Infrastructure under pressure

The state government and iron ore miners in the Mid-West are facing crunch time over the development of new railway and port infrastructure, which is needed if planned mines are to proceed.

The long-running debate over the proposed Oakajee port and associated rail lines highlights the need for new and upgraded infrastructure to support planned resource projects.

The issue is arguably most acute in the Mid-West, which is changing from a sleepy farming region to a busy mining province, but has been felt to varying degrees at nearly every major port across the state.

Rapid economic growth has also squeezed the state’s urban infrastructure, with Perth’s domestic airport struggling to handle increased passenger numbers.

Similarly, Fremantle harbour has been unable to smoothly manage increased freight volumes, particularly in the lead up to Christmas.

The state government has a record capital works budget that involves extra spending on everything from hospitals to roads and electricity transmission; but it is under pressure to spend more.

One region where the infrastructure challenge is being tackled decisively is the Pilbara, where the big iron ore miners are building their own railways and ports.

BHP Billiton, Rio Tinto and Fortescue Metals Group collectively have spent, or have committed to spend, more than $15 billion expanding the capacity of their iron ore businesses in the Pilbara.  The vast bulk of that has been spent on railways and ports.

In addition, the Port Hedland Port Authority has recently completed a dredging program as a precursor to an expansion of its general berth facilities.

A big challenge for the Pilbara will be meeting its long-term needs.

A state government-commissioned study early this year identified Ronsard Island, about 80 kilometres west of Port Hedland, as the preferred site for the region’s next big port.

Planning and Infrastructure Minister Alannah MacTiernan said early this year that a major new port could be needed as soon as six years away.

In the Mid-West, the state government has progressively expanded the capacity of the port at Geraldton.

But the port has been unable to cope with the relatively modest growth in export volumes in recent years.

The region’s long-term needs are to be met by new rail lines and a new port at Oakajee, north of Geraldton.

Mining and infrastructure companies, led by Yilgarn Infrastructure and Midwest Corporation, which are backed by Chinese interests, and Murchison Metals, which is backed by Japan’s Mitsubishi Corporation, have been competing to win the right to develop the new infrastructure at a cost of up to $3 billion.

Babcock & Brown-owned WestNet Rail, which operates the region’s existing rail lines, is also looking to provide upgraded rail services.

The government is believed to be considering a compromise solution that would separate development of the new port from the rail infrastructure.