North Australia Digest – 26/11/201226 November 2012
Despite generating more than $100 billion a year in revenue and inspiring tens of billions of dollars in new investment, West Australia’s resources sector is experiencing mounting pressure from rising costs, new taxes and wobbly demand forecasts.
West Australia’s major iron ore miners have remained bullish despite being at the mercy of commodity prices and Chinese demand. Atlas’s managing director Ken Brinsden says “[t]here has been volatility and at times the market has been soft, but our experience is our customers are still performing.”
Strong demand for commodities underpinning the northwest’s export boom – iron ore and liquefied natural gas – is forecast to remain strong in the decades ahead. However both industries face major challenges, dealing with construction and operating costs, the skills shortage and the threat of new competitor nation supplies.
The enormous wave of construction in West Australia’s liquefied natural gas industry is allaying concerns about the direction of the state’s economy in the face of volatile commodity prices.
Floating LNG production could revolutionise major LNG projects of the North West shelf – a method preferred by Shell – bringing cost pressures down, but creating less jobs.
With Woodside’s Pluto gas project set to start production in March, Andrew Burrell looks at the importance of Woodside’s North West Shelf gas project – launched in 1984, Australia’s largest ever natural resources project and the world’s biggest producer of LNG. A 2009 study by consultants at ACIL Tasman found the North West Shelf had generated export revenues of $60bn, increased Australia’s GDP by more than $70bn and boosted WA’s GSP by more than $90bn.
Mining companies have made a huge contribution to regional communities in Australia’s North West, despite the recent move toward FIFO workers, especially to the plight of indigenous Australians, as BHP Billiton Iron Ore president Jimmy Wilson writes.
WA Premier Colin Barnett argues that despite current success, continued investment is necessary if North Western Australia is to reach its full potential.
Paul Sheehan discusses Mrs Gina Rinehart’s new book Northern Australia, And Then Some, noting that despite her own personal success Mrs Rinehart’s interest in North Australian development represents “something much bigger and potentially much more important than her own business.”
The Australian Financial Review
Gas producers are not ignoring the needs of Australian gas users to chase more lucrative exports markets, according to Santos chief David Knox.
As a result of the mining boom, the industry will emerge as a much larger part of the Australian economy, meaning bigger exposure to volatile global commodity prices.
The West Australian
The slowdown in the mining sector is bringing some welcome relief to junior miners, with mining services and drilling becoming more accessible and less expensive. However, Reed resources chairman David Reed says it is not good for “the industry in some ways, as normally the smaller companies hang off the small business which is handed out to the drillers by the bigger companies. It’s worrying when the big companies scale back.”
Queensland’s decision to overturn a 20 year ban on Uranium mining led to a spike in the shares of uranium explorers, however it has been short lived as optimism surrounding the industry fallen away.