Opinion – Roy Hill advances local industry – Australian Resources and Investment Magazine

My team and I at Hancock Prospecting have been working to bring the Roy Hills iron ore project in Australia’s north-west to fruition. I’d like to comment on this major project.

All the work on planning, engineering and feasibility studies has been completed and the key government approvals are in place. The project is now entering the construction phase with civil earthworks underway to provide accommodation for the construction workers, and the harbour dredging is almost complete.

In late 2014, subject to a number of things – including the timely achievement of debt finance – it is expected that the first iron ore will be mined and processed, transported 340 kilometres on a new heavy-haul rail line, and exported through new purpose built wharves at Port Hedland. This is a very exciting new venture, incorporating the latest world-class innovations in technology and infrastructure. Over 1000 people are already employed across the project, and we have recently accumulated over 1.2 million work hours without lost injury time.

During the construction phase, we expect over 8000 positions to be created on this project. The vast majority will go to Australian workers, but to meet the required surge numbers for the skill categories, it will be necessary to source some overseas workers so that the construction phase is not interrupted. Once construction is completed, there will be more than 1000 permanent employment opportunities created for approximately 20 years, if not longer. It is expected that all of these positions will go to Australian workers; however, before we can get to the long-term phase, the project needs sufficient workers in the Pilbara to be able to build and deliver this project.

In recognition of my desire to create further sustainable opportunities for regional people, as an offset for the utilisation of overseas workers during the construction phase of the project, there would be many training places created for Australians to gain the skills required for future participation. Not all of these will be generated on the Roy Hill project  construction sites; they will also be provided in other Australian towns and areas to enable the benefits to be shared.

The Roy Hill project is still in its early days, but has already made a very significant contribution to our local, regional, state and national economies. For instance, I am advised that over 95 per cent of contracts awarded to date have gone to Australian businesses, and this local spending has already totalled more than $1 billion. These considerable benefits are therefor already flowing to families in many Australian communities.

However, purchases are not always being made from within Australia. There are many items of specialist equipment and technology that are not manufactured in our country. For instance, we can only source key equipment – such as large ore trucks, locomotives and electronic rail signalling systems – from overseas. There are also products that are of such a scale or volume that they are beyond the ability of Australian firms to produce within the time required. Nevertheless, the Roy Hill project is likely to spend $1 billion in Western Australia alone in this current financial year.

The Roy Hill project is one of the only major iron ore resource projects that is Western Australian/Australian majority-owned. We also have some key strategic investment partners from South Korea and Japan who complement our business and bring considerable financial, engineering and steel industry expertise to the table.

I am very conscious of the fact that our project is just a small issue in the context of where Australia is and where it is currently heading. As this edition of Australian Resources and Investment goes to print, Australia is due, for the first time ever, to hit its debt ceiling and breach its loans if the Australian debt then continues to increase, despite five or six years of the commodities boom resulting in increased revenues.

We should be preparing for this and doing whatever we can to ensure our exporting and revenue-earning industries remain competitive in the world markets, so that this much-needed revenue grows. Instead, even without the additional massive costs of the carbon tax and the mining resource rent tax, Australia is already one of the five most expensive places in the world in which to do business.

Things like additional FIFO conditions, restrictions on overseas guest labour, regulations, approvals, permits, licences and attached conditions, eliminating the diesel fuel rebate, insisting on more expensive or inappropriate Australian content, et cetera, will simply add to Australia’s already high costs of doing business, and less business means less revenue and fewer sustainable jobs. We have to be much more sensible about burdening our small, export-oriented and other businesses, and resist policies that could kill the geese who lay the golden eggs. We need these businesses and projects.

Instead, we should be advancing policies to make Australia a better place in which to invest and do business if we wish to hand on a better living standard to the next generation – a generation that will otherwise be struggling with our debt, plus the extra expense of an increasingly aging population.

ANDEV offers some vision to assist our north. Visit www.andev-project.org.