Anchored in sparkling turquoise waters off BHP Billiton's iron ore loading terminals in Port Hedland, some 20 huge vessels wait to take on their precious cargo. Down the coast at Rio Tinto's Cape Lambert port, another 15 are waiting.
At the ports themselves the lack of bustling human activity is deceptive. Operations are humming, as befits the queue of waiting ships.
At BHP's Nelson Point site at Port Hedland, a car dumper installed in a cavernous building unloads one railcar after another of iron ore lump from Mt Whaleback, the world's biggest single-pit open-cut iron ore mine, about 450 kilometres away.
The dumper upends each railcar in turn, sending a roaring, dusty red avalanche of ore down into a hopper, to be transported by conveyor and stockpiled waiting for loading. Not a human operator is to be seen.
Between the Nelson Point and adjacent Finucane Island 24-hour operations, BHP fills about 1000 vessels a year. A 175,000-tonne vessel takes 30 hours to fill, all from operations controlled remotely from BHP's office at the Brookfield Place skyscraper in Perth. Only the shiploaders, with their extendable boom, are manned with a driver ensuring ore is placed evenly throughout the holds.
Despite worries about stalling Chinese demand, the key ports in Western Australia show no sign of any softening.
Iron ore exports from Port Hedland, the world's largest bulk export terminal, reached a record 39.2 million tonnes in August, including an all-time high of 33.9 million tonnes to China.
At Rio, where work was recently completed on a $US10 billion-plus expansion of iron ore port and rail infrastructure in WA to 360 million tonnes a year, operations are being ramped up.
Iron ore chief Andrew Harding says the focus has switched to improving efficiency and productivity, with the aim of adding to the almost $US1 billion of cumulative operating cost savings made since 2012. As at BHP, increased use of high-tech automation systems is driving progress.
Harding points to new technology as providing Rio with a "productivity edge" over rivals.
Increased use of automation by the majors has facilitated the expansion of low-cost supply that has sent iron ore prices in July to their lowest for at least six years and is hurting smaller, higher-cost players.
Near $US56 a tonne, iron ore prices have slumped 61 per cent since early 2014. Prices for another key WA commodity, liquefied natural gas, have also plummeted, tracking crude oil prices, which are down at sub-$US49 a barrel, from $US115 last June.
The tumble in prices has put additional pressure on a sector already in a state of transition from a major construction phase into an operational one, says Reg Howard-Smith, chief executive of the Chamber of Minerals and Energy in WA.
"Clearly, whilst it had been widely accepted there would be a softening there has been more than that in both of those bulk commodities," Howard-Smith says.
"That's meant additional pressure and obviously, jobs have been lost in addition to that transition, but volumes are up and will increase further."
On the Burrup Peninsula, Norway-based Yara International is less than three months away from starting up a $US800 million ammonium nitrate project that will supply miners for use in iron ore extraction.
Yara Pilbara plant manager Rob Stevens appears little concerned about the price weakness in the plant's target market.
"The market hasn't slowed at all," Stevens says, noting that while the iron ore prices have dropped, overall production volumes have been maintained. Output from the new 330,000-tonnes-a-year technical ammonium nitrate (TAN) plant, owned partly by explosives giant Orica and US oil player Apache, is intended to match demand from the mines.
As the TAN plant moves into commissioning, the workforce has fallen from a peak of 560 to fewer than 300, and will fall further. It is reflective of what is occurring throughout the WA resources sector, where jobs are forecast to fall from 105,200 in 2014 to 87,000 by 2025 as more projects start up.
Construction on Chevron's mammoth Gorgon LNG project is in its final stages, and the US major's $US29 billion Wheatstone LNG venture is also due to complete in 2016. The $10 billion Roy Hill iron ore project, controlled by Gina Rinehart's Hancock Prospecting, is due to ship its first cargo in the coming months.
Deloitte is predicting that by 2020 the construction workforce in the WA resources sector will be 17,300 lower than last year's. The operational workforce is still growing and it set to peak at 4300 above 2014 levels in 2019 before turning down.
"There's clearly going to be further people exit when Gorgon and Wheatstone in particular come to an end, and Roy Hill, which is very, very close," Howard-Smith says. "But on the positive side employment will be more than double on an ongoing sustainable basis from when we started this 10 years ago, from about 40,000 to the high 80,000s: that's a significant increase."
Volumes are rising as a result of the investments, with WA resources sector exports forecast by Deloitte to be 480 million tonnes greater than in 2013 by 2018. The drive to lift efficiency means productivity in the production is forecast to increase 40 per cent by 2017.
The sector has rationalised as a result of weaker prices for several commodities, high production costs and the scaling back of projects and investments.
Expectations of an early expansion of Gorgon beyond the 15.6 million tonnes a year under construction, faded several years ago because of cost blowouts in the initial phase, and have become more distant with the drop in LNG prices.
At $US54 billion, Gorgon is the largest single resource development in Australia's history, with production set to begin late this year or in 2016 from the first of its three 5.2 million-tonnes-a-year liquefaction trains being built on Barrow Island, about 60 kilometres off the WA mainland.
Within months, instead of providing a convenient harbour for a cruise ship being used to accommodate construction workers, the 2.1-kilometre jetty jutting out from the eastern flank of Barrow Island will start to see the arrival of LNG tankers to ferrying gas to customers in Japan, South Korea, India and elsewhere. A domestic gas plant will supply 300 terajoules a day of gas into the WA market.
With a lifespan of 30-40 years, Chevron has said it remains "comfortable" with the economics over the course of the cycle, despite the slump in crude oil prices that has slashed expected initial revenues from the project.
But cost and price hurdles have dashed hopes for expansion. Howard-Smith acknowledges in the short and medium term, investment in new LNG capacity "seems unlikely".
At Yara, Stevens says a landmark decision to use a modular style of construction – where large components are built overseas and placed together on site – rather than the traditional "stick-build" style was what made that investment economic. The plant is the first technical ammonium nitrate plant to be delivered by modular construction worldwide.
"I don't believe this plant would have been erected here if it wasn't modular based," Stevens says.
Howard-Smith points to the gold sector as another brighter spot, helped by the weakening of the Australian dollar. Exploration activity is higher than elsewhere in the sector and augurs well for future production, he says.
Technology is playing a part here too, allowing miners to increasingly operate underground mining equipment from the surface even at smaller operations.
"It isn't all gloom and doom by any means," Howard-Smith says.
Source: The Sydney Morning Herald
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