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Woodside and BHP Billiton top the field

IF there was an award for companies achieving high local content on Western Australian projects, BHP Billiton would take line honours, while Woodside would be a contender for handicap winner.

The local content on BHP Billiton’s $1 billion Area C iron ore mine and Port Hedland port expansion project has been higher than any other major project in WA.

Australian content on spending to date was 92 per cent, while WA content was 84 per cent.

At first glance this was a much better outcome than Woodside has achieved on its $1.6 billion Train Four project.

The estimated WA content on spending to date was 61 per cent, while Australian content was 66 per cent.

However, if the ‘big ticket’ items that cannot be made in Australia, such as cryogenic heat exchangers, compressors and cryogenic pumps, were excluded, the Australian content would soar to 96 per cent.

Most projects find that Australian firms are simply unable to produce some of the specialised equipment they need.

Wesbeam, for instance, is building an $84 million laminated veneer lumber plant north of Perth.

This kind of plant has never been built in Australia before and the company anticipates that about two thirds of all capital equipment will have to be imported.

The track record of BHP BiIlliton and Woodside indicates that the nature of each project is a key determinant of local content levels.

The high local content on BHP’s Area C project was assisted by the large amount of civil engineering work.

In contrast, its hot briquetted iron project in Port Hedland, which involved substantial equipment imports, achieved a less impressive 70 per cent local content.

Woodside expects Australian content on its $800 million second trunkline project to be just 54 per cent, well below the level on its Train Four project.

Newcrest is targeting “80 per cent-plus” local content on its Telfer gold mine project, which is due to get under way this year.

Rio Tinto, which has recently commenced work on its $400 million HIsmelt project at Kwinana, is targeting 70 to 75 per cent local content.

The Industrial Supplies Office (ISO) of WA, which is sponsored by the State Government, plays a key role in helping major projects maximise local content.

It maintains a database of local firms that can be used by project proponents wanting to find local suppliers.

Woodside project services manager Rob Hannan is full of praise for ISO in WA.

“ISO WA is by far the most efficient ISO organisation in Australia,” he said.

The director of ISO WA, David Kobelke, said it was important to ensure project proponents were focused on local content.

“We ask the projects to think about these things early and plan for it,” he said.

It was also important to have an accurate database of ‘pre-qualified’ vendors who are known to the project proponents.

“Once that occurs, you have a very high likelihood that local companies have a chance to win the contracts.”

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