generated in Alcoa's adjacent alumina refinery. Timing is dependent on favourable SALLY MALAY MINING LIMITED Mantinea Flats - Ord River Irrigation Construction at the Sally Malay project has market conditions and statutory approvals. commenced. A 120-person village is scheduled Scheme (Stage 2 Development) - Mantinea Expenditure: $75m. to be operational in Q4 2003, with plant Flats Employment: Construction: 150; Operation: 50 commissioning scheduled for Q3 2004. The first HENRY WALKER ELTIN LTD. GOLD The project consists of developing and servicing shipment of concentrate to the Jinchuan Group Boddington - Gold Mine (Wandoo in China is planned for Q3 2004. Sally Malay approximately 80 farms (about 4200 ha total) at plans to employ both open-cut and Mantinea Flats for irrigated intensive horticulture which Expansion) underground mining methods to extract ore, will then be offered for sale. Following an Expression of BGM MANAGEMENT COMPANY PTY LTD which will be processed via a 750 000 t/a mill. A Interest process in late 1998, a consortium headed by Boddington Gold Mine is managed by BGM bulk nickel/copper/cobalt concentrate will be Henry Walker Eltin Limited was mandated to carry out Management Company Pty Ltd on behalf of Newmont, shipped by road and exported through the the development, subject to a successful feasibility study AngloGold and Newcrest. BGM has environmental upgraded port of Wyndham. The project is and associated approvals. The studies have been approval for the expanded Wandoo project, based on expected to have a mine life of 5.5 years on deferred pending resolution of land access issues. mining the extensive bedrock that underlies the mined- current resource estimates. Expenditure: $108m. out oxide resource. The project includes a dedicated Expenditure: $50m. Ord River - Ord River Irrigation Scheme 100 MW gas-fired power station. Project go-ahead will be subject to commercial factors. Employment: Construction: 150; Operation: 120 ORD STAGE 2 M2 AREA Expenditure: $500m. The potential exists for a 30 500 ha irrigated agricultural OIL & GAS DEVELOPMENTS Employment: Construction: 500; Operation: 350 North West Shelf - Project Expansion - development immediately to the northeast of the existing Ord Stage 1 development. The WA and NT Sunrise Dam - Gold Mine - Underground 4th LNG Train, Second Trunkline Governments are committed to investigating the project Development WOODSIDE ENERGY LTD feasibility and propose to consult with the local ANGLOGOLD AUSTRALIA LTD Proposals by the NWS partners for additional community before progressing the re-tendering of the AngloGold Australia Ltd has announced it will begin a LNG Trains 4 and 5, and a second trunkline and Ord Stage 2 M2 area. Environmental approval has been three-year underground development in Q4 2003 at the expansion of the Domgas plant, received given for an irrigated agricultural project in the M2 area. Sunrise Dam gold mine to test the feasibility of later environmental approval in 1998 and 1999. The Possible crops include sugar, cotton, leucaena or committing to a full-scale underground operation. The LNG expansion is based on growing Asian horticultural crops. study will involve the development of two declines energy markets. In April 2001 the partners Expenditure: $600m; Construction: 200;. Operation: 825 totalling 9 km in the vicinity of previously defined committed to development of the A$1.6 billion West Kimberley - Water & Land Resources reserves. The company expects to make a decision on LNG Train 4. Construction of Train 4 Development Project whether to proceed to full-scale underground mining in commenced in Q3 2001. In December 2001 the early 2007. A positive decision is expected to increase WESTERN AGRICULTURAL INDUSTRIES PTY LTD joint venturers approved expenditure for the the life of the project to at least 2012. Western Agricultural Industries Pty Limited (WAI) was A$800 million second subsea trunkline linking Expenditure: $87m. the offshore production facilities to the onshore appointed in August 1997 to carry out feasibility studies gas plant on the Burrup Peninsula. Substantial into establishing an irrigated agricultural industry based HEAVY MINERAL SANDS progress has been made in the construction of on the ground and surface water resources of the Jangardup South - Mineral Sands Mine Train 4 and the laying of the second trunkline Canning Basin and Fitzroy River system. Results to date CABLE SANDS (WA) PTY LTD has commenced. The trunkline is scheduled to indicate that there is sufficient potential to establish a 20 Cable Sands has outlined a major titanium minerals be completed in April 2004 to coincide with the 000 ha groundwater-based irrigated cotton industry in orebody adjacent to D'Entrecasteaux National Park. completion of Train 4. an area situated about 200 km south of Broome. Feasibility and environmental studies are well Expenditure: $2.4b. Feasibility studies have been deferred pending advanced. An environmental impact statement for the Employment: Construction: 2000; Operation: 70 resolution of land access issues. WAI's MoU with the project is expected to be released for public review in PETROCHEMICALS/CHEMICALS State, which allows WAI to undertake its feasibility 2004. studies, has been extended to 30 June 2004. Expenditure: $40m. Burrup Peninsula - Ammonia Plant Expenditure: $1.9b. Employment: Construction: 100; Operation: 50 Employment: Construction: 500; Operation: 3000 BURRUP FERTILISERS PTY LTD Kemerton - Titanium Dioxide Pigment Plant Burrup Fertilisers is developing an ammonia BAUXITE/ALUMINA plant at the King Bay/Hearson Cove industrial Expansion area on the Burrup Peninsula, near Karratha. Pinjarra/Huntly - Alumina Refinery MILLENNIUM INORGANIC CHEMICALS LTD Around 760 000 t/a of liquid ammonia will be Efficiency Upgrade Millennium has approval for a major expansion of its produced and exported to India and other world ALCOA Kemerton titanium dioxide pigment plant to 190 000 markets for the manufacture of fertilisers. SNC- Alcoa is planning a $440 million efficiency upgrade of its t/a. The EPA approved the proposal in April 1999. A Lavalin Australia Pty Ltd, is the EPC contractor Pinjarra alumina refinery that will add an additional 0.6 decision to proceed is dependent on market factors. and Sinclair Knight Merz the environmental Mt/a to raise total refinery capacity to more than 4 Mt/a. Expenditure: $470m. management consultant for the project. The Subject to environmental approval and market Employment: Construction: 500; Operation: 200 Harriet Joint Venture has an agreement to supply conditions, it is planned to bring the additional capacity Kwinana - Titanium Dioxide Pigment Plant 82 TJ/d of natural gas to the project. on stream at the end of 2005. Expansion Construction commenced on 30 April 2003 and Expenditure: $440m. TIWEST JOINT VENTURE production is planned to start in Q3 2005. Employment: Construction: 1000 Environmental approval for the staged expansion of a Expenditure: $630m. Wagerup/Willowdale - Alumina Refinery pigment plant capacity to 180 000 t/a has been given. Employment: Construction: 500; Operation: 60 Train 3 Expansion A decision to proceed with further stages within this TIMBER ALCOA WORLD ALUMINA AUSTRALIA expansion is dependent on market conditions. Neerabup - Laminated Veneer Lumber Environmental approval was granted in August 1995 to Employment: Construction: 108; Operation: 98 Plant increase the mining rate and expand the Wagerup IRON ORE refinery to 3.3 Mt/a by construction of a third WESBEAM PTY LTD production train and round-out of total facilities. An East Pilbara - Iron ore mine rail and port WESBEAM Pty Ltd has reached an agreement increase in capacity of 25% was completed in 1999. development with the State, which has been ratified by Commitment to build the third train is dependent on FORTESCUE METALS GROUP (FMG) Parliament, for the development of an A$80 market and community factors. FMG is conducting a pre feasibility study into a new million laminated veneer lumber (LVL) plant at Expenditure: $1.2b. iron ore development in the eastern Pilbara (based on Flynn Drive, Neerabup. Construction of the Employment: Construction: 1500; Operation: 250 the Mt Nicholas, Tongololo Creek, Mt Lewin and Mindy plant has commenced with first production due GALLIUM Mindy prospects), to be serviced by a multi-user in the second half of 2004. Timber feedstocks will railway and port infrastructure at Port Hedland. The be pine trees harvested from State Government Pinjarra - Gallium Extraction Plant company referred the first phase of the proposed owned plantations at Gnangara and other areas. GEO SPECIALTY CHEMICALS INC. project for formal environmental approval in December The project will sell LVL and veneers to In March 2001, GEO Speciality Chemicals Inc of the USA 2003. A detailed feasibility study is expected to Australian and overseas markets. announced plans to construct a major new gallium commence in March 2004. Construction on the rail and Expenditure: $80m. metal extraction facility at Pinjarra, south of Perth, on port facilities is planned to start Q4 2004/Q1 2005 to Employment: Construction: 200; Operation: 140 the site of the former Rhodia gallium chloride plant. The supply the Chinese market from early 2006. facility is planned to have an ultimate capacity of 100 t/a Expenditure: A$1.8 billion of '4N' gallium metal. The gallium will be extracted from Employment: Construction: 1000; Operation: 300 32 Prospect March–May 2004 seaaoc 2004 • 7 - 9 June 2004 Holiday Inn Esplanade Darwin • seaaoc 2004 • 7 - 9 June 2004 Holiday 10th Annual

"The Asia Pacific Region and the Global Oil and Gas Market"

7-9 June 2004 Holiday Inn, Esplanade, Darwin

KEYNOTE PRESENTATIONS: The Hon. The Hon. Clare Martin Warren Entsch, Chief Minister Parliamentary Northern Territory Secretary to the Dr Mari Alkatiri Minister for Industry, Prime Minister East Timor Tourism and Resources

PLUS KEY PRESENTATIONS FROM: Platinum Sponsor • Blair Murphy, Darwin Area Manager, ConocoPhillips • Dr Brian Fischer, CEO, ABARE • David Maxwell, Gas Business Unit Director, Woodside • Barry Jones, Executive Director, APPEA Proudly Endorsed by • Kim Wood, CEO, Power and Water Corporation • Ed Willet, Commissioner, ACCC

• Jim Limerick, Director General, WA Department of Australian Pipeline Northern Territory Industry Association Minerals Council Industry and Resources • Mark Leahy, General Manager, RANms • Ken Spicer, Project Director, Alcan • Mr Tetsu Hashimoto, General Manager, LNG Fuel Department, Tokyo Electric Power Company HIGHLIGHTS • Nation Building and Economic Development in East Timor Official Publication • Energy Market Regulation and Policy • Bayu Undan Project Update In Partnership with • Timor Sea and North West Shelf Gas Developments • The Future of Domestic Gas Supply and Demand • International Export LNG Supply Options • Gas Pipeline and Infrastructure Projects Researched & Produced by

For sponsorship / exhibition opportunities please phone Roger Reilly on 02 9923 5067 or email [email protected]

Delegate Name: (Mr/Mrs/Ms) Conference Pricing Job title: Tick Delegates Price GST Total Conference Only $1695.00 $ 169.50 $1864.50 Company: Conference + 1 Workshop $2490.00 $ 249.00 $2739.00 Address: Conference + 2 Workshops $3085.00 $ 308.50 $3393.50 Conference Only "special rate" $ 995.00 $ 99.50 $1094.50 Telephone: Conference + 1 Workshop "special rate" $1530.00 $ 153.00 $1683.00 Yes! I would like to receive free email information on relevant events. Conference + 2 Workshops "special rate" $1930.00 $ 193.00 $2123.00 Official Evening Function $ 110.00 $ 11.00 $ 121.00 Email: Please select workshops A B C D I will be attending the cocktail reception on Sunday 6th of June at no charge I require a reservation on the bus from the Holiday Inn to the dinner venue *Special Rate for Members of NT Minerals Council, NT Chamber of Commerce and Industry and NT based businesses.” Due to unforeseen circumstances, the programme may change and IIR reserves the right to alter the venue and/or speakers

TO REGISTER CALL NOW! TEL: (02) 9923 5090 FAX: (02) 9959 4684 EMAIL: [email protected] VISIT: www.seaaoc.com Projects under consideration as at 1 March 2004

Hope Downs - Iron Ore Mine LEAD OIL & GAS DEVELOPMENTS HOPE DOWNS LIMITED Wiluna (Magellan) - Lead Mine Gorgon (Carnarvon Offshore Basin) - Gas Hancock and Kumba have completed a feasibility study of the Hope Downs project. The alliance is now MAGELLAN METALS PTY LTD and Condensate Field progressing project finance, joint venture and market The project is based on a lead carbonate (cerussite) CHEVRON AUSTRALIA PTY. LTD. agreements. deposit 30 km west of Wiluna. A feasibility study to The Gorgon Joint Venture is considering an LNG (up to Expenditure: $1.05b. take account of additional ore reserves, revised 10 Mt/a) and domestic gas development at Barrow Employment: Construction: 500; Operation: 300 production strategies, and current market conditions Island, based on gas from the Gorgon field. The Koolan Island, Western Australia - Iron Ore - Koolan is currently the subject of independent review. restricted industrial use of Barrow Island has been Island Construction is planned to commence late in Q1 approved, in principle, by the Western Australian AZTEC RESOURCES LIMITED 2004 to produce metal on site through direct Cabinet after evaluation of environmental, social, reduction of the concentrate for export through the Koolan Island - Iron Ore Mine economic and strategic aspects. Gas reserves have port of Geraldton. Proven and probable reserves been enhanced by positive results from an exploration AZTEC RESOURCES LIMITED total 11.1 Mt at a grade of 6.8% lead. Annual program in the West Gorgon area. Development Aztec Resources proposes to develop a mining throughput is planned at 1.2 Mt/a of ore to eventually decisions by the Gorgon Joint Venturers will be subject operation based on the ex-BHP Koolan Island iron produce over 80 000 t/a of soft lead. to market commitments. The Joint Venture has applied ore deposits in the Yampi Sound, 130 km northwest Expenditure: $48m. for environmental approvals so it is in a position to start of Derby in Western Australia. Aztec aims to become Employment: Construction: 100; Operation: 80 construction in late 2005. a producer of premium grade and quality iron ore at MANGANESE Expenditure: $6b. a production rate of 3-4mtpa. A mainly indicated Employment: Construction: 2900; Operation: 600 resource totalling 24.9 Mt at 67% iron has been Kalgoorlie Region - Manganese Dioxide Macedon/Pyrenees (Carnarvon Offshore calculated from the BHP data of the down-dip Project - Stage 1 Basin) - Oil/Gas Fields extensions of the main orebody. The company plans HITEC ENERGY LIMITED to complete a feasibility study during 2004 with HiTec Energy Limited proposes to produce BHP BILLITON PETROLEUM PTY LTD mining to commence in 2005. electrolytic manganese dioxide (EMD) for alkaline These are two adjacent, but separate offshore Expenditure: $50m. batteries. The hydrometallurgical plant will be a hydrocarbon fields within the West Muiron structure, Koolanooka, Western Australia - Iron Ore brownfield development at Cawse, 50 km north west about 50 km north of Exmouth. The Macedon gas field Mine - Mid West Region of Kalgoorlie, built around an existing electro- was discovered in 1992 by the West Muiron-3 well with a follow-up appraisal campaign in 1994. The Pyrenees MIDWEST CORPORATION LIMITED winning cell house and SX plant, acquired by HiTec in October 2003 . The initial production of 12 500 t/a, oil and gas field was discovered in 1993. Development Mid West Region - Iron Ore Mine of the Pyrenees heavy oil accumulation would likely MIDWEST CORPORATION LIMITED planned for 4th quarter 2004, can be expanded to 23 000 t/a without significant changes to the existing only proceed as part of a larger heavy oil project Midwest Corporation proposes to develop a number undertaking. Macedon is under consideration for of iron and steel feedstock materials projects, plant. Manganese ore will be sourced from Consolidated Minerals' Woodie Woodie mine in the domestic market opportunities. including direct shipping iron ore from Koolanooka, Employment: Construction: 35; Operation: 5 Blue Hills, and Weld Range tenements; and a direct Pilbara, as well as manganese waste from OMG's reduction iron ore pellet project based on the Cawse nickel plant. North West Shelf - Project Expansion - 5th magnetite resource at Koolanooka tenements. The Employment: Operation: 41 LNG Train total identified resource estimate for the Koolanooka Expenditure: $136m. WOODSIDE ENERGY LTD and Blue Hills tenements is 3.4 million tonnes with METHANOL Proposals by the NWS partners, for LNG Train 5 and a an average grade of 58.2% iron. Sales are expected to second trunkline, and expansion of the Domgas plant, commence by Q4 2004. Burrup Peninsula - Methanol Plant received environmental approval in 1998 and 1999. GTL RESOURCES PLC IRON ORE PROCESSING The LNG expansion is based on growing Asian energy GTL Resources proposes to build a plant to produce 1 markets. In April 2001 the partners committed to Fortescue (Cape Preston) - Mine and HBI Mt/a of methanol by late 2005. The plant will be development of the A$1.6 billion LNG Train 4. Train 5 Plant situated at Withnell East on the Burrup Peninsula. development is contingent on future market AUSTEEL PTY LTD On 17 October 2001, GTL Resources signed a conditions. The Austeel consortium is promoting a 3.85 Mt/a Memorandum of Understanding with Apache Expenditure: $1.6b. EAF steelmaking project, utilising the Fortescue Corporation, Globex Energy Inc and Santos Ltd for Scarborough (Carnarvon Offshore Basin) - the purchase of 108 TJ/d of natural gas to supply the magnetite deposits. Austeel plans to produce slab, Gas Field hot-rolled and cold-rolled coil and galvanised steel at plant. Products will be sold to Swiss company Vitol for trading on international markets. EXXON MOBIL a new plant in Newcastle, NSW, that will receive feed The field is located in 900 metres of water, 300 km from a new iron ore mine and HBI production facility Expenditure: $770m. Employment: Construction: 600; Operation: 85 offshore in the Carnarvon Basin with probable reserves at Fortescue. Processing in Western Australia of approximately 8 Tcf of gas. Evaluation work is being includes magnetic concentration, pelletising and DRI NICKEL undertaken to assess options including standalone processes. HBI(DRI) will be shipped to Newcastle Mt Keith - Nickel Mine LNG development and supply to NWS project venture through new port facilities at Cape Preston. as part of potential NWS expansion. Environmental approval for the mine to HBI stage WMC RESOURCES LTD has been granted. Other projects based on the A feasibility study for an expansion of the Mount Scott Reef/Brecknock (Browse Basin) - Fortescue deposits (being promoted by parent Keith operation from 11mtpa to 14.2 Mt/a Gas Fields company Mineralogy) involve an export DRI/slab throughput has been conducted. Options for WOODSIDE ENERGY LTD project and an export pellet project. implementation, including an incremental In February 2001, recoverable reserves for the Scott Expenditure: $3b. expansion, are under consideration in light of other Reef/Brecknock project were upgraded to 20.49 Tcf of Employment: Construction: 5000; Operation: 1050 nickel sulphide opportunities in the area. gas and 311 million barrels of condensate after multi- Debottlenecking of the Kwinana nickel refinery will KAOLIN disciplinary studies incorporating the results of drilling see production capacity increased from 67 kt/a to 70 at Brecknock South. The fields are considered Thangoo (100 km SSE of Broome) - k/pa by the end of 2004. commercially viable in the future, but await firm Kaolin Mine Expenditure: $150m. development plans dependent on significant growth in MANSFIELD MINING NL Ravensthorpe - Nickel Mine domestic gas and LNG markets. A major kaolin deposit, to be mined by Mansfield BHP BILLITON - RAVENSTHORPE NICKEL Tern/Petrel (Bonaparte Offshore Basin) - Mining NL as the Eaglehawk Kaolin Project, is OPERATIONS PTY LTD Gas Field situated on Thangoo pastoral station about 100 km BHP Billiton's Ravensthorpe Nickel Operations Pty SANTOS LIMITED south-southeast of Broome in the West Kimberley. It Ltd is currently evaluating the production of up to The offshore Petrel gas field, discovered in 1969, is is one of Western Australia's few high-grade deposits, 220 000 t/a of mixed nickel/cobalt hydroxide to be located about 250 km west of Darwin on the WA/NT with proven reserves of around 410 Mt. The quality of processed at QNI's Yabulu refinery in Queensland. seabed border in the Bonaparte Basin. The offshore the resource has been verified by independent This will increase the annual production of nickel Tern gas field, discovered in 1971, is located about 300 bodies (CSIRO, Universities in Qld and SA). Once and cobalt at the refinery by 45 000 t/a (140%) and km west of Darwin in WA waters in the Bonaparte operating, the A$90 million project could produce 1400 t/a (70%) respectively. The feasibility study was Basin. Field development options include installation and export 700 000 t/a of kaolin and by-product completed late in 2003 and an investment decision is of unmanned offshore production platforms with a minerals such as silica sand, ilmenite and leucoxene. currently forecast for late in the first quarter 2004. pipeline to a gas treatment plant south of Darwin. The Expenditure: $90m. Expenditure: $1.4b. development possibilities for these fields have been Employment: Construction: 50; Operation: 130 Employment: Construction: 1000; Operation: 300 enhanced by recent significant discoveries by other parties nearby, which may provide tie-in potential for 34 Prospect March–May 2004 Petrel and Tern to service domestic gas customers. A ammonia/urea project. The plants being planned RARE EARTHS recently completed technical review will assist in would be world-scale and produce around 1.2 Mt/a focusing in 2003 on commercialisation of the fields. of granular urea and 100 000 t/a of ammonia. Urea Mt Weld - Rare Earths Operations Whicher Range (Perth Onshore Basin) - is widely used as a fertiliser, while ammonia is used LYNAS CORPORATION LTD Lynas is planning to mine up to 200 000 t/a ore, Gas Field in fertilisers, explosives and as a chemical feedstock. Expenditure: $900m. producing 20 000 t/a of rare earths concentrate. In AMITY OIL NL Employment: Construction: 1000; Operation: 130 phase 1, the concentrate will be exported to China The Whicher Range gas field, located 21 km south of for toll processing into approximately 10 000 t/a Busselton, was discovered in 1968. Four wells drilled Burrup Peninsula - Dimethyl Ether Project rare earth oxides. Lynas will market all products to date have confirmed a significant-sized gas field, from the downstream processing under the Rare but gas flow rates have been sub-commercial. Work, JAPAN DME LTD. Earths Direct "RED" Brand. Lynas is also evaluating including high pressure injection of carbon dioxide, Japan DME Ltd, a joint venture of Japanese the feasibility of secondary processing rare earths to increase gas flow rates from the extremely tight companies comprising Mitsubishi Gas Chemical carbonate in Australia. sands, has increased the possibility of commercial Company, Itochu Corporation, Mitsubishi Heavy Expenditure: $40m. development. A recently completed (January 2004) Industries and JGC Corporation, plans to develop a Employment: Construction: 100; Operation: 35 well (Whicher Range-5) was suspended as a world-scale dimethyl-ether (DME) plant on the potential gas producer and data evaluation is to be Burrup Peninsula near Karratha. DME is used as an TIMBER undertaken to determine if a fracture stimulation aerosol propellant and is a likely future Collie - Pulp Mill program will give a sustainable commercial gas flow. environmentally clean fuel for the power generation GRIFFIN ENERGY PETROCHEMICALS/CHEMICALS and transportation industries. The proposed plant Griffin Energy and an unnamed, Chinese Industrial will produce methanol for conversion into 1.7 Mt/a Group have jointly appointed an international Barrow Island - Gas to Liquids Fuels of DME from around 220 TJ/d natural gas. Detailed forestry consultant to carry out feasibility studies SASOL CHEVRON GLOBAL JOINT VENTURE feasibility studies are underway. The project was into the establishment of a chemi-mechanical pulp Sasol Chevron is considering Australia as a location granted Major Project Facilitation status by the (CMP) mill near Collie. Subject to the findings of the for a plant to produce environmentally clean diesel Federal Government. Environmental consultant, study, the joint venturers will propose a mill with a fuel from natural gas. This gas-to-liquid fuels plant Parsons Brinckerhoff (Aust) Pty Ltd, has pulp output of around 200,000 t/a, with a would initially produce about 50 000 barrels a day of commenced work on obtaining environmental corresponding annual raw material requirement of synthetic liquid product. Future expansions would approval for the project. A commitment to proceed around 500,000t of wood fibre. The raw material provide up to 200 000 barrels a day to supply both is expected by the end of 2003. Current planning is input would be sourced from blue gum plantations Australian and South East Asian markets with total for the plant to be operating by end of 2006. located within economic haul distances of the mill. investments of A$10 billion and utilising around 20 Expenditure: $1b. Expenditure: A$400 Tcf of gas over the 25-year design life. Possible Employment: Construction: 1000; Operation: 150 Employment: Construction: 300; Operation: 72 locations in the North West of Western Australia are PLATINUM GROUP METALS being investigated. ZINC/COPPER Expenditure: $2b. Munni Munni - Platinum Deposit Teutonic Bore - Jaguar - Base Metal Employment: Construction: 2500; Operation: 200 HELIX RESOURCES NL Deposit Burrup Peninsula - Ammonia Urea Plant Helix Resources NL has established an indicated PILBARA MINES LIMITED resource of 9.2 Mt at 2.9 g/t combined platinum, DAMPIER NITROGEN Ongoing prefeasibility studies of Pilbara Mines Ltd's palladium, rhodium, and gold, 0.2% nickel, and The Joint Venture between Agrium Inc of Canada, Jaguar base metal prospect, 54 km north of Leonora, 0.3% copper at its project site near Karratha. Plenty River Corporation Ltd, Thiess Pty Ltd has have indicated a resource of 1.72 Mt of zinc/copper. Preliminary mining studies suggested a mining rate been terminated. Plenty River and Thiess have It is planned to develop a $30–40 million of combined open cut and underground production signed a Cooperation Agreement to develop the underground mine, expected to have a 5–6 year life, of 1.5 Mt/a. Further activity was postponed in early A$900 million ammonia and urea plant while with a possible start-up date of October 2004. 2003, as a result of poor exploration results and a Agrium is looking to develop a separate project. Both Expenditure: $35m. decreased palladium price. The project is under companies are seeking access to the site on the review. Burrup Peninsula that had been set aside for an

Prospect March–May 2004 35

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AUSTRALIAN MARINE COMPLEX

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