Western Australia’s share of national exports has risen to 46 per cent and looks set to rise further.
The scale of Western Australia’s exports boom, driven mainly by the rapidly expanding Pilbara iron ore miners, means it sometimes pays to focus on the smaller details to comprehend its enormity.
At Rio Tinto Iron Ore, the number of rail cars carrying ore to its Dampier port has more than doubled over the past five years.
It has 136 locomotives hauling 9,250 ore cars; by 2015, it expects to have about 185 locomotives hauling 12,000 ore cars.
Further north at Port Hedland, BHP Billiton Iron Ore is working furiously to lift its export capacity. It loaded a record 850 vessels last financial year and is planning further expansion projects.
For anybody who has observed the narrow entry channel and tight turning bays at Port Hedland’s inner harbour, that is an extraordinary feat.
Rio and BHP, along with half a dozen other iron ore miners, were the major contributors to a rapid increase in the value of WA’s export income last financial year.
The total value of WA’s iron ore sales leapt 62 per cent to $57 billion, with the big two – Rio and BHP – accounting for just more than 75 per cent of the total.
After iron ore, the next biggest contributor to the state’s exports is the petroleum sector. Its contribution rose 24 per cent to $23 billion.
The big player in this sector is the North West Shelf venture, which is part-owned and operated by Perth company Woodside Petroleum.
Running a distant third is the gold industry, though getting a precise handle on its contribution to WA exports is not an easy task.
The value of gold sales from WA last financial year was $8.2 billion, up a healthy 25 per cent, according to the Department of Mines and Petroleum. This outcome was helped by both higher production volumes and selling prices.
The value of gold exports is estimated separately by the Australian Bureau of Agricultural and Resource Economics and Sciences.
Its latest estimate showed total exports of $13 billion, after adding in $5.4 billion of imports, leaving a net figure of $7.6 billion.
The business at the centre of this trade is the state-owned Gold Corporation, which operates the Perth Mint, Australia’s only major gold and silver refinery.
The mint refined almost all of Australia’s gold production last financial year, as well as gold produced in New Zealand, Papua New Guinea, Fiji, Solomon Islands, Thailand and Malaysia, plus scrap gold from various Asian countries.
Gold Corp’s latest annual report disclosed sales revenue of $5.4 billion – lower than the state total, in part because copper concentrates (containing gold) from three large mines (Boddington, Telfer and Golden Grove) are not refined at the Perth Mint.
The big three
The three largest commodities – iron ore, petroleum and gold – together accounted for 88 per cent of all resources sector sales last year, according to the Department of Mines data.
The growth in WA exports means the state, with just more than 10 per cent of the national population, now contributes 46 per cent of national exports.
That is up from 38 per cent two years ago.
The state’s share of national exports is set to increase, on the back of massive expansion projects in the iron ore and liquefied natural gas (LNG) sectors.
The capacity of WA’s iron ore miners is about 460 million tonnes per annum; projects currently underway will lift that figure to 790mtpa and expected production from 12 advanced projects will lift capacity to more than 1 billion tonnes. (See WA Business News’ Major Projects feature, September 1, 2011, for details.)
Most pundits are tipping a decline in iron ore prices; currency movements will also affect the value of iron ore exports. Nonetheless, the overall trend will undoubtedly be substantial growth.
Similarly, the LNG sector is poised for rapid growth, with Woodside’s Pluto project close to completion and the Gorgon and Wheatstone projects underway.
Rio v BHP
The world’s largest mining company, BHP Billiton, has traditionally been the biggest contributor to WA exports, according to previous editions of WA Business News annual exports feature.
However, the rise and rise of iron ore has changed that, with Rio Tinto appearing to have caught up to its larger rival.
Rio’s largest division by far is iron ore; last financial year, it generated WA exports worth $24.9 billion. Adding its Argyle Diamonds and salt business takes Rio’s total to above $25 billion.
BHP has a similar total, spread across five areas – its WA iron ore business, its Nickel West division, its Worsley Alumina subsidiary, its share of the NW Shelf venture and petroleum exports from its Pyrenees, Stybarrow and other fields offshore WA.
(The first four numbers are all publicly disclosed; see table. The latter is an estimate based on partial disclosure in BHP’s annual accounts.)
The state’s third-largest exporter (not counting the NW Shelf joint venture) is Pilbara iron ore miner Fortescue Metals Group, which lifted export sales by 69 per cent to $5.4 billion last financial year.
In the iron ore sector, other contributors are Atlas Iron, which really hit its straps last year; the value of its iron ore exports leapt from $85 million to $585 million.
US company Cliffs Asia Pacific, which has mines in the Yilgarn region and exports through Esperance, and local company Mount Gibson Iron, which has operations in the Mid West and Kimberley, were other notable iron ore exporters.
Woodside is the state’s sixth-largest exporter, with estimated export income of about $4 billion, primarily from its share of the Shelf venture.
The commissioning and ramp-up of its Pluto LNG development will rapidly escalate Woodside’s contribution to state exports.
Alumina producer Alcoa, grain exporter CBH and oil and gas producer Apache Energy round out the state’s 10 largest exporters.
Outside of primary industries (mining, fishing and farming), the state has one manufacturer among its 25 largest exporters. This is boat builder Austal.
It generated export sales from its Australian business of $165 million last year.
