Smart solutions lifting exports at Port Hedland

Big data has helped the Pilbara Ports Authority to dramatically increase throughput, in contrast to other ports.

There has long been speculation about the maximum capacity at Australia’s biggest bulk commodity port, Port Hedland.

Pilbara Ports Authority chief executive Roger Johnston believes the number is about 700 million tonnes annually, a level more than three times the output achieved seven years ago.

Around that time, BHP canned a proposed $20 billion investment to build an outer harbour at the port, with then chief executive Marius Kloppers arguing more throughput could be achieved by optimising the existing facilities.

The port’s performance in the years since has validated Mr Kloppers’ view, with BHP lifting iron ore shipments from 155mtpa to 275mtpa.

In addition, Fortescue Metals Group increased exports to 170mtpa, while Roy Hill brought its 55mtpa operation online.

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But the port has managed this growth through a combination of new technologies and by squeezing assets, with total exports of 519mt in 2018 compared with 199mt in 2011.

“There’s a lot of technology we’ve developed, and a lot of processes we’ve developed, that are completely unique and world first in being able to facilitate (the growth),” Mr Johnston said.

“For starters, one of the first things we did when I came here (in 2011) is we threw out the traditional style of modelling; we took our modelling inhouse and developed what we call a dynamic port capacity model.

“We base our models, instead of on theoretical charts of tides … we actually put tidal monitoring buoys up and down the channel, we started monitoring a live feed of wind, current and wave data.

“After collecting all of that we started building it into a brand new model to calculate what would be the optimum way to manage vessels out of the port.

“Years ago we theoretically had a tidal window of about three or four hours, in which we could facilitate up to six vessels.

“This past month we put 10 out on a tide recently.

“It’s because we’ve got better control of tidal ranges … we’ve got deeper draught capacity.”

Mr Johnston said those changes had lifted port capacity to 577mt, with more available through capital investment.

One useful piece of technology was the under-keel clearance system, developed in the 1990s by Victorian company OMC International.

The technology blends live and theoretical data in the lead-up to departure, and then runs on live data as a boat exits the channel.

All the extra information means operators can be very precise about loading a vessel while still clearing the depth limits to leave the port.

“We can give the ship the maximum possible draught that it can be loaded to for the shipper to optimise the use of his vessel,” Mr Johnston said.

He said about 10,000 tonnes more could be fitted on a Capesize vessel leaving the harbour than was the case just a few years ago.

“Even as volume has grown, shipping numbers haven’t had to keep up because we can get more on a ship,” Mr Johnston said.

He said the knowledge and analytical capability was a crucial part of the business, and was kept in house, but most of everything else, such as stevedoring, was licensed out to private operators.

Next steps

Mr Johnston told Business News the authority could raise capacity at Port Hedland to 700mt with two key capital investments, 

The first, the channel risk and optimisation project, was already under way and should be completed by the end of May.

“(That) allows us to shorten up the departure windows, because we’ve created more safety bays and safe passing lanes in the channel in the event of a ship getting into trouble,” Mr Johnston said.

The investment is around $120 million, with dredging company Jan De Nul selected in January to complete the work.

The second investment would be an extra turning circle, he said.

“If you build an extra turning circle in the actual port itself we can bring vessels in, instead of an hour apart, at much shorter intervals, because we’ll then have two turning basins to operate in,” Mr Johnston said.

Other works at the port include a replacement of berth three, which has gradually been eroded by salt exports, with Fremantle-based TAMS awarded a $33 million contract for that work.

The previous contractor for that job, York Civil, entered administration six months ago.

The other big project on the horizon is Lumsden Point, which would be a new general cargo terminal serving lithium miners and cattle exporters, among others.

“It’s the past 18 months that we’ve really run hard at trying to develop the facility,” Mr Johnston said.

About $80 million of dredging works has already been undertaken, and the authority is seeking a developer to move the project forward.

“We reckon there’s a very good, strong business case,” Mr Johnston said.

“It’s an opportunity for a private party to invest in the long term in port infrastructure.”

Qube and Melbourne International RoRo & Auto Terminal have been shortlisted to design detailed proposals.

In another part of the port, Mineral Resources is running the rule over a bulk shipping berth at South Western Creek, and is believed to be in discussions with the Department of Jobs, Tourism, Science and Innovation on that development.

Plateau

During the past two financial years, the state’s five port authorities paid $387 million of dividends to the state government, led by Pilbara Ports with $234 million and Fremantle Ports with $77 million.

Between them, about $553 million of capital investment is planned over the current financial year and the following three years, including $205 million at Fremantle.

Traffic growth at most ports, with the exception of Port Hedland, has been low.

At Bunbury, trade rose 3.7 per cent in the four years to 2018, while at Fremantle, which measures by containers, movements increased 3.5 per cent to 770,000 twenty-foot equivalent units.

Geraldton, operated by the Mid West Ports Authority, had a drop of 6 per cent, which was driven by a fall in iron ore exports.

One major shift in the past year was at Esperance Port, controlled by Southern Ports Authority, after US-based Cliffs Natural Resources announced it would shut down the Koolyanobbing mine.

The state government stepped in, however, and helped arrange a deal with MinRes to take over the operation.

Iron ore trade through Esperance will continue, but is expected to fall from about 11mtpa to 6mtpa.

The government’s mid-year budget review showed a subsidy of $94 million across four years at the port to underpin discounted port usage fees for MinRes.

Southern Ports chief executive Steven Lewis said he was optimistic about the future for Esperance, with potential new customers on the horizon.

Mr Lewis was appointed in January to the role, with the Albany, Bunbury and Esperance ports all under the Southern Ports umbrella.

“With the mineral provinces that are (out) that way, between the ports of Geraldton and Esperance, both I would expect would do very well in the next few years,” Mr Lewis said.

“We would be expecting other exports to come through Esperance.”

Some of the concern about a potential closure of the Koolyanobbing mine had been the impact on port workers.

“Any evaluation of our workforce ... what we need is always with the lense of knowing what our forward trade talks are like, and at the moment they’re very encouraging,” Mr Lewis said.

“I think our workforce has a good future ahead.”

Lithium in particular was likely to create opportunities, he said, and Southern Ports’ annual report showed lithium exports at Esperance and Bunbury grew 40 per cent in 2018.

There were also opportunities at Bunbury, with about 400 hectares of land available and potential new customers, one of which would be the Albemarle lithium refinery, which is being built near Kemerton.