Article – Roy Hill iron ore mine project in Pilbara hiring on a large scale

14 March 2014
Sue Lannin
ABC News

PHOTO: The remote WA Roy Hill Mine has purpose-built accomodation for workers.

As the mining industry slows down, billionaire Gina Rinehart’s Roy Hill project is one of the few companies in Australia hiring on a large scale.

The iron ore mine in the Pilbara in Western Australia is under construction and production is planned to start late next year.
Roy Hill has been swamped with job applications as Western Australia’s jobless rate jumps to 5.9 per cent, the highest in a decade.
In an interview with the ABC, Roy Hill chief executive Barry Fitzgerald said there had been a lot of interest.
“We’ve had 600 applications for one particular class of job,” he said.
“We’ve had over 5,500 expressions of interest or direct applications since Christmas.”
The company is planning to start production late next year although it is still waiting for lenders to sign off on around $7 billion worth of loans needed to build the project.
Some of that money has already been committed by US and Asian export credit agencies.
Roy Hill aims to produce 55 million tonnes of iron ore a year which would make it the world’s fourth biggest iron ore producer.
The project will cost around $10 billion to build a mine, a 344 kilometre railway to Port Hedland, and port facilities to export the iron ore at Port Hedland harbour.

Hancock and its investment partners have put in $3.2 billion.

Roy Hill is 70 per cent owned by Gina Rinehart’s Hancock Prospecting, which is in partnership with South Korean steel giant Posco, Japanese steelmaker Marubeni Corporation, and Taiwan’s China Steel Corporation.

The remote WA Roy Hill Mine has purpose-built accomodation for workers.

Around 2,400 workers are currently employed at the biggest mining construction project in Australia.
There will be nearly 4,000 construction workers at its peak and 2,000 operational staff once the mine is up and running.

The project is unionised with about 140 Australian Workers Union enterprise bargaining agreements covering construction contractors on site.
The agreements include a “project incentive payment” where workers get paid a $205 weekly bonus not to take part in unauthorised strikes or take unauthorised leave.
Roy Hill originally planned to start production at the end of this year.
Mr Fitzgerald said funding negotiations were taking longer than expected because it is the largest finance deal for a mining project in the world and there were a number of lenders involved.
“It’s well progressed just like we’ve sold the majority of our product,” he said.
Roy Hill has sales agreements in place covering more than half of its iron ore with Asian steelmakers.
But Roy Hill’s iron ore will come onto the market at the same time fellow miners BHP Billiton, Rio Tinto and Fortescue Metals Group are also expanding.
Swiss investment bank UBS has predicted that iron ore prices could fall below US$100 a tonne over the next five years to around US$82 a tonne.
UBS global commodity analyst Daniel Morgan says increased production will drive down prices.
“We do have the iron market moving into surplus which creates pressure for pricing,” he said.
“And the Roy Hill project, if it does go ahead, is another project that adds to that surplus.”
But he says smaller Australian iron ore miners and high cost Chinese producers are more likely to be hit rather than medium-sized Australian producers like Fortescue Metals and Roy Hill.
“I think it’s more junior producers in Australia, also Africa and Brazil,” he said.
Ryan Dong, vice president at Chinese forecaster, Shanghai Metals Market, expects inefficient Chinese iron ore miners to go out of business as supply increases, leaving the door open for more iron ore imports to China.
“With more supply globally, the price could be pushed down,” he said.
“With lower price there will be even less Chinese domestic mines existing and key production so that leaves more room for imported iron ore.”
Mr Fitzgerald said he expected Roy Hill to be viable and the company was factoring in a long term iron ore price of below US$100 a tonne.
“The long term forecast is significantly below $104 US a tonne, that’s industry forecasts not my projection,” he said.
He said a weaker Australian dollar would also help the bottom line.

Courtesy of ABC News