IS the commercial centre of the Pilbara moving west? BHP Billiton's proposed merger of its iron ore operations with those of Rio Tinto is the latest indication of the dynamic shift under way in the north-west, one that will tend to favour Karratha as the
IS the commercial centre of the Pilbara moving west?
BHP Billiton's proposed merger of its iron ore operations with those of Rio Tinto is the latest indication of the dynamic shift under way in the north-west, one that will tend to favour Karratha as the region's operational hub.
While the focus on the iron ore merger is only part of the reason for Karratha's rise, it is a significant one nevertheless.
"I think at the moment the observable (government) strategy is twin towns; that has mainly been because there are two iron ore companies," said an industry observer.
For many close watchers of the resources sector, one of the key reasons BHP wants to cosy up to Rio Tinto is the constraints and risks associated with its export operations at Port Hedland, where ore carriers visiting its two facilities, Finucane Island and Nelson Point, rely on the same shipping channel. The rise of Fortescue Metals Group and other users has further exacerbated that issue.
Extreme tides and the narrowness of the channel mean heavy traffic and mistakes can create costly delays.
While BHP has previously mooted Port Hedland's expansion to as much as 700 million tonnes per annum, including a new outer harbour several kilometres offshore serviced by a long jetty, many believe that expanding Rio Tinto's facilities, especially those at Cape Lambert, is a much easier option.
If that occurred, it would bring further growth to a part of the Pilbara that is already experiencing rapid development.
Apart from Rio Tinto's own expansion of the Dampier Port, the nearby Burrup Peninsula has become the scene of strong development activity for the LNG sector with the North West Shelf's expanded presence and its operator, Woodside Petroleum, going it alone with its Pluto LNG project.
Close to Karratha is also the Apache Energy-operated Devil Creek domestic gas joint venture and near that is CITIC Pacific's $5 billion Sino Iron Ore project at Cape Preston, a magnetite production and processing facility expected to be the first of several in the area.
Of course, there is also the $50 billion Gorgon project on Barrow Island directly west of Karratha.
But the true change in the Pilbara balancing act is potential developments near Onslow, where the state government has planned an 8,000-hectare industrial park called Ashburton North, which could be home to three gas projects at this stage.
The biggest of those planned is BHP's Pilbara LNG project supplied by gas from the Scarborough field.
Another major project is potentially in the hands of Chevron, which wants to build an LNG plant to process gas from its Wheatstone field.
BHP is also looking at developing the Macedon domestic gas project there.
The Ashburton site will alleviate the issues of the Burrup where heritage issues have made expansion difficult.
However, the potentially shifting sands of geopolitical power in the region are not necessarily of concern to those who have ridden out the global financial crisis better than almost anywhere in the world.
Port Hedland Chamber of Commerce president Bill Dziombak said it was too early to tell what the merger of the iron ore giants would mean for the harbour town but he was optimistic given it had not felt any impact from the recent financial crisis.
"Iron ore exports are going to increase out of this [Port Hedland] region, jobs will remain," he said.
"From a regional perspective the merger is an extremely strong move.
"It will make a much larger company and much larger profile and that only brings strength to the region.
"The future here is all positive."
