20/06/2016 - 16:25

More resources jobs to go as cycle turns to production

20/06/2016 - 16:25


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As WA’s last mega mining project swings into operations mode, there’s more pain ahead for employment and investment numbers.

CYCLING: Processing equipment at the Citic Pacific Sino Iron project. Photo: Tony McDonough

As WA’s last mega mining project swings into operations mode, there’s more pain ahead for employment and investment numbers.

CITIC Pacific’s completion of its Sino Iron project’s processing lines heralds the end of Western Australia’s decade-long iron ore construction boom, with the magnetite project near Karratha aiming to reach its 24 million tonnes per annum capacity within two years.

It had been slow going for Citic, which had been hit by delays on the commissioning of the first two processing lines and legal disputes with landowner Clive Palmer, although the most recent lines were completed faster than scheduled, the company said.

The project involved a series of major developments, including a 450-megawatt power station, a desalination plant, and the six processing facilities to improve the grade of magnetite mined onsite.

The Sino Iron project is estimated to have cost upwards of $US12 billion, although the company would not be drawn on finalising a figure just yet, while Gina Rinehart’s Roy Hill Holdings’ 55mtpa mine, rail and port, which came online late last year, cost $10.5 billion.

Other major capital projects, led by Rio Tinto and BHP Billiton, which targeted capacity expansions to 360mtpa and 270mtpa respectively, are complete.

It means the value of mining projects under way across the state is now as low as $1.6 billion, according to BNiQ, down from more than $50 billion just three years ago.

LNG projects

Four of the five major liquefied natural gas facilities planned are still under way, however, although research by National Australia Bank suggests the resources sector has more jobs to shed as the LNG projects come online.

Chevron Australia’s Gorgon project is the most advanced, with one train producing LNG, while production of the first gas at its Wheatstone project is forecast for the middle of next year.

The tail-off in private mining investment as projects get under way, and the impact on the state’s economy, is illustrated in the chart.

Business investment peaked in WA in 2012-13, at nearly $79 billion, and is expected to come in at $51 billion in the current financial year.

It will fall again to about $42 billion next year, and continue to dive until the end of the decade.

The size of mining investment as a portion of that number is well illustrated in the recent Australian Bureau of Statistics capital expenditure figures for WA.

In the March quarter of this year, for example, mining investment was $8.2 billion, compared with just $191 million in manufacturing and $1.5 billion in all other industries.

A recent report by Nab argues that the continued slide in mining investment as projects come online will deliver a further blow to employment in the sector, with WA still only halfway through the investment cycle.

Queensland, Nab said, was close to the end of the cycle.

Nab points out that a higher capital intensity for iron ore and LNG projects will additionally mean more job losses when they move to operational phase than coal mining projects in Queensland.

“We expect further net falls in mining employment in both states as the reduction in construction jobs outpaces the increase in operational jobs,” the report said.

“Most of the job cuts in the mining sector going forward are likely to stem from WA.”


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