Regions play to resources’ strengths

Article by Mark Beyer courtesy of Business News.

WHEN Prime Minister Anthony Albanese took his full ministry to Port Hedland in February, the focus was on the importance of the resources sector.

It was an opportunity for Mr Albanese and his east coast colleagues to see first-hand the enormous scale of iron ore export operations from the port.

Port Hedland Mayor Peter Carter had a more complex agenda.

“We have always maintained that Port Hedland is an economic powerhouse for our nation, but we also face numerous challenges as we try to prosper as a community,” Mr Carter said.

With a housing shortage, very high living costs and limited community amenities, he said Port Hedland was not meeting residents’ expectations of a regional town.

Mr Carter welcomed the prime minister’s announcement that $565 million would be invested into Pilbara ports but said this needed to be supported by investment in social infrastructure.

“The state and nation need a thriving port to drive our economy, but the port also needs a thriving Hedland to succeed,” Mr Carter said.

No politician would publicly dispute that statement, but the reality is that fly-in, fly-out practices mean a thriving community is not necessary for the resources sector.

Port Hedland has a population of about 15,000 people, yet every month more than 40,000 people fly in and out of the town’s airport, most of them FIFO workers.

It’s a similar story at Karratha. It has a population of about 23,000, yet every month about 46,000 people rotate through the city’s airport.

The two communities are in the midst of a sustained investment boom, as new iron ore mines and lithium projects are developed. That flows through to big investments in the railways and ports.

Karratha also benefits from major gas developments on the Burrup Peninsula, with Woodside Energy spending $7 billion on its Pluto Train 2 expansion and Perdaman spending $6 billion on its urea project.

Layered over that is an array of renewable energy projects to help the miners decarbonise and to support potential hydrogen projects.

In the meantime, communities such as Port Hedland and Karratha are battling to get childcare workers, nurses, teachers and shop assistants.

These key workers simply can’t afford to live in the Pilbara, and even those with money struggle to find accommodation.

Port Hedland, for instance, has less than 1 per cent of housing stock available for sale and fewer than 80 properties available for rent, yet more than 600 jobs are being advertised in the area.

Both communities are seeking to provide solutions.

The City of Karratha has teamed up with Woodside and Rio Tinto to provide 41 dwellings for service workers.

The city’s mayor, Peter Long, said providing affordable housing was vital to ensuring Karratha was a liveable city.

“It’s important for businesses to be able to employ staff at a reasonable rate and to do that you have to have reasonably priced accommodation, and that is what the City of Karratha is offering,” he said.

Port Hedland is hoping to offer something similar: it is finalising a business case to develop up to 60 dwellings for key workers.

The town has committed $30 million over five years to this project and is hoping to collaborate with both state and federal governments, as well as industry, to fund the remaining $10 million.

The big resources companies that operate in the north-west invest in the local communities.

Rio Tinto, for instance, has committed to invest $7.5 million per year in community initiatives in the Pilbara, while the Woodside-operated North West Shelf venture invests about $4 million per year.

BHP, Fortescue Metals Group and Roy Hill Holdings also have community programs.

But locals question whether the spending is enough relative to the billions of dollars in profit extracted from the region.

The same applies to government spending in the region.

This was given a huge boost 15 years ago after the Nationals WA championed the Royalties for Regions program, which pumped billions of dollars from mining royalties into the state’s regions.

The City of Karratha was one of the main beneficiaries.

It has been transformed by projects such as The Quarter office building, Pelago apartments, the Karratha Health Campus, the Red Earth arts centre and the undergrounding of power.

Its relative prosperity contrasts with other communities in the region, notably the historic town of Roebourne with its large Aboriginal population.

Governments currently are more focused on stimulating business investment in the north-west, notwithstanding the overheated economy.

One of the main tools used by the federal government is the Northern Australia Infrastructure Facility.

It has committed nearly $4 billion in loans to projects across northern Australia since it was established in 2016.

The beneficiaries include 10 projects in WA’s north-west (see table).

These include BCI Minerals’ Mardie potash project, which secured a $490 million loan, and Perdaman’s urea project, which obtained $475 million in government loans.

The beneficiaries include just one project outside the resources sector.

NAIF has approved a $34 million loan to Kimberley Cotton Company to help fund construction of a cotton gin near Kununurra.

With just a handful of mining projects, agriculture is far more important for the Kimberley.

The cotton gin is the latest in a long list of projects designed to help the Ord River irrigation area realise its much-touted potential.

An estimated $2 billion has been invested in infrastructure in the Ord on the premise this would trigger more private investment.

The latter has been slow to come, with several false starts. In 1998, Richard Court revealed a Wesfarmers Marubeni consortium had been selected to develop large-scale sugar industry at the Ord.

That came to naught.

In 2012, Colin Barnett announced Chinese group Kimberley Agricultural Investment planned to invest $700 million in the region.

Since then, KAI has been battling regulatory hurdles as it seeks to develop additional land. It has also pivoted away from sugar to cotton, which is considered to have the best potential after extensive trials of genetically modified varieties.

KAI has become a shareholder in Kimberley Cotton Company, along with ASX company Namoi Cotton, the Ord River District Cooperative and traditional owners through MG Corporation.

Kimberley Cotton Company announced in November it had completed funding for the cotton gin, which was budgeted to cost $44 million.

But like most projects in the north-west, it has hit new hurdles.

Namoi disclosed last month that construction of the Kununurra cotton gin had been delayed.

“A new round of funding is currently in process to meet increased construction costs arising from a change in scope to meet approval conditions,” it said.

Kimberley Cotton Co executive officer Louise Schubert told Business News the changes would have a significant effect on costings.

“Shareholders have already expressed interest in increasing their investment, which would cover a considerable amount of the additional capital raising and, in view of this, KCC continues to proceed with the project as planned,” Ms Schubert said.

“While this has resulted in a delay to the project, we are still working towards the first ginning season being June-July 2025.”

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