SPECIAL REPORT: Three businessmen will have more impact than most on the state’s economic future, with Peter Coleman leading an oil and gas revival, Chris Ellison building a lithium empire, and Rob Scott reshaping Wesfarmers.
SPECIAL REPORT: Three businessmen will have more impact than most on the state’s economic future, with Peter Coleman leading an oil and gas revival, Chris Ellison building a lithium empire, and Rob Scott reshaping Wesfarmers.
Woodside Petroleum chief executive Peter Coleman has played a lead role in the upcoming surge in resources investment, with the Perth-based energy producer pushing forward with two mega projects.
The outlook for the state’s oil and gas sector was bleak as recently as a couple of years ago, but the picture has brightened dramatically, in large part thanks to Woodside’s plans for about $35 billion of investment.
If both the Browse and Scarborough projects enter production, Mr Coleman will have successfully turned two of the state’s most perennially elusive gas developments into a reality.
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The biggest is Browse, which has undergone multiple previous iterations, including an onshore facility at James Price Point and a floating variant.
Mr Coleman’s plan is to pipe gas from the field, located off the coast of the Kimberley, about 900 kilometres to the North West Shelf Venture’s existing Karratha gas plant.
Achieving alignment between the multiple partners of both ventures earlier this year was a major step forward for Browse.
The other development project, Scarborough, has long seemed improbable because of its distance from the coast.
In March, Woodside moved to buy 50 per cent of the Scarborough LNG project, giving it a 75 per cent share, backed by a $2.5 billion capital raising.
The deal included $US444 million upfront and a further $US300 million contingent on a final investment decision.
Fluids from the Scarborough field, which contains about 7.3 trillion cubic feet of gas, will be pumped across the Carnarvon Basin through a new pipeline, to the existing Pluto LNG facility in Karratha.
That will give other operators, such as Chevron, an opportunity to tap fields such as Clio and Acme, while Woodside will be building a second LNG train at the facility and a connector to the neighbouring Karratha plant controlled by North West Shelf Venture.
Bechtel was selected as the likely candidate for front end engineering and design work, to commence in March 2019 in preparation for final go ahead the following year.
Scott shifts focus
Rob Scott has made some big moves to sharpen Wesfarmers’ business model. Photo: Gabriel Oliveira
After taking the helm at Wesfarmers about 12 months ago, chief executive Rob Scott wasted no time in changing the business model.
The biggest shift was announced in March when the Perth-based business announced it would spin-off supermarket major Coles.
That came just more than a decade after Mr Scott’s predecessor led Wesfarmers’ acquisition of Coles, making the conglomerate Australia’s biggest employer.
Coles, which accounted for 60 per cent of its total capital but only 34 per cent of Wesfarmers’ earnings, was returned to the ASX bourse in late November, with its former parent retaining a 20 per cent slice.
The second major change was to back out of the ill-fated move of acquiring UK business Homebase under the banner of hardware chain Bunnings.
That reversal was announced in May, when Homebase was sold to British private equity group Hilco Capital for a nominal sum.
Speaking at the time, Mr Scott said the Homebase adventure had cost shareholders around $1.3 billion, comprised of a roughly $400 million loss on the disposal and write-downs announced in February of $900 million.
Wesfarmers’ stock price has suffered in what has been a rough year on the ASX, falling from an adjusted $33.45 at the start of November in 2017 to be about $31.70 at the time of writing.
The company has also stepped away from the coal mining business, selling the Curragh coal mine in March to Coronado Coal, and more recently offloading its 40 per cent share of the Bengalla mine to New Hope Corporation for $860 million.
In November, Wesfarmers sold a 13.2 per cent interest in oil and gas producer Quadrant Energy to Santos, earning $US170 million.
All up, it means Mr Scott will have plenty of capital to invest in existing operations or acquire new businesses, and shape the company’s new direction.
Exactly what that will be, however, is yet to be seen.
Ellison still making moves
The 2017 Business News Person of the Year, Chris Ellison, was again prolific in 2018, leading Mineral Resources during the continued maturation of lithium mining in Western Australia.
Mr Ellison’s latest deal was to sell a 50 per cent stake in the company’s Wodgina processing project and mining operation, for $1.6 billion, to American chemicals company Albemarle Corporation.
He has big plans for Wodgina, including a three-train lithium concentrator facility with capacity of about 750,000 tonnes annually.
Construction is under way, and the final train will be completed in the middle of next year.
The second step will be building a lithium hydroxide refinery, one of five under consideration or under way in WA.
Mr Ellison was also involved in saving the Koolyanobbing iron ore mine, which was to be shuttered by US miner Cliffs Natural Resources on the back of a move in the market towards higher grade ores.
In July, MinRes announced it would take over the mine, in a deal that was backed by the state government, with port subsidies and fee waivers offered as sweeteners.
Chris Ellison has big plans for Wodgina. Photo: Gabriel Oliveira
Other moves have included the purchase of the Kumina iron ore project from BCI Minerals, and securing about 14 million tonnes of new crushing contracts.
Looking ahead, MinRes has been working on a major infrastructure development in the Pilbara, a $1.6 billion plan to build a light rail system and a new port at Lumsden Point.
That would be a multi user facility with a 50-year time horizon.
But there have been a couple of defeats for MinRes along the way.
The Wodgina mine produced 3.5mt of direct shipped lithium ore in the 2018 financial year, against guidance of as much as 4.75mt in November last year.
MinRes nonetheless surpassed its Ebitda target of $500 million for the year.
The company was heavily involved in a three-way takeover battle for Atlas Iron, a contest eventually won by Gina Rinehart’s Hancock Prospecting.
