A wave of investment in mining, energy and renewables is expected to sustain growth in the north-west.
THE industries attracting big dollars in the north-west are set for major changes over the coming decades but two things are unlikely to change.
The scale of investment will be sustained at high levels and the pressure that imposes on north-west communities will not diminish.
The Pilbara Development Commission estimates $177 billion is due to be invested across the region.
That will be spread between iron ore, oil and gas, clean energy, chemical manufacturing, and infrastructure.
The PDC said these projects would create 51,000 construction jobs and nearly 10,000 jobs once operational. In a region with a population of about 58,000, it’s little surprise the growth comes with major challenges.
That’s after accounting for the fact most of the investment pipeline – $131 billion – comprises projects that are ‘under consideration’, so there is no guarantee they will proceed. However, the projects under construction or committed still add up to a very large $46 billion.
Local business groups agree the region’s growth has created a trifecta of issues: lack of workers, lack of affordable housing, and limited child care.
Onslow Chamber of Commerce and Industry chief executive Chantelle King told the recent Pilbara Summit the trifecta made it difficult for local businesses to pursue opportunities.
“Almost every business in Onslow is recruiting for staff,” Ms King said. “They eventually attract someone to the role, but we don’t have anywhere for them to live.
“Unfortunately the result is that local businesses do not have the capacity to deliver on opportunities presented to them by big business.
“Big business then contracts the work outside the region and flies [the workers] in and out.”
Karratha & Districts Chamber of Commerce chief executive Sarah Whelan echoed these concerns.
“With these projects, as seen in previous booms, it puts significant pressure on everything,” Ms Whelan said.
“From staff, when there is a global shortage of skilled workers, to housing and affordable living, and there is no simple fix.
“There are not enough people, and if we had people we have nowhere to put them.
“It’s a serious issue that is putting significant pressure on all businesses in the area.”
Ms Whelan said a thriving local business community was the backbone of a strong and prosperous region.
“But for this backbone to remain strong, it needs the unwavering support of big business,” she said.
Source: www.businessnews.com.au/bniq/projects
A handful of giant companies dominate the north-west.
There are none bigger than the iron ore miners: Rio Tinto, BHP and Fortescue, followed by Hancock Prospecting and Mineral Resources.
All these companies support their local communities, but there is always a demand for more, especially given the scale of their operations and their big annual profits.
The iron ore miners are the biggest contributor to economic activity in the north-west in multiple ways.
For starters, they are huge employers; collectively they have about 50,000 staff.
Business News has estimated less than a quarter of these people actually live in the Pilbara, but that still makes the iron ore sector the region’s biggest employer.
The profile of workers in iron ore has changed enormously over the years and continues to evolve, with an increasing number based in Perth as the miners move toward remote operations.
Their big haul trucks are mostly driverless, water carts and drill rigs are becoming driverless, and some trains do not have drivers.
All of this equipment is controlled by hundreds of staff sitting in front of banks of computer screens in Perth.
As well as being a big employer, the iron ore sector is a big spender.
Rio, for instance, spends about $9 billion per year with suppliers in Western Australia, including $600 million with Pilbara suppliers.
The large miners are also very big investors.
Their capital expenditure falls into two categories.
Each year they collectively spend at least $5 billion on ‘sustaining capex’, just to keep their existing operations in good working order.
Added to that is their ‘growth capex’, which includes the construction of new mines.
Currently, there are just two big new mine developments in full swing: Rio’s Western Range and Mineral Resources’ Onslow Iron.
There is a long list of mine projects set to proceed in the next year or so, in many cases subject to gaining final regulatory approvals.
Hancock Prospecting subsidiary Atlas Iron, for instance, has undertaken extensive preparatory work on its McPhee Creek mine, with most of the engineering completed and equipment ordered.
However, it cannot begin site works until it obtains a long-awaited environmental approval.
McPhee Creek is likely to be followed by two other Hancock projects: Mulga Downs and Ridley.
Similarly, Rio is awaiting approvals for its next tranche of new mines, which it needs in order to reach its medium-term production target of between 345 million tonnes and 360mtpa.
These projects are West Angelas, Hope Downs 1, Greater Nammuldi, and Brockman 4.
It is aiming to start construction of these projects in 2024, subject to regulatory approval.
Rio has not released costings but each is likely to easily exceed $1 billion.
Rio Tinto gas large workshops near Dampier for maintenance of its rail wagons and locomotices. Photo: Mark Beyer
Outside of iron ore, there is just a handful of big mining projects under way, including BCI Minerals’ Mardie salt development and the expansion of Pilbara Minerals’ lithium mine.
The queue of likely projects is led by two big goldmines: De Grey’s proposed Mallina mine, which will cost more than $1 billion, and Newmont’s Havieron mine.
Woodside Energy is also a big investor in the region, although the number of operational jobs flowing from oil and gas projects is a lot less than for mining.
It is currently spending more than $15 billion developing its offshore Scarborough gas field and expanding its Pluto liquefied natural gas (LNG) plant.
The two projects are expected to generate a peak workforce of more than 3,200 people during construction.
The projects are also delivering work to contractors overseas and in Australia.
Woodside and its lead contractors, Bechtel and KBR, have awarded $3.6 billion of contracts to 103 businesses.
To date, more than 60 Karratha-based businesses have been engaged on Pluto Train 2, with an estimated $90 million committed.
Some of the beneficiaries include NYFL Tutt Bryant, part owned by local Indigenous group Ngarluma Yindjibarndi Foundation, and Wangarri Crane and Equipment Hire.
Mobile Concrete Solutions, engineering joint venture KBSS Brida, Indigenous contractor Yurra, and civil services business Red Macs have also secured work on the project.
Woodside said almost 600 direct jobs were expected to be created or sustained during the operational phase of these projects. This includes the creation of about 300 direct jobs in WA. Of these, 70 or so will be frontline, residential roles based in Karratha, a spokesperson said.
Scarborough is one of several large offshore gas projects under development.
Chevron, Santos and Shell are also developing gas fields off WA’s northern coast.
The nature of these projects means the economic and employment benefits in WA are much less than for onshore projects of similar value.
Construction activity is well under way at the Pluto LNG project, on the Burrup Peninsula.
It is located just a short drive from Perdaman’s $6.4 billion urea development.
Perth-based contractor Decmil Group is currently undertaking site works, with construction scheduled to start in the second half of next year.
At its peak, the project is expected to generate about 2.500 construction jobs.
The scheduling of the two projects about one year apart is expected to mitigate labour supply pressures.
There is expected to be a huge investment in renewable energy as the resource companies seek to decarbonise.
Consulting firm BCG has estimated renewable electricity generation in the Pilbara will increase 30-fold between now and 2040, from just 400 megawatts to 14.8 gigawatts.
The big miners have shed some light on their plans out to 2030 and in each case the cost will be in the billions.
Fortescue is planning to deploy an additional 2GW-3GW of renewable energy generation and battery storage by 2030.
That is a big step up from its $700 million Pilbara Energy Connect, currently under way, which is a mix of new gas and renewables developments.
Rio has outlined plans to have 600MW of renewables in the Pilbara by 2030, saying that will displace the majority of gas use.
Similarly, BHP is aiming to have up to 550MW of renewables (wind, solar and battery energy storage) by 2030.
Woodside has gained environmental approval for a solar farm that could be up to 500MW in capacity. It is likely that third parties will end up supplying a lot of renewable power to the big resources companies. Foremost among these will be BP’s Australian Renewable Energy Hub, to be built north-east of Port Hedland.
The project is designed to produce green hydrogen and green ammonia but BP has made clear an initial step will be the sale of renewable electricity.
ASX company APA Group is also eyeing opportunities in the region after its recent deal to buy Alinta’s Pilbara assets.
APA said the business had a 1GW development pipeline costing $3 billion.
The development of new mining and energy projects is also spurring investment in infrastructure, including port facilities.
The Pilbara Ports Authority is currently spending about $1 billion upgrading its facilities and more projects are set to follow.
