03/06/2010 - 00:00

Expected investment, development boom to diversify base

03/06/2010 - 00:00


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BY any measure, the Mid West stands on the brink of an unprecedented level of development and investment, as scores of projects across a range of industries – including mining, energy, transport, and science – jostle for pre-eminence.

Expected investment, development boom to diversify base

BY any measure, the Mid West stands on the brink of an unprecedented level of development and investment, as scores of projects across a range of industries – including mining, energy, transport, and science – jostle for pre-eminence.

It has also become one of the state’s most significant melting pots of international and Australian business interests, as companies from China, Japan, South Korea, and the US have been drawn by the region’s potential.

Few understand the scale of the task, or the prize, as well as Giulio Casello, chief executive of Sinosteel Midwest, the Chinese company planning to develop the $2 billion Weld Range iron ore project.

“The Mid West is facing $20 billion of investment over the next five years to get things up and running. That is a huge investment that is going to require finance from somewhere around the world, whether it be China, the US, England or here,” Mr Casello told the WA Business News forum.

“There’s a lot of money to be spent, there’s a lot of money to be raised in the next few years to make this happen.”

Iron ore the driver

Clearly, the iron ore sector is the fundamental driver of the region’s hopes, with at least $10 billion in serious large-scale projects either under construction or in advanced planning, excluding the $4 billion investment needed to deliver the Oakajee port and associated rail network.

According to the state government’s estimates, iron ore development could lead to a near 20-fold increase in the region’s output to more than 110 million tonnes a year.

The caveat to that is completion of the Oakajee port and associated 570-kilometre heavy rail network on time in 2014.

Currently, the region produces around 6mtpa, from three mines – Mt Gibson Iron’s Tallering Peak mine 175km east of Geraldton, Crosslands Resources stage one Jack Hills mine 100km north-west of Meekatharra, and Sinosteel’s Koolanooka mine 50km west of Karara.

But that will change next year, when Gindalbie and its Chinese partner AnSteel start production at their small 2mtpa hematite mine at Karara, 225km east of Geraldton.

That is just a taster that will be followed six months later by the first production of magnetite concentrate from their $2 billion flagship Karara project, which will initially produce 8mtpa but could be expanded to as high as 30mtpa once Oakajee port is complete in 2014.

Meanwhile, Chinese controlled Asia Iron is aiming to start production at its 10mtpa, $2 billion Extension Hill magnetite project in 2013, exporting through the existing Geraldton Port. But first production at Extension Hill is expected next year, when Mt Gibson opens a small hematite mine at the site.

Following close behind in 2014 will be the region’s two largest operations at Jack Hills and Weld Range, which are forecast to produce 25-35mtpa and 15mtpa respectively.

The second wave of proposed projects include Golden West Resources’ planned 10mtpa Wiluna West mine, Cashmere Iron’s billion tonne Cashmere Downs project 510km east of Geraldton, and Emergent Resources’ remote Beyondie magnetite project midway between Wiluna and Newman.

All will require a significant expansion of the rail network planned by MurchisonMetals/Mitsubishi-owned infrastructure developer Oakajee Port & Rail.

Once OPR’s main line to Weld Range and Jack Hills and southern link to the Karara line is complete, extensions are envisaged to the Robinson Range/Beyondie region in the north, and east to Wiluna and Cashmere Downs.

It will also open opportunities to develop other mineral resources in the region, such as copper, mineral sands, vanadium, and potentially even uranium in the long term, such as BHP Billiton’s big Yeelirrie project south of Wiluna.

OPR chief executive John Langoulant said one of the beauties of the Oakajee port and rail development was the unforeseen opportunities it would unlock.

“Once the infrastructure is there, it will also open up a huge number of other resources, some of which we know about, but probably quite a lot that we don’t,” he said.

“That’s what infrastructure does – it creates an opportunity for things which are latent or are only mildly prospective.”

Rail to open other doors

It is for that very reason Premier Colin Barnett has labelled Oakajee as perhaps WA’s most important infrastructure project for the next 50 years, and why the state and federal governments have committed $678 million for common-user infrastructure at the port.

But the City of Geraldton-Greenough has gone further, crafting a blueprint for a $4.6 billion interconnected web of railways to link Oakajee with the rest of the state, for which it has submitted a funding application to Infrastructure Australia.

The plan includes a direct line to Perth via Muchea and Eneabba, a northern connection from Jack Hills to Newman, and southern link from Wiluna to the existing rail header at Leonora.

These connections would link every major port and region in the state, other than the Kimberley. More importantly for Geraldton, it would also make Oakajee a viable import-export hub for the south-west, alleviating the need for port expansions in the more tightly constrained Kwinana and Fremantle areas.

Geraldton city chief executive Tony Brun said the plan would ensure a more diverse economic base for the region and a more efficient and flexible infrastructure network for the whole state.

“As much as we love the miners, we don’t just want to be a mining town, because then you ride that cycle and become too dependent on one industry,” he said. “We’d like to see agriculture remain strong, we want to see processing, we want to see science and technology.”

Top of the list of such projects is the $2.5 billion Square Kilometre Array radio-astronomy project, earmarked for Boolardy station. WA is battling with South Africa to host the multi-national project to develop a radio telescope 50 times more sensitive than current instruments, using up to 3,600 radar dishes. The winning location will be announced next year.

Mr Brun said WA would gain little benefit of the $2.5 billion capital investment due to the specialist nature of the equipment, but the spin-off benefits would be enormous, including the attraction of hundreds of specialist researchers and scientists to the region.

Powering the dream

With the entire scope of projects planned for the region estimated to have a total power demand of 2 gigawatts – including 70 megawatts just to meet the SKA’s computing demands – energy investment is the other key focus of project development.

To take advantage of the Mid West’s natural abundance of renewable energy sources, Mr Brun is also pushing to establish Australia’s most extensive integrated network of renewable energy supplies.

The region is already one of WA’s leading sources of renewable energy, with two of the state’s biggest operating windfarms – Infigen Energy's 90MW Alinta windfarm near Walkaway and the 80MW Emu Downs windfarm near Cervantes.

In addition, council has approved a stage two expansion of Infigen’s Walkway windfarm, to 400MW, while Verve Energy is planning the 90MW Mumbida windfarm nearby.

Other than wind energy, Midwest Energy wants to build a 200MW solar thermal generator at Perenjori, and a small wave-power generator is being evaluated as part of the Oakajee port development.

And while power station proponent Eneabba Gas has full approvals for its planned Centauri-1 conventional 168MW gas-fired power station at Dongara, it aims to make it the first in WA to run on gas generated via underground coal gasification.

Mr Brun said while the Mid West could become Australia’s first industrial or mining region to be self sufficient from renewable energy, he emphasised that all development in the region absolutely hinged on completion of 330-kilovolt transmission line between Perth and Geraldton.

Without access to the south-west grid, renewable projects would simply not be viable, he said.


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