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Global demand driving resources

THE increasingly globalised nature of Western Australia’s economy is highlighted by the resource companies driving increased investment in the State.

Multinationals such as Alcoa, BHP Billiton, Rio Tinto and ChevronTexaco are behind some of the biggest projects currently under way or planned for WA.

This makes the local management of these companies crucial to the State’s economic fortunes.

Woodside is a Perth-based company but increasingly it is also adopting a global perspective.

Its new chief executive, Don Voelte, was recruited from the US and is expected to focus on ‘big picture’ strategic growth opportunities, leaving chief operating officer Keith Spence to run the existing operations.

As such, Mr Voelte will help to determine the extent to which Woodside invests in new projects or focuses instead on international opportunities.

It is close to completing a major expansion of the North-West Shelf project, has commenced the Enfield gas project, and is widely tipped to commit to a fifth production train on the North-West Shelf.

The company has made it clear that it wants to diversify its operations, so WA will have to compete for future investment dollars against opportunities in places like the Gulf of Mexico.

The rapid growth of the Chinese economy has underpinned the expansion of Woodside’s operations. Another major player in the oil and gas sector is Chevron-Texaco, whose Australian managing director is Jay Johnson.

ChevronTexaco is the major owner and will be the operator of the giant Gorgon oil and gas project, by far the single largest project on the State’s horizon.

Stage 1 of the Gorgon project involves an investment of $6 billion in the first production train on Barrow Island.

Stage 2, worth an extra $5 billion, involves the delivery of gas to the mainland and construction of a second production train.

Alcoa World Alumina Australia is one of WA’s major employers, with 4,500 staff in its bauxite mining and alumina production facilities.

It is also the State’s largest exporter, with annual export revenue of $2.8 billion, according to WA Business News’ Book of Lists.

Under the leadership of managing director Wayne Osborn, it has recently commenced a $440 million upgrade of its Pinjarra alumina refinery, which will create 1,000 construction jobs at its peak.

The Worsley alumina joint venture, majority owned by BHP Billiton, is also believed to be close to committing to a $200 million upgrade of its operations.

The alumina producers are benefiting from China’s strong economic growth.

Another sector thriving for the same reason is the iron ore industry.

The two main producers, Rio Tinto and BHP Billiton, are collectively spending more than $2 billion to expand production.

The key local people at these two companies are Chris Renwick, chief executive of Rio Tinto Iron Ore, and Graeme Hunt, president of BHP Billiton Iron Ore and Boodarie Iron.

Rio Tinto has also invested in the $400 million HIsmelt project at Kwinana, which is a new method of processing ore into pig iron.

If it lives up to its potential, HIsmelt could revolutionise steel making.

BHP Billiton’s interests in WA also include the $1.4 billion Ravensthorpe nickel project, which is due to be established over the coming 18 months.

Ravensthorpe is characterised as a ‘second generation’ laterite nickel project and BHP Billiton is aiming to avoid the major technical problems that adversely affected the first generation of laterite nickel projects, such as Minara Resources’ (formerly Anaconda Nickel) Murrin Murrin project.

Minara was on the brink of collapse when Peter Johnston took over as chief executive in November 2001, but he has since stabilised the business and is now considering expansion options.

Mr Johnston’s predecessor, Andrew Forrest, is once again pursuing ambitious growth opportunities via Fortescue Metals Group.

The company is targeting iron ore mining and infrastructure opportunities in the Pilbara and, should Mr Forrest succeed, he will become one of the most influential people in the resource sector.

Apart from the big companies, the buoyant state of WA’s resource sector also reflects the numerous projects developed by smaller companies.

This is most evident in the boom conditions in Kambalda, where junior companies are working at fever pitch to meet the current strong demand for their output.

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