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NEWS, PROFILES, MAJOR PROJECTS LIST, OPINION AND MORE

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SUPPLY CHAIN AND MAJOR PROJECT NEWS AUTUMN 2017

RESOURCES:

CONSTRUCTION:

CURTIN’S GREAT RISING; SCARBOROUGH’S NEW FACELIFT

INFRASTRUCTURE:

IRON ORE BACK ON TRACK; HEDLAND POWERS ON

EXCLUSIVE:

WA’S ONLY MAJOR PROJECTS LIST

STEEL INDUSTRY HARDENS UP; BUSSELTON AIRPORT LIFTOFF

ENERGY:

LNG’S LATEST INCARNATION; WHY WE NEED A NATIONAL POLICY

EUROPEAN INVASION

THE HUNT FOR WA DEFENCE SUPPLIERS BEGINS

AUTUMN 2017 WA WORKS 1

BY


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WELCOME

AUTUMN 2017

IN THIS EDITION

ENERGY A HOT TOPIC

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elcome to the autumn edition of WA Works, your first choice for reliable information and feature stories on the State’s supply chain. This issue is an energetic chapter in that evolving story, in more ways than one. Energy is a hot topic nationally, given the increasingly vocal debate about Australia’s energy policy, the place of renewables and worries about a looming shortage of gas on the East Coast. Check out Joe Doleschal-Ridnell’s incisive analysis of the complex topic. In WA, the debate is more about ‘Where to from here?’ after the State’s massive LNG construction boom. We cover Chevron’s call for collaboration, Woodside’s plans for LNG as a transport fuel, and an innovation in LNG trading underway in Perth. If iron ore is more your game, don’t miss our exclusive interview with Pilbara Ports Authority CEO Roger Johnston, who illuminates Port Hedland’s looming capital works program. “The European Invasion” heads up our defence coverage, while infrastructure boasts stories on WA’s airport plans and a longawaited irrigation project at Collie. Our construction section takes readers to the beach as Georgiou digs into the Scarborough foreshore redevelopment, followed by a glimpse into the future of WA education courtesy of the Greater Curtin redevelopment. Of course, our regular features are all there for your enjoyment and edification, including the exclusive Major Projects List and Major Resource Projects Map. We hope you enjoy reading WA Works as much as we do producing it. Please share your thoughts at editor@cciwa.com ¢

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The BIG Picture From the CEO’s desk Memo from the minister CCI’s economic outlook ENERGY: LNG’s evolution Putting LNG on the spot Winds of change or hot air? DEFENCE: Here come the Europeans Emily’s $50b French connection ASC investing in the west RESOURCES: Port power Nova lights up WA nickel I am woman, I mine ore Major WA Projects List Major Resource Projects Map INFRASTRUCTURE: Busselton Airport lift off Collie water ready to flow

It’s your business to register.

CONSTRUCTION: Life’s a beach Curtin raiser lifts uni’s sights Done and Dusted/Going for broke Mindworks/Yelverton

Published quarterly by Chamber of Commerce and Industry of Western Australia (Inc) 180 Hay Street, East Perth WA 6004 T (08) 9365 7555 F (08) 9365 7550 E info@cciwa.com www.cciwa.com President Agu Kantsler

If you employ workers in the construction industry you may be required by law to register in the Construction Industry Long Service Leave Scheme. Find out by visiting www.myleave.wa.gov.au or by calling 08 9476 5400.

Chief Executive Officer Deidre Willmott

Editor Stephen Bell (08) 9365 7445

Production Editor Tony Barrass (08) 9365 7627

Graphic Designer Katie Addison (08) 9365 7518

editor@cciwa.com

tony.barrass@cciwa.com

katie.addison@cciwa. com

Advertising and Subscription Paula Connell (08) 9365 7544 advertising@cciwa.com

Disclaimer: This information is current at March 2017. CCI has taken all reasonable care in preparing this information, however, it is provided as a guide only. You should seek specific advice from a CCI adviser before acting. CCI does not accept liability for any claim which may arise from any person acting or refraining from acting on this information. Reproduction of any CCI material is not permitted without written authorisation from the Director of Advocacy. © Copyright CCI. All rights reserved.

Cover: The Italian Navy’s FREMM-class warfare frigate, one of three designs shortlisted for Australia’s $35 billion Future Frigate Program.

AUTUMN 2017 WA WORKS 3


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BIG PICTURE

unnelling for Perth’s $1.9 billion Forrestfield-Airport Link project is yet to begin but Italy’s Salini Impregilo, the senior partner in the SI-NRW joint venture, has had plenty of practice. This picture shows Salini Impregilo workers alongside a cutting head of a giant Tunnel Boring Machine as it emerges from a tunnel dug for the Riyadh Underground project in Saudi Arabia. Two of the giant TBMs — the 130m-long machines weigh 600 tonnes and cost about $25 million each — will be used in Perth starting in July. ¢

4 WA WORKS AUTUMN 2017


AUTUMN 2017 WA WORKS 5


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6 WA WORKS AUTUMN 2017


From the CEO’s desk While we agreed to disagree on some issues, there are numerous proactive Labor policies we believe will strengthen the economy, says CCI CEO Deidre Willmott

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elcome to the New Year and the latest edition of WA Works. And what a start to the year it’s been. Already we’ve seen a huge election victory for WA Labor and leader Mark McGowan, who has now been sworn in as the new Premier, bringing with him a new set of priorities that will impact WA infrastructure and our construction, defence, manufacturing and resources sectors. There have been some WA Labor policies with which the business community disagreed. CCI maintains that the tearing up of the Roe 8 contracts will hurt business and see jobs lost at a time when unemployment remains a key community concern. Likewise, it is now extremely unlikely the privatisation of Western Power will come to pass. CCI believes this is deeply regrettable as the sale of the depreciating asset would have been instrumental in paying down State debt and creating funds to be spent on new infrastructure, which would, in turn, create jobs for WA workers.

HE BRINGS A NEW SET OF PRIORITIES THAT WILL IMPACT INFRASTRUCTURE, CONSTRUCTION, DEFENCE, MANUFACTURING AND RESOURCES SECTORS

proposal is now dead in the water. This will come as a relief to employees working in the resources sector, whose very jobs rely on WA maintaining a reputation as a safe and stable place to invest. Since the misguided idea was floated, CCI was among the first to call out the proposal for the damage it would do to investment and employment, so it is certainly welcome news that this flawed policy is off the table. Looking forward to the incoming term of government, there are numerous proactive Labor policies that CCI believes will be important in strengthening our economy. Firstly, business warmly welcomes WA Labor’s commitment to establish Infrastructure WA as an independent, bipartisan advisory body to oversee the development and implementation of a 20-year State infrastructure strategy. CCI has long-called for a 20-year plan to give investors the certainty they need to finance WA projects that will create jobs for workers. An independent, bipartisan infrastructure body will also boost transparency around infrastructure funding to ensure that funds allocated will provide the widest benefit to the greatest number of West Australians. CCI’s Infrastructure Forum will provide an opportunity for CCI Members to have input into WA’s infrastructure planning. Secondly, the appointment of a Defence Advocate to promote WA’s world-class defence industry will further empower the local sector to expand, secure Commonwealth defence contracts, create jobs and contribute to a more diversified economy. The WA

Defence Industry Council, established by CCI, looks forward to working with Minister for Defence Issues, Paul Papalia, and the new advocate, to maximise WA’s involvement in the nation’s bourgeoning defence industries. And thirdly, WA Labor has said it will assist small and medium-sized contractors get full, fair and reasonable access to contract opportunities by legislating the Western Australian Industry Participation Plan Act and investing $1 million into the Industry Capability Network (ICNWA). ICNWA has been operated by CCI for more than a decade and under CCI’s oversight, ICNWA has enjoyed great success, helping more than 400 WA companies win work across 1600 tenders since 2013. CCI welcomes WA Labor’s $1 million commitment to ICNWA to see this important work continue. Building local content in all WA projects will be a major focus of CCI during the coming year. At a broader level, business also welcomes Mark McGowan’s commitment to no new taxes on West Australians or increases in taxes on West Australians. Four out of five jobs in WA are created by the private sector, so CCI is pleased that no new or increased taxes will be leveraged on the business community, allowing business to do what they do best — invest, innovate, grow and create jobs. With many new and exciting opportunities ahead, I look forward to connecting with each of you through WA Works as we all work together to lay the foundations for a new generation of prosperity for the WA economy. ¢

Asset sales should be a fundamental part of repairing the State’s finances, so CCI urges the new Premier and his Cabinet to reconsider the merits of privatisation as an integral part of their government’s debt management strategy. It should be noted that there is a great, immediate gain from the election of a Labor Government — the Nationals’ toxic mining tax AUTUMN 2017 WA WORKS 7


Perth Airport

A world-class gateway connecting WA Following the completion of our historic $1 billion transformation we have significantly expanded capacity, more than doubled the size of our terminal facilities and greatly improved the customer experience. We were also recently awarded the coveted Australian Airport Association Industry Award for Capital City Airport of the Year 2016 strengthening our position as a world-class gateway to the State for both international and Australian visitors.

perthairport.com.au 8 WA WORKS AUTUMN 2017


Memo from the Minister The WA mining boom is far from over, says Federal Resources and Northern Australia Minister Matt Canavan

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s the Minister for Resources and Northern Australia, I take every opportunity to spruik the contribution the mining sector makes to our national economy — particularly the industry in Western Australia. The latest figures show we now have a trade surplus of almost $6 billion, and $3.2 billion was generated by an increase in mining and resources exports. Last December, mining exports hit a record $16 billion. So, the idea that the mining boom is over is simply wrong. Australia is exporting record amounts of mining commodities, especially iron ore and coal. At the same time, prices have also been up. While prices will inevitably rise and fall in line with demand and supply, we will continue to export near record amounts over the next few years because our mining sector is very strong and very competitive. Along with minerals, the LNG sector drives the WA economy.

In 2015, Australia exported 30.4 million tonnes of LNG valued at $16.5 billion. We are already the world’s second-largest exporter of LNG and are on track to take the number one spot by 2020. The resources industry is especially important to everyone in Western Australia. According to the latest ABS figures, the resources industry contributed more than a quarter of the state’s gross value. That’s compared with a figure of 7.1 per cent nationally. Also, the industry accounts for 7.7 per cent of the state’s employment. In recent times, the resources industry has achieved several significant milestones in WA, such as last year’s first LNG shipment from the Chevron-operated Gorgon project on Barrow Island. Its operations will provide the nation with valuable economic and employment benefits for decades to come. Before that, the first shipment of iron ore from the Roy Hill project in the Pilbara was another important milestone.

WE NOW HAVE A TRADE SURPLUS OF ALMOST $6 BILLION, AND $3.2 BILLION WAS GENERATED BY AN INCREASE IN MINING AND RESOURCES EXPORTS

Of course, the contribution resources continue to make to the State and the nation extends well beyond jobs and the economy. Resources activities are often the foundation stone for what become diverse major centres, with the industry playing a crucial role in supporting communities and building vital infrastructure that benefits Western Australians for years to come. Take a look at the Pilbara as a prime example. For decades, the region was thought to be too remote and rugged for exploration and development. But from the early 1960s, on the back of its rich natural resources, the region has opened itself up to the world. The Pilbara is now one of Australia’s greatest economic success stories. It is the epicentre of booming iron ore and LNG industries. It produces over a third of the world’s iron ore, and the North West Shelf, off the Pilbara coast, accounted for 70 per cent of Australia’s LNG sales in 2015. The flow-on benefits to the region have been substantial. More than 65,000 people now call the Pilbara home, in towns such as Karratha, Port Hedland, Onslow, Tom Price, Newman and Wickham. I’d like to see those towns prosper and grow even further. Resources companies have built mines, ports, gas plants and hubs, extensive railway systems and vital community infrastructure for schools, shopping centres and other public facilities across the region. And the region also boasts world-class recreation, sporting and community facilities that are meeting the needs of a growing population and creating opportunities for economic growth. Driving regional growth and development is essential to our future prosperity. The Federal Government is doing just that with a plan to develop our north, including in areas like the Pilbara, through roads, water infrastructure and providing a catalyst for investment. The $5 billion Northern Australia Infrastructure Facility has been set up to help build infrastructure throughout the north and I encourage applications from WA projects. There’s a lot to be positive about as Western Australia prepares to write the next chapter in its resources story. The statistics point to a resilient industry with a strong future — and that’s great news for every West Australian. ¢ AUTUMN 2017 WA WORKS 9


CCI’S ECONOMIC OUTLOOK

SIGNS ARE GOOD FOR GREEN SHOOTS RECOVERY BY RICK NEWNHAM CCI Chief Economist

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he end of an historic period of resource project investment has been playing out for some time now and the structure of the economy has been in transition. While it’s a difficult task to predict how quickly the economy will recover, we know that our economy does a good job of reallocating resources to where they are most needed. Economists at CCI have been keeping a keen eye on various indicators for signs of recovery, with the view that one piece of economic data by itself is never going to give you a good picture of the whole economy. Dissecting economic data can reveal which ones contain vital signals about the economy and which ones should simply be looked through. In recent months, three economic data points in particular have caught our attention and, together, suggest that the WA economy is showing green shoots of recovery.

First, the unemployment rate has fallen in the last three months consecutively, from its high of 6.9 per cent in November last year to 6 per cent in February. The most recent figures also show that the number of full-time jobs in WA increased over 12 months to this February, which is the first time this has occurred in any 12-month period since 2015. Our population growth has slowed and part-time jobs have helped take up the slack in full-time job creation.

These movements have helped keep the unemployment rate lower than it otherwise would have been. Economists look to the labour market as an indicator of how much unused potential there is in the economy, so the recent signs suggest that labour markets are adjusting well to serving the needs of our economy. Secondly, our latest Consumer Confidence survey results points to a strong and stable base of consumer demand in the


CCI’S ECONOMIC OUTLOOK

economy. Roughly two-thirds of people surveyed in March Quarter 2017 expect the WA economy to improve or remain unchanged in the short-term. In addition, the survey results suggest that consumers’ personal finances compared to a year earlier are improving and that interest rates and living costs are having less influence on their outlook than in recent times.

Third, State Final Demand (SFD), which is the economy without exports, grew by 0.4 per cent in the December Quarter 2016 following more than a year of negative growth. During that time the consumption components of SFD continued to grow but were more than offset by negative growth in investment. Significantly, the overall positive growth in SFD

OUR POPULATION GROWTH HAS SLOWED AND PART-TIME JOBS HAVE HELPED TAKE UP THE SLACK IN FULL-TIME JOB CREATION On these current indicators, we expect that consumer confidence will strengthen as political uncertainty — both domestically and abroad — continues to stabilise.

seen in December was driven by positive growth in investment. In particular, business investment grew by 2.4 per cent which is the first positive growth since March 2014. While this still

may not be the end of the unwinding of the mining boom, we are certainly close. The Reserve Bank of Australia’s forecast is that we are some 90 per cent of the way down the slope. These three indicators build upon a base of positive economic conditions that are ready to support an economic recovery. Lending rates are at historic lows and continue to accommodate

new investment. The exchange rate has depreciated against the US dollar and has performed an important role as a shock absorber to the end of the mining boom, helping our export-orientated industries be more competitive. Exactly when the next economic windfall will hit our shores is unclear, but WA is showing signs that it is ready to set sail when it does. ¢ AUTUMN 2017 WA WORKS 11


ON THE GROUND JOBS BOOST FROM GREENBUSHES LITHIUM SPEND The $320 million doubling of the world’s biggest lithium mine, Talison’s Greenbushes operation in the South West, is expected to generate hundreds of contractor jobs during a 26-month construction phase. China’s Tianqi Lithium and US-based Albemarle, the joint owners of Talison, approved the long-awaited project in March, providing a timely fillip for the construction, engineering and mining services sectors. Talison said it expected to start site works in May, while commissioning was anticipated to begin in Q2 2019. More than 90 per cent of the project spend would be “local to Western Australia with a commitment to utilise as much local content as possible”, Talison said. During peak activity, more than 200 contractors would be employed with 40 to 60 new permanent positions created over the long-term while production was ramped up to full capacity, it said. WA Works understands that Talison will use an EPC model, with the head contractor expected to roll out work packages for earth works, concreting and steel works over the second half of this year. ¢

PLUTO LNG EXPANSION BACK ON THE AGENDA Four years after putting a major expansion of its Pluto LNG plant on ice, Woodside Petroleum says it is now working on a smaller upgrade of the Karratha facility. Woodside CEO Peter Coleman said the company could add as much as 1.5 million tonnes of LNG processing capacity to Pluto by bolting on an off-the-shelf module. Coleman said the “plug-in” option was also competing with a debottlenecking project, and Woodside aimed to select the preferred option by the third quarter of this year. “We’re doing the work now,” he told investors after the company’s half-year profit result. Adding a modular LNG train could add 1-1.5Mt to Pluto’s existing 4.9Mtpa capacity, whereas the debottlenecking would deliver “just under 1 million”, Coleman said. “That’s where the increment is, and that’s the decision we need to make,” he said. Woodside has not put a cost on the expansion, seen as a way of utilising some of Pluto’s smaller offshore gas resources ahead of longer-dated decisions on the much larger Browse and/or Scarborough fields. But the expansion would be “very competitive”, he said. “We expect to be able to expand Pluto at numbers similar to what you’re seeing some of the Gulf Coast plants being expanded at,” he said. ¢

12 WA WORKS AUTUMN 2017

CHEVRON CALLS FOR LNG COLLABORATION

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hevron’s Australian Managing Director Nigel Hearne has called for greater industry collaboration to maximise the benefits of WA’s LNG infrastructure amid an investment drought in new mega-projects. “As it stands, there is unlikely to be another large greenfield LNG development in WA,” Hearne told a CEDA forum in Perth during his first major public speech since replacing Roy Krzywosinski last June. “What we do have is 11 trains of installed, world-class liquefaction capacity and an opportunity to safely, reliably and competitively develop WA’s resources,” he said. Hearne did not name any undeveloped gas fields in his call for more alliances between resource holders, infrastructure owners and suppliers. But Woodside’s Browse gas field and Exxon Mobil’s Scarborough fields are currently weighing up their development options after significant delays to previously touted floating LNG projects. Hearne, who revealed that Gorgon’s third and final processing train was in the process of starting up, said utilising existing infrastructure had several advantages over investing in new projects, including pipelines, tanks and jetties that were already built. For instance, Chevron’s Wheatstone project, due to start up its first train in the middle of the year, was designed so third-party producers could process their otherwise stranded gas on “groundfloor terms”. “The opportunity to collaborate either in the operating or maintenance world, or future field development, is where we need to move forward,” he said. “If we can add more value to our collective businesses, that is a good outcome.” Hearne said that collaboration was a good theme at $50 a barrel oil prices, noting that the cost of developing some US gas fields had been cut by half in the last five years. But it was an “equally good theme at $70 or $100 oil — there’s value to be generated if we get it right.” With the Australian Energy Market Operator forecasting that demand for LNG would exceed supply after 2023, it was important that industry — with the support of government and the community — continued investing for the future. And WA’s new LNG facilities would

require ongoing “multi-billion dollar investments”, he said. This would include new production wells, subsea equipment, platforms and pipelines. In January, Chevron started front-end engineering and design activities on the second stage of Gorgon and called on industry to register their interest in the project. The initial work includes additional wells and subsea infrastructure at the existing Gorgon and Jansz-Io fields. WA Works understands that early design work is underway with the assistance of Wood Group, along with GE subsea equipment. Chevron expects to have five LNG trains running in WA from the middle of next year, following the completion of Wheatstone. Regular turnarounds — scheduled maintenance shutdowns — would provide a major opportunity for the WA supply chain, he said. “We will have five trains that will be on a four-year turnaround cycle,” he said. “So if you do the maths we will be doing turnarounds all the time — every year. “I think there is innovation (needed) there for maintenance techniques and on-screen inspection,” he said. Chevron could partner with companies such as GE on how to extract data from gas turbines and remote monitoring centres. “I think there is a lot of things to get people excited about on really sweating those assets — running them up to capacity day-in/day-out,” he said. Although Hearne was buoyant about the industry opportunities with regards to Chevron’s five LNG trains, he played down the chances of major expansions. “I can’t see us, in the near-term, investing in a fourth train at Gorgon or a third train at Wheatstone,” he said, adding that Chevron was currently more focused on generating returns and paying back capital. Hearne also said the right policy settings were critical to attracting investment in LNG. ¢


A DAY IN THE LIFE

Scott Carberry, Project Supervisor, Anzac-class, IKAD Engineering

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live in Waikiki and each morning drive straight to the Royal Australian Navy’s HMAS Stirling Naval Base on Garden Island. I head out onto the causeway, which is a restricted access area with defence passes needed. Gaining security clearance was easier for me because I am still an active reservist. I was in the Navy for seven years over here in the West and served on all the Anzac-class (frigate) platforms. When the ships are refitted, most of the work is subcontracted out to civilians, and IKAD Engineering was coming on board doing maintenance. I always found that they were a cut above the rest with their quality and efficiency.

above the rest and managed to get in with IKAD. The first year I was running IKAD’s maintenance contracts at BAE Systems’ yard at Henderson, leading a team of 24 people. We worked on the Warramunga, Parramatta and Toowoomba Anzac-class frigates. It could range between six jobs or eleven for the day, and sometimes more. They finished most of the Anti-Ship Missile Defence (ASMD) upgrades out there and I was sent to Garden Island to finish off the Toowoomba ASMD. Once you’ve done all the construction, maintenance and upgrades, you need to test all of the systems — that’s called the set-to-work phase. All of the systems run on sea-water cooling, so you can’t do

EVERYONE PULLS TOGETHER AS A TEAM TO ACHIEVE THE RESULT OF FINISHING THE TASK I left the Navy when I got married and decided the defence force lifestyle, which involves being away a lot, is not the best choice for someone starting a family. So I targeted a few of the contractors who I thought stood

much until it is on the water. We’ve got offices and workshops at the hardstand, or lay-up area, on Garden Island, which is hired out to contractors on refits. I normally get there at 6.00am ready for the pre-start

meeting at 6.30am. My team of about six people meets there to discuss safety, the jobs they are doing and issues that could arise on the day. My role is supervisory, but coming from a mechanical fitter background, if there is a problem or a younger apprentice has some questions, I may need to get on the tools and help them out. I’m not just running the fitters. It could be painters, boilermakers, and all the subcontractors — electricians, insulators and so forth. With this ASMD upgrade, all the ships are identical — it’s like parking four Ford Falcons next to each other. We usually try to mix our crews up, so you get some more experienced guys alongside fresh fitters and apprentices. We don’t like people jumping around too much, but we need to keep the key players on to filter their knowledge down to the people underneath them. It’s all about the training. The (Navy) crew live and work on board; they have material control of the ship. They know all the systems and are doing their set maintenance. We might remove a pump and put it in, but it will still need regular maintenance, such as startups, inspections, shutdowns or electrical cleans. The navy

personnel also provide systems knowledge, safety advice and fault finding. I know those ships back-tofront, so the systems knowledge helps me a lot. I trained as a mechanical fitter in the Navy, which is called a Certificate Four in Mechanical Engineering. It is also easier for me to plan a schedule because they have acronyms for everything, so I know what sequence things go in. Our set knock-off time is 3pm but I’m often there for an extra hour to plan for the next day and do a site inspection. So an average day for me is nine or nine-and-a-half hours. It is generally a five-day-aweek job, but I’ve worked the last three of four weekends due to urgent repairs. The biggest thing for me is the camaraderie and teamwork. If you have a lot of things on your plate and you get an urgent repair request from the client, everyone pulls together as a team to achieve the result of finishing the task and getting the ships back to sea. If I can’t contact anyone and I’m on the island by myself, I know I can call IKAD’s Managing Director Ivan Donjerkovich any time to ask for advice. I’ve even had Ivan out on the floor on the tools before, giving me a hand. ¢ AUTUMN 2017 WA WORKS 13


ENERGY

So far pigeon-holed as a clean energy export, LNG is now being used as a cheap alternative to diesel, both on land and off it BY HAMISH HASTIE

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here are big changes occurring just over the horizon in LNG’s global consumption, and WA is leading the pack as the commodity evolves into a lucrative alternative to diesel. Indeed, the next tanker you see steaming north may not only be delivering it to the energyhungry mega-cities of Asia, but the ship itself could be powered by the lower carbon and particulate emitting fuel source — Liquified Natural Gas. The attention being given to LNG as a substitute fuel source to the eight billion litres of diesel currently being consumed in WA’s Pilbara comes amid a fierce national debate about high gas prices and power outages on the east coast, just as major LNG export projects in Queensland begin ramping up. The irony of what’s happening on the east coast is that globally, supply of LNG is almost exceeding demand after consistent annual increases in production which has sparked the need for new markets. WA introduced a domestic gas reservation policy in 2006 which 14 WA WORKS AUTUMN 2017

requires new gas developments to supply the equivalent of 15 per cent of their gas exports to the state market. Between 2015 and 2016 there was a 6.1 per cent increase in global LNG production from 245 Mt to about 260 Mt. The ramp-up of Australian LNG projects has contributed to this increase including Chevron’s Gorgon facility on Barrow Island, which started shipping LNG in March last year. Fortunately for the gas sector LNG is increasingly being used as a cheap alternative to diesel both on the land and now off it thanks to the International Maritime Organisation’s recent restrictions on sulphur content and emissions in fuel. The restrictions will apply to all shipping from 2020, and because of the ease in which LNG meets these restrictions it’s expected to drive a global switch to it. LNG greenhouse gas emissions are up to 25 per cent lower than diesel and 30 per cent lower than heavy fuel oil. WA industry, meanwhile, is making use of the State’s ample gas resources by pushing into new energy and fuel markets,

and Perth-based LNG giant Woodside is at the forefront of it. The company recently signed an agreement with GE to support LNG as a fuel in WA and took delivery of the Siem Thiima, the first dual-fuelled LNG/diesel marine support vessel in the southern hemisphere.

diesel a year,” he told the recent AOG conference in Perth. “In today’s market 245 million tonnes of LNG is being used worldwide (per annum). “If you were to deploy LNG into the marine sector alone it is a 700 to 1000 Mtpa marketplace. “So even at a 10 per cent

SUPPLY OF LNG IS ALMOST EXCEEDING DEMAND AFTER CONSISTENT ANNUAL INCREASES Woodside Chief Operations Officer Mike Utsler says LNGpowered vessel numbers were experiencing huge growth in the northern hemisphere and they are looking at converting the rest of their 50-strong fleet to LNG over the next five years. Utsler says in the Pilbara, three billion litres of diesel are used for power generation each year, along with five billion litres a year in marine transport for the iron ore carriers between Karratha and China. “That is eight billion litres of

penetration you’d be looking at a third of the world’s current LNG supply as a future uplift.” To fuel the Siem Thiima and any other future Pilbara diesel-turned-LNG customers, Woodside also revealed plans to build a small LNG loading facility at its Pluto plant on the Burrup Peninsula. A spokeswoman says the facility, yet to be approved, would load LNG onto trucks for distribution to users in the Pilbara. “Using LNG as a transport fuel


ENERGY

IT’S A GAS : LNG’S EVOLUTION

offers an opportunity to replace diesel and other fuels and help to reduce emissions — the Pilbara is the perfect place to drive this transition,” she says. “Initially, Woodside intends to supply its first dual-fuel LNG/ diesel-powered platform support vessel with approximately 2000 tonnes per annum. “However, this would likely increase over time as the market develops. It is envisaged that LNG will eventually be sold to Pilbara customers, replacing diesel as a transport fuel and as a fuel for power generation at remote sites.” Further down the supply chain Wesfarmers’ EVOL LNG hope to capture the burgeoning market expanding their LNG delivery service. Under an agreement with Woodside they successfully refuelled the Siem Thiima in January in the state’s first commercial bunkering operation. EVOL LNG Business Manager Nick Rea says for now they are particularly focused on establishing truck-to-ship LNG bunkering as a low cost entry-level solution, but hope to grow it.

“As demand grows, EVOL will be able to use its experience in LNG truck-refueller technology to design, build, own, operate and maintain shore-to-ship LNG bunkering facilities at major ports,” he says. “EVOL LNG is also able to support local shipbuilders with the design and sea-trialling of new LNG-fuelled vessels for local and international markets.” LNG is also being used to generate power inland with Mineral Resources recently confirming it is building an energy division following the success of its LNG power plant at the Mt Marion lithium mine. Rea says the potential new markets that large scale producers are looking at like transport and decentralised, off-the-grid power plants like the Mt Marion plant are much smaller-scale and harder to serve. He says they often require more complex supply chains and end-users open to new or alternative technologies. “While large-scale exploration and production companies ship millions of tonnes of LNG via sea to international customers, we transport LNG via road tankers

to domestic customers such as remote mine sites, truck refuellers and industrial plants,” he says. “From our experience, it’s the LNG supplier that has to do the heavy lifting if they are to penetrate new markets and displace incumbent fuel sources such as diesel. “This means developing new supply chains, new infrastructure at the point of delivery, and new end-user technologies.” Rea says a prerequisite for success in developing new LNG markets will be regulatory pressure on carbon emissions.

“The development and adoption of international standards for LNG bunkering will assist in the future, however, it will be the desire to improve emissions that will really drive adoption of LNG as a marine fuel, where SOx (sulphur-based) emissions are eliminated and NOx (oxides of nitrogen) and carbon emissions are significantly reduced,” he says. “Australian regulators need to ensure we keep pace with the rest of the world as emission limits are put in place to ensure that we don’t end up with the old clunkers being dumped in our backyard.” ¢

LNG GOES DUTCH The evolution of LNG as a marine fuel source is already underway in Europe. And Dutch Shipbuilder Damen, which has teamed with WA-based Civmec in bidding for Australia’s $3-4 billion offshore patrol vessel contract, is at the cutting edge of that transformation, having recently launched a range of LNG carriers. Damen Shipyards Bergum’s Design and Proposal Marketeer Bastiaan Schurink says there is a continued focus on tightening exhaust emissions. “Emissions regulations are getting tighter every day. Ships need to reduce their emissions — and one way to do that is LNG,” he says. “Of course, there are other ways, but LNG is a preferred method to reduce not only SOx and NOx, but also a substantial amount of CO2 emissions.” AUTUMN 2017 WA WORKS 15


ENERGY

PUTTING LNG ON THE SPOT A tech start-up wants to cash in on the industry’s increased liking for spot trading BY STEPHEN BELL WA Works Editor

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s corporate ambitions go, they don’t get much bigger. Perth-based technology company GLX is betting that its new on-line trading platform will be able to capture a hefty slice of the US$150 billion liquefied natural gas market by dramatically streamlining the buying and selling of LNG cargoes. GLX expects its digital platform — developed in Perth and operated out of Singapore — will be warmly embraced by big energy companies in the coming months, with “live” trading due to begin as WA Works went to press. Moving LNG into the realm of e-commerce is expected to vastly increase efficiencies compared with the current system of ad-hoc tenders and negotiations, which 16 WA WORKS AUTUMN 2017

have dominated since the industry kicked off in the 1960s, says GLX founder and CEO Damien Criddle. “The LNG industry is renowned for embracing the latest technology in the exploration, development, production, transportation and regasification processes, but when it comes to trading the product it has been slow to take advantage of the digital revolution,” he said. “The GLX platform will create significant efficiencies and advantages for all industry participants and ensure supply and demand come together in a much more transparent and efficient manner.” The revolution has been slow in arriving to LNG, natural gas that has been chilled to about minus 160 degrees Celsius to liquefy it for ease of storage or transport. It is not a commodity that can easily be stored on the dock waiting for a buyer to sail past.

It is also a capital-intensive industry that, traditionally, has prompted producers to secure long-term contracts from Japan and South Korea to underwrite the risk of building huge LNG plants such as the Woodside Petroleum-operated North West Shelf in WA. The game is now quickly changing. With supply plentiful after the recent start-up of several mega-projects, many buyers are choosing to use spot sales for a part of their needs rather than locking themselves into inflexible long-term contracts. “If you go back to the early 2000s, spot would have comprised just five to 10 per cent of the overall LNG market, and probably only 6-7 million tonnes per annum,” says Rob Cole, the former Woodside director who joined GLX as chairman last year. “Today it is about 30 per cent and there has been a 10-fold

increase in the volume of spot to north of 70Mtpa,” Cole told WA Works. “That is 1100 to 1200 cargoes per year being sold on a spot or short-term basis.” Some forecasters predict spot trades will account for 50 per cent of the market by 2021 as more buyers embrace the flexible pricing options. “We’d like to get as much of that spot market as possible,” says Cole. “In an absolute success case, this would be a winner-take-all product.” GLX is channelling plenty of LNG know-how into chasing the big prize. A former commercial lawyer, Cole spent more than three decades in the industry, including his recent spell at Woodside. Similarly, Criddle clocked up nearly 20 years in natural gas and LNG, providing commercial advice to major producers, before launching GLX in 2015. “This platform is clearly an innovation based on our


ENERGY

underlying foundation of LNG expertise,” Cole says. “If we can build on that momentum and move into other products then we are drawing in a whole new 21st century economy. “In developing this product we had rooms full of young people, all 35 and under, with screens everywhere working on design and giving us advice on the digital world.” So will those youngsters be able to teach new tricks to old dogs like Cole (he turns 55 this year) and his former colleagues in the LNG industry? Cole believes they can, given that GLX’s platform is not attempting to reinvent the wheel. “It is what is done in the industry at the moment, but this automates it,” he says. “We would see this (product) reducing to a week what currently takes six-plus weeks to negotiate.” There are plenty of others

who believe in the technology, including a number of wealthy local investors. The Criddle family — Damien’s father Denis founded the Decmil engineering group in the late 1970s — has contributed a significant sum of money to the start-up, alongside other high net worth West Australians, Cole says. Those investors haven’t been ruffled by low LNG prices caused by the current glut of supply. “There is no question that there is going to be continued downward pressure on LNG spot prices,” Cole says. “But we are indifferent to the price. The key trend for us, which provides a great opportunity, is the increased spot volumes.” The company is offering fee-free membership and trading to “early adopters” in the first year in the hope of maximising volumes. It is also betting that members who have seen the system in

action will be prepared to pay for the service after the freebie period finishes. “In due course, the business has to make a return in the form of membership and transaction fees.” The platform will be operated out of Singapore, where CEO Criddle is based, but GLX plans to retain its Perth office to continue development, Cole says. For example, it is possible that a ship auction system will be added at a later stage. GLX has put a lot of work into the shipping aspect of LNG, with its platform providing users the flexibility to either take responsibility for transport, or not, he says “That’s a variable that reflects a key part of the market at the moment — shipping. There is a lot of spare shipping capacity around and that has had an impact on rates.” So who is likely to be staring

at the platform’s web interface in its early days? Cole says GLX has about 20 parties in total interested in the technology after conducting 30-odd sit-down demonstrations over the past year, he said. “It doesn’t sound like a huge number, but the market is still relatively concentrated. We’ve probably spoken to buyers and sellers with 40-50 per cent of the global LNG trade under their responsibility.” GLX won’t name names, aside from Perth-based energy giant Woodside, which has committed to a trial of the platform for Day One. Woodside CEO Peter Coleman had been “very supportive from an early point,” said Cole, who formerly reported to Coleman in his old job as an executive director of the Perth-based company. “It is great to have a company like Woodside openly indicate that they are signed up.” ¢ AUTUMN 2017 WA WORKS 17


ENERGY

WINDS OF CHANGE OR HOT AIR? What is clear is the current system is not sustainable and creates serious questions for long-term energy security BY JOE DOLESCHAL-RIDNELL

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n September, a ferocious storm crossed South Australia and knocked out its energy system, but it had nothing on the squall this created for debate on the future of energy in Australia. As it morphed into a political tornado, it made its way through the halls of federal Parliament, where we saw coal and solar panel props being paraded with reckless abandon, and continues to swirl around the proverbial water coolers from one side of the country to the other. Renewable energy has always tested well in focus groups, and for understandable reasons of offering a zero-emission generation option in one of the most greenhouse gas intensive parts of our economy. For right or wrong, questions over renewable energy has had political effect. At a state-level, WA Premier Mark McGowan said a government 18 WA WORKS AUTUMN 2017

he led would not introduce a state renewable energy target. Federally, Opposition Leader Bill Shorten and Shadow Treasurer Chris Bowen got tangled in language trying to explain the difference between a target and an aspiration, how this would be reached, and what the cost would be. The Opposition aspiration of 50 per cent renewable energy by 2030, as it stands, won’t be driven by a specific subsidy as it is now, but rather presumes some other mechanism (i.e. an emissions intensity scheme) will be in operation which will deliver emissions reductions to reach that goal. You can see how the message can get lost. The Federal opposition has subsequently ruled out expanding the existing Large Renewable Energy Target (LRET) scheme beyond 2020. We’ve also had Elon Musk’s proposal that Tesla could solve South Australia’s power woes in 100 days — or it’s free!

Embattled SA Premier Jay Weatherill has since announced a plan for the State’s energy security, including funding 100MW battery storage to the tune of $150 million, and investing, building, and owning a $360 million, 250-megawatt gas-fired plant. The likely success of this plan is unclear, and a cost-benefit analysis of government ownership of a plant for emergency situations, which essentially duplicates an existing privatelyowned generator, would be a welcome addition to the plan. In this dramatic energy whirl-wind we should not forget that there’s sound economic justification for privatising assets in the first place, and that taxpayers will be stuck with this asset for decades. So, what’s the basis of renewable energy being such a talking point. The starting point is to understand the conditions of our neighbours across the Nullarbor.

Fact; South Australia suffered a state-wide blackout in September, experienced a price-spike in July where prices reached $14,000 a megawatt hour, and has experienced three load-shedding events (constraining demand) in 15 months. Previously, it had experienced three load shedding events in 15 years. It’s also true that South Australia has among the highest penetration of windpowered electricity generation in the world. It’s also at the end of the national electricity market, and although it does import electricity from Victoria, its interconnection has proven vulnerable. No doubt, South Australia has a serious energy problem. But it is too simplistic to say this problem is because of renewable energy, and it’s likewise disingenuous to say the characteristics of intermittent energy like wind has nothing to do with it. In simple terms, here is what happens.


ENERGY Some days in South Australia wind energy and solar panels can account for all the State’s energy needs. But when the wind isn’t blowing, and the sun isn’t shining, or on particularly hot days (which often coincides with no wind), energy needs to come from somewhere else.

the prospect of more expensive electricity, but what’s stopping Victoria from deciding it doesn’t want to allow the export of electricity into SA? To keep a national market together, the Federal Government needs to step-up. There needs to be changes to electricity market

2017 IS THE YEAR TO GET REFORM BACK ON THE AGENDA TO ENSURE LONG TERM ENERGY SECURITY FOR THE STATE In recent years, South Australia has seen the closure or mothballing of 1025 megawatts of generation, including both coal and gas plants. For comparison, wind capacity accounts for over 1500 megawatts. When 1500 megawatts of capacity fall out of the market, this clearly creates an issue for affordability and security. Without wind blowing, gas generation sets the minimum price, which is more expensive than coal was, or wind is. Secondly, if other generation cannot come on time quickly enough, as is what happened in the previous load-shedding event, demand will need to be cut. The answer to these challenges is not to take the bat to renewable energy and blindly embrace a return to the past, such as developing new coal generation. Despite the potential and our self-interest in developing coal carbon capture and storage, the market is not optimistic about the future of coal generation. This is evident by the lack of capital available for this endeavour, and the policies of several national and global energy companies to phase-out their coal generation fleet over the coming years. What we do need is strong national energy policy — the more announcements such as that in South Australia, the more fragile our national market becomes. Under proposals, the SA Government will have powers over the national market to ensure local generation is used first. Not only does this create

rules to allow for a smoother introduction of renewable technology, and there should be changes to planning frameworks under the LRET to ensure wind generation has a storage solution to account for their intermittent nature. Here in WA, we are not immune from the winds of change. With national attention on energy, 2017 is the year to get reform back on the agenda to ensure long term energy security for the State. There are two key areas of reform. The first is to adopt a constrained network model, which would have occurred had Parliament passed legislation

to that effect last year. In the absence of the implementation of constrained network access, the State’s ability to safely and securely connect any large scale new entrant generators to the network is limited because of the excessive cost and timeframes involved in reinforcing the network under the current model. Although not formally part of legislation, by design generators connected to the Western Power network will generally be able to supply electricity without any limitations. This has several implications, including difficulty for new projects to connect to the grid (i.e. renewable projects), lack of incentives between generators to behave competitively, and inefficient network investments. The other is tariff reform. Household consumers in WA do not pay the true cost of electricity, at least not directly. It is hidden in the form of various subsidies. For example, one subsidy sees Synergy charge non-contestable customers (generally households and small businesses) a fixed, regulated price to access the grid, which is below the cost that Synergy pays Western Power for this service. The State Government must use consolidated revenue to cover that and other shortfalls, which in 2015-16 was to the tune of more than $300 million. Another subsidy sees customers in the South West Interconnected

System pay a tariff equalisation contribution to cover the higher cost of supply to rural customers in the rest of the State, which in 2015-16 was around $140 million. Ultimately, the way prices are charged bears very little relationship to the actual cost of supply. We pay too much for the variable price of electricity (think of this as the actual electricity we use) and not enough for the fixed cost (costs of the grid). What we pay is also not reflective of the fact that it costs more to supply electricity during peak times, which of course is when most people use their electricity. So, the price incentives for consumers to use energy efficiently are all wrong. We should get these price signals right to ensure the long-term success of renewable technologies including rooftop solar, and innovative systems such as trading energy between homes and businesses. With our current structure of crosssubsidisation and tariffs not being reflective of true cost, for every solar panel installed there is less revenue being received for network upkeep. If we started trading energy between our homes tomorrow — and making a profit — we would be doing so without paying the true cost of having access to the distribution network. ¢

AUTUMN 2017 WA WORKS 19


ENERGY

DEATH OF BIG PROJECTS EXAGGERATED History shows the storm will pass when it comes to LNG

BY ANDREW PICKFORD

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oodside CEO Peter Coleman’s musings on the death of the LNG mega-project has caused reflection about the future of the industry. Beyond 2017, is Coleman’s comment a feature of a cyclical downturn, or prediction of the future? The commissioning of large or mega-LNG projects requires aligning stars, such that a window opens and investment is sanctioned. Australia went through a very unusual period from 2007-2012 when several approvals resulted in $200b flowing to LNG mega-projects. While the cumulative effect of the new investments will catapult Australia to be the leading global LNG exporter in 2018, the construction phase was marked by a series of costs blow-outs, union disputes and commissioning challenges.

20 WA WORKS AUTUMN 2017

These issues became well known in Houston and other energy capitals. Despite the current glut in the LNG market which is expected to continue until 2022, long-term growth in natural gas demand will ultimately lead to wave of investment into the sector. The question is; when and where? While attention is focused on the US unconventional revolution and its LNG expansion plans, it does not mean WA LNG is out of contention. LNG investments have always been lumpy and spasmodic. For now, numbers will be run on de-bottlenecking exercises, which increase LNG capacity for limited capital expenditure. On a cost basis, per unit of expansion, de-bottlenecking is competitive and often superior to US Gulf Coast projects. Backfill opportunities, which arise when LNG capacity comes available as mature fields come off plateau production and start declining, will be attractive towards 2020. Despite the potential of de-bottlenecking and backfill, the Australian debate over the Petroleum Resource Rent Tax, tax structures of multinational energy firms and wider discussions of domestic gas restrictions and gas moratoriums are coming at the wrong stage of the cycle. Why would investment flow to a WA LNG project when US firms could potentially have a

15 percent tax rate and access to booming onshore gas production with streamlined regulations?

moorings, along with greater collaboration between companies, will see some novel

LONG-TERM GROWTH IN NATURAL GAS DEMAND WILL ULTIMATELY LEAD TO WAVE OF INVESTMENT INTO THE SECTOR On the bright side, the storm will pass and future WA (and Federal) governments will recalibrate. This will become easier as the investment boom fades from memory. A new generation of WA leaders will need to learn how we created the LNG industry under the guidance of Sir Charles Court and how we became a pioneer of selling LNG to China. The first green shoots will be brownfield expansion plants which involves putting a new LNG train next to existing operations. These can cost 30 per cent less than greenfield projects and will largely avoid public protests like James Price Point. Burrup and Gorgon are potential candidates. Another option will be Floating LNG. The commissioning date and cost overruns of Shell’s Prelude does not mean the concept is dead. Scarborough is a possibility. Some of the less known advancements in sub-sea pipelines and ocean floor

partnering opportunities and commercial arrangements. These will be different than the construction boom, with robotics, flexible contracting and digital technologies increasingly applied. The LNG mega-project is not dead. Western Australia has the potential to attract a future wave of LNG investment, but will need to respond to the new dynamics of US LNG and other competitors. This is not a new challenge. In the 1980s there was much hand-wringing about the North-West Shelf LNG and low energy prices. The late 2010s are not unique. In the 2020s, we will be dealing with different suppliers and consumers, new opportunities and hopefully a more globally competitive cost structure. These pages will then be dedicated to the pipeline of new LNG mega projects. Andrew Pickford is a Senior Fellow at the International Strategic Studies Association. ¢


ENERGY

The Class of 2021; EAG’s Pat Tierney and Stephanie Kay with the latest 10 recruits.

YOUNGSTERS TAP INTO NEW OIL, GAS OPPORTUNITIES BY STEPHANIE KAY

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collaborative training initiative from four oil and gas majors is starting to bear fruit as more young people jump on board the new National Energy Technician Training Scheme. The new approach to entry-level apprenticeships to the oil and gas industry has been spearheaded by Shell, Quadrant Energy, Vermilion and Woodside to tackle a future potential industry skills shortage. It will also ensure young West Australians have a clear pathway into an industry that will see them take key roles for some of the state’s most exciting oil and gas projects. CCI’s Energy Apprentice Group manages and co-ordinates the training on behalf of the stakeholder companies during the four-year apprenticeship.

This sees Year 12 school-leavers from around WA get training, qualifications and experience in process plant operations and/or maintenance technical streams. NETTS is now in its second year with 26 apprentices for the companies employed through EAG. Sterling Winmar, a first-year Instrumentation Technician apprentice for Shell, says he’s excited about the prospect of working for one of the world’s biggest resources companies and having the opportunity to take part in projects offshore. “Getting paid to learn, gain skills and on-the-job experience from all the companies makes this a really exciting first job,” he says. The apprentices do their training at ACEPT, part of South Metropolitan TAFE, a state-ofthe-art facility which allows for

hands-on practical experiences as part of the apprentices’ first two years of training in the Perth metro area before moving to their host company site. The collaboration between the stakeholder companies also gives the apprentices exposure to many different companies and sites before hitting the tools in year three with their own host company. Quadrant Energy Director of Operations, Ian Grant, says the collaboration with the other operators has been “significant”. “Our supply chain partners have also really supported the program offering unique opportunities for secondments and exposure to their businesses. NETTS apprentices represent the future face of oil and gas WA and Quadrant Energy is pleased to be a part of this.” ¢ AUTUMN 2017 WA WORKS 21


DEFENCE

HERE COME THE EUROPEANS European ship makers are muscling into WA’s supply chain as they battle for a share of Australia’s $89 billion naval renewal program BY STEPHEN BELL WA Works Editor

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n mid-summer, a 140m state-of-the-art warship sailed into WA waters and docked at Fremantle. It wasn’t a show of force, rather a display of European technology as the Italian Navy chose Australia Day to parade its Carabiniere frigate to all and sundry on Fremantle Wharf. The show and tell was the start of a national tour aimed at helping Italy’s state-owned Fincantieri to win Australia’s $35 billion Future Frigate contract. One of three companies short-listed to build nine new warfare frigates, Fincantieri designed and built the Carabiniere, which was delivered to the Italian Navy two years ago. But why visit Fremantle when the new frigates will be built in Adelaide? It seems that Fincantieri, and the other warship hopefuls, have been listening to the Federal Government, which says a 22 WA WORKS AUTUMN 2017

nation-wide supply chain is needed to support South Australia in delivering the decades-long program. It was a good omen, then, that the Italians chose Fremantle as their first port of call, before sailing the Carabiniere on to Adelaide, Sydney and Melbourne. At present WA is slated to be the “second hub” in Australia’s massive naval renewal project by building the $3-4 billion Offshore Patrol Vessel program. Austal, currently delivering the Pacific Patrol Boat replacement program, is a key contender for OPV and frigate work, as are big Henderson players Civmec and BAE Systems. But faced with the sight of Italy’s newest warship docked at Fremantle, local defence suppliers — about 80 of them were invited to tour the ship on an industry day — must have wondered if WA will play a bigger-than-expected role in the looming ship building bonanza.

Fincantieri hopes that a modified version of the Carabiniere will be Australia’s next anti-submarine warship, but it is facing stiff competition from Spain’s Navantia and the UK’s BAE Systems. Fincantieri has called for the help of WA suppliers in its pitch to build the warfare frigates and kicked off a national roadshow with a briefing to about 100 supply representatives in Fremantle. Senior Vice President Mark Purcell describes the Government’s plan to cut steel by 2020 as a “very aggressive timeline” for the Future Frigate Program. “The plan is to announce the preferred tenderer and contract award in 2018, and we need to go through the tender process and a tender submission in 2017,” Purcell says. “So we are seeking potential sub-contractors at this stage for elements and scope of the SEA 5000 work package. “We are going to have a very

short period of time this year to run through the tender process, and we’d like to invite as many of you as possible on that journey,” he says. Although construction will be centred round Adelaide, it is Purcell’s view that the Frigate program needs to be a national effort. He was unsure if maintenance and support contracts — a major opportunity for WA companies — will be built into the Government’s request for tender process. “We don’t have full clarification as to what that might look like but, one way or other, ongoing support will need to be considered from Day One,” he tells WA Works. “And the fact that we have five FREMMs (frigates) already sailing and accepted by the Italian Navy (means) we have some very good usage and reliability data coming out of those vessels.” Based in Trieste, Fincantieri operates 20 shipyards across four continents, with 20,000


DEFENCE

employees and 80,000 sub-contractors. In the US, Purcell says that Fincantieri has grown from one acquisition to running three local shipyards, including commercial as well as naval operations. “We think this is very important, because one of the key objectives the Australian Government has set through this program is the notion of continuous shipbuilding,” Purcell says.

provide “enduring capability” for shipbuilding in Australia. “We think that the model we’ve used in the US has been very successful,” Purcell says. Holland’s Damen, meanwhile, is vying with two German companies, Fassmer and Lurssen, to build the OPVs. Civmec is aligned with Damen and Lurssen on their respective bids, while Austal is working with Fassmer. In a southern hemisphere

WA IS SLATED TO BE THE SECOND HUB IN AUSTRALIA’S MASSIVE NAVAL RENEWAL PROJECT “They don’t want SEA 5000 (frigates) to be a one-shot program and recreate the boom and bust of shipbuilding.” Rather, the Government has called for SEA 5000 to

summer blitz, three of the European shipbuilding giants visited WA in the space of three weeks, starting with Fincantieri in Fremantle. Damen whipped up supplier support in Perth’s Hyatt

hotel, while Navantia chose Bentley’s Technology Park to show its wares. It amounted to a virtual invasion, with WA Works covering it from the supply lines. Henderson-based Civmec stormed into contention to build the OPVs after announcing it had teamed with ASC to jointly bid for the build. ASC and Civmec’s Forgacs Marine and Defence subsidiary were chosen by both Damen and Lurssen to work with them on their respective bids. Speaking in front of more than 300 suppliers at a CCI briefing, Damen said it intended to lodge its tender with the Australian Government on the basis of using Forgacs and ASC to build the OPVs. With the Federal Government requiring the first two OPVs to be built in Adelaide before the program switches to Henderson, Todd believes that having both Forgacs and ASC on side will minimise the risk of shifting between states. “We are comfortable that

we have a commercial agreement with those organisations to make that transition as seamless as we can and reduce risks for the Commonwealth,” he says. “We are also very comfortable about using the Henderson precinct.” Civmec is building a $80 million Forgacs-badged workshop alongside an existing heavy industry factory as part of its push into the budding defence sector. Forgacs managing director Mike Deeks says the factory will be big enough to house a frigate and “plenty big enough” to build the OPVs. “Our intention is that, with production starting in Adelaide in 2018 and transferring to the West in 2020, in the intervening period we will build our new facility.” Civmec sees the two main shipbuilding hubs of Adelaide and Henderson becoming closely linked in a relationship which will offer considerable advantages to a national shipbuilding industry. > p24 AUTUMN 2017 WA WORKS 23


DEFENCE > Wolter ten Bokkel Huinink, project manager of Damen, says his responsibility in the OPV project team is maximising local content. “We have a team of about 30 working on the tender documentation and we realise that this industry capability plan is the most important part — we cannot do this without you.” Another Euro shipbuilder, Spanish giant Navantia, plans to open a WA office next year as part of a major expansion in Australia. Francisco Baron, Navantia’s Australian Managing Director, says the company aims to boost its national workforce by 50 percent over the course of 2017. “Next year we expect to be 150, which I think is a conservative figure,” he says. The Spanish company — currently working with the AWD Alliance on the construction of three Air Warfare Destroyers for the Royal Australian Navy — also plans to open its first WA office next year. It currently operates out of Adelaide, Sydney,

Williamstown and Canberra. “We are here to stay,” he says. “And we are in a recruiting mode — we are looking for bright engineers and managers, so you are welcome to join us.” Warren King, Navantia board member and special adviser, says Navantia is well-placed to build the nine frigates and fulfil the Government’s objective of a sustainable national shipbuilding effort. “If we build on the AWD and the Navantia approach, the continuous shipbuilding program has already commenced — it commenced in 2007,” he says. “Given our presence here, we are ideally placed to build on the supply chain that is already established.” Rival SEA 5000 bidders Navantia and BAE Systems are both listing Australian industry opportunities on the ICN Gateway platform. A few months before the European invasion, CCI Chief Executive Deidre Willmott was flying the flag for WA business on a fact-finding mission in France,

Germany and the Netherlands. Willmott accompanied the former WA Commerce Minister Michael Mischin and other State government officials on the visit, following an invitation from French submarine maker DCNS for Mischin to visit the company’s naval dockyard at Cherbourg in the north of France. Last year DCNS was selected as the Federal Government’s design partner in the $50 billion program to build 12 new Shortfin Barracuda submarines to replace the current Collins class submarines. “While the new submarines will be built in South Australia, WA is planning to play a key role in the submarine program including the manufacture and supply of components,” Willmott says. “With more than half the

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DEFENCE

EMILY’S $50B FRENCH CONNECTION When Emily Minson saw an opportunity in Australia’s burgeoning defence industry, she pursued it with gusto BY TONY BARRASS

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mily Minson has 50 billion reasons to feel relaxed about her latest career move. Now heading up Lunik, her Melbourne-based strategic communications and public affairs consultancy, Minson’s story confirms the age-old adage that if you back yourself and go for it, the sky’s the limit. After finishing her politics, commerce and French studies at Adelaide University in 2005, she began working in Alexander Downer’s office as a media adviser early in 2006, but when Australia’s longest serving Foreign Minister quit politics two years later, she joined him, former South Australian senator Nick Bolkus and Ian Smith in a lobbying and consultancy firm, Bespoke Approach. Often her role was to give advice about how to make sure a company’s business priorities did not compromise the organisation’s reputation with government or public stakeholders. After five years she left Bespoke and wanting a break, spent six months on a working holiday in France before returning home. Her rejuvenated French language skills were to come in handy later. Seeking more than Adelaide could offer and wanting to gain experience in a larger organisation, she joined global strategic communications and government relations firm Kreab in their Melbourne office. When the $50 billion Future Submarine Program surfaced —

the largest government contract in Australian history — started to gain prominence, Minson saw an opportunity and pursued it with gusto. “I put my hand up and told work I was really interested in defence, I thought defence procurement was underserved by government relations professionals and that the submarine contract was only going to get bigger and bigger. It was also an unusual space for a woman, which made it all the more interesting to pursue,” she told WA Works. In late 2014, Minson travelled to WA for the Submarine Institute of Australia conference. There she met several key contacts with French naval giant DCNS, one of the three companies that ended up being shortlisted for the Future Submarine Program’s Competitive Evaluation Process. They got on well and her language skills allowed her build an informal but strong relationship with some of the visiting French executives. “All the big players were in town for this conference and the general consensus was that the big upcoming contract would be awarded to the Japanese without any real competitive process. At that stage the French hadn’t even been invited to participate,” she says. Other than a small office in Canberra, the French had “no profile” but that wasn’t necessarily a bad thing as DCNS had the “benefit of being the underdog”. Minson was convinced that if the campaign was run locally — and not out of Paris — and they aggressively

Minson and Lunik colleague Zack McLennan communicated the capabilities of DCNS to those who made and influenced the decisions, then they would have as good a chance as anyone. An intimate understanding of the local environment was pivotal. The first step was to discover how Australians viewed the French generally, DCNS in particular and their offerings to the Australian Navy. Market research at that initial stage was critical. That information helped the DCNS and the French Government understand the political landscape and gave the syndicate a pragmatic view of the size of the task ahead. Then followed countless meetings with state and federal MPs, industry reps, potential suppliers and department boffins as Minson, her colleague Zack McLennan and the DCNS team deconstructed the complexities of defence procurement and broke it down into easilyunderstood, bite-size messages and processes that could be easily digested by all stakeholders, especially the public. Her internal rules were simple: „  Establish an internal campaign team with the authority to develop and implement decisions — not only does this make the team much more nimble in responding to developments but also minimises the risk of leaks; „  Respect the government and departments at all times — don’t do anything that might unnecessarily distract or antagonise the minister or the department;

 Manage expectations — be realistic to the government and the public about what is and is not possible; „  Develop clear and simple messages; „  Limit the number of people delivering the key messages to your stakeholders. Emily remembers well that April day last year when Prime Minister Malcolm Turnbull stunned the defence community and announced that DCNS had pipped the Japanese and Germans to win the enormous contract. She and her colleague McLennan joined the DCNS team headed by CEO Sean Costello for the company briefing and had to hold their tongues for hours until Paris awoke and officially commented on the shock win. “I remember thinking how surreal it all was,” she recalls. “We were holed up in a board room in Canberra and there on TV was Malcolm Turnbull announcing we had won, so I got out my phone and snapped a photo of it just to make sure it wasn’t a dream.” Emily has since parted company with KREAB but is thankful for the opportunity she was given. With McLennan as a partner, Lunik is now focusing on the numerous opportunities that are emerging in the defence sector. And she’s got a good springboard to kick-start her business. DCNS, knowing a winner when they see one, and with the submarine program still in its infancy, have engaged Lunik to make sure their voice is heard along the corridors of Canberra. ¢ „

AUTUMN 2017 WA WORKS 25


DEFENCE

OUT OF THE SHADOWS Patience the key to winning even a small part of the contract bounty, says defence veteran L3 Oceania has won the right to supply new generation night goggles. BY STEPHEN BELL WA Works Editor

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remantle-based L3 Oceania is a veteran in Australia’s defence industry, having helped pioneer noise assessment technology for the Collins submarine in the late 1990s when the company was still known as Nautronix. Nowadays the home-grown supplier has a new name and a growing military order book as it prospers under the ownership of big US defence conglomerate L3 Technologies. In October, for instance, L3 Oceania won a $307M contract to supply and support night fighting equipment — including new generation night goggles — to soldiers as part of the LAND 53 program.

like a particularly juicy prize to contractors feeling the pain of the post-boom resources economy. But he warns them to be ready for the long haul if they are to win even a small part of the bounty. “Defence is a particular culture and you have to be prepared to be part of it,” he says. “Secondly, you need to understand the true meaning behind the opportunities. “While defence is a very open procurement system, you can often be led to believe — because it’s open — that it is also easily achievable.” Not so, Elson says. “There is a lot of strategy, history and information needed to achieve results and, being an open system, it is very competitive at the same time.” Elson’s first rule is; “be patient”. “But also be very aware of

DEFENCE IS A PARTICULAR CULTURE AND YOU HAVE TO BE PREPARED TO BE PART OF IT And with the Federal Government planning a $195 billion rebuild of Australia’s military capabilities over the next decade, L3 is in prime position to win more work on major programs including the Offshore Patrol Vessels (OPVs), Future Frigates and Future Submarines. For Scott Elson, an L3 Oceania veteran and Director of Sales and Marketing, it seems like a good time to give something back in the form of sage advice to industry newcomers. He says $195 billion might look 26 WA WORKS AUTUMN 2017

the processes that you need to get in, win and deliver defence business.” One risk is the complexity of finding a way in to one of three main entry points: as a prime respondent to tenders, a provider of products or services to a defence “prime”, or supplying extra value as a contractor. If you do crack the entry code, there are also plenty more pitfalls to be aware of, Elson says, including the fact that defence represents a moving target: the constant rotation of

Department of Defence personnel means the average posting lasts only two years. And, contrary to accepted belief, the broader defence industry is not populated by a majority of ex-services personnel. In fact, it is a homogeneous community of “mostly middle-aged AngloAustralian men”, Elson says. And many of those men are on the other side of the continent. “We do quite a bit of business direct with the Defence and obviously that is Canberracentric,” he says. “And the other prime contractors we deal with are companies like Raytheon, BAE Systems, ASC, Thales and a few others who are mostly East Coast-based.” L3 Oceania’s current focus is Australia’s $3-4 billion OPV program. Elson says L3’s broader organisation in Australia has several products and services, and already boasts relationships with the three short-listed OPV designers — Damen of the Netherlands, and Fassmer and Luerssen of Germany — courtesy of prior projects. L3 Oceania will be pitching for the supply of navigation and communication equipment on the OPVs, which are scheduled to begin construction in 2018. The company has a number of its systems on the Australian navy fleet and is looking to augment or increase them to be part of the “common system” for the OPVs, he says. Defence Industry Minister Christopher Pyne has instructed OPV tender respondents to maximise their local industry participation by developing Australian Industry

Capability Plans. Elson applauds the Government’s intention, but warns there is a caveat: “They don’t want it to come with an additional cost. That is often the case — how you fit that particular requirement and how you can then add value without adding cost.” He also warns it is hard to define what Australian content is, as it often means “different things to different people”. Pitching for new work is really like “putting a business case together on why your system, being the Australian version, would be better than the customer already has”. L3 Oceania provides underwater sonars and communication devices alongside above-water systems found on the bridges of ships. It is hopeful of also being part of Australia’s two bigger marine defence projects, nine new frigate warships worth $35 billion and 12 future submarines worth about $50 billion. After a decade of doing the hard yards, the company now secures more than 90 per cent of its revenue from defence, with the remainder mostly oil and gas contracts. Elson is philosophical about the fact that L3 Oceania decided to dive deeply into defence just as the resources boom took off. It forced him to watch other WA contractors dine out during those hectic times. Nowadays many of those competitors are playing catch-up in defence, yet he encourages them to “buckle up and take the ride”, keeping in mind that defence is not a quick fix for financial pressures. ¢


DEFENCE

Caption

ASC personnel carry out maintenance on HMAS Sheean.

ASC INVESTING IN THE WEST A major upgrade highlights WA’s increasing role in Collins Class fleet

BY AMY PHILLIPS

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SC is investing in its purpose-built facility at Henderson, with its September 2016 upgrade due to be completed this June. The objective of the upgrade is to increase Collins Class submarine availability as part of a revised, hi-tempo usage upkeep cycle which results in submarines spending a decade in operational service, followed by two years in deep maintenance — known as ‘10+2’. ASC’s submarine business has long been Australia’s home of submarine platform expertise and experience, with a track record of delivering availability and reliability to the Royal Australian Navy (RAN) from its sites in Perth and Adelaide. Fully-owned by the Federal Government, ASC is relying more and more on the ASC West facility, which employs more than 320 personnel in maintenance of operational submarines.

For the first time ASC West now supports five submarines home-ported at Fleet Base West as part of the requirement for four submarines to be available to the Fleet Commander of the RAN at any given time. “The upgrades being implemented at ASC’s Henderson facility will allow ASC to maintain the Collins Class Submarines to the international benchmarks, identified by the Coles Review, and further increase the availability and capability of submarines for the RAN,” says Craig Vandepeer, General Manager CCSM West. Stage 1 of the upgrade was completed on schedule in February, including a major revamp of the maintenance hall and the addition of a four-level support tower that enables staff to access the hatches of a docked submarine, improving efficiency. A new canteen to support the increased number of employees at the facility was also completed. “Over the past year we have

seen an additional 40 people employed at Henderson to support increasing demand which will only continue to grow. This is why significant research into how best to organise and support our workforce here in WA was integrated into upgrade plans, such as the build of a new canteen and offices,” says Vandepeer. Stage 2 will include a fabrication workshop and the installation of an automatic fire-fighting system, due for completion by mid-May. The final facility upgrades, including construction of a sky-bridge between the maintenance hall and the hard stand, and the completion of new offices, are scheduled for completion this June. The sky-bridge will allow access between level four, the new goods lift and hard-stand, and greatly improve access from the hall to any docked submarine. In mid-February HMAS Sheean was moved into the upgraded

maintenance hall to begin a 12-month mid-cycle docking, the first time such an extensive maintenance and upgrade package will be completed at Henderson. “It is an exciting and challenging time for all of us at ASC’s Henderson facility, we are taking on larger capability upgrades than ever before, which the modernised facility directly supports us to achieve,” he says. In December, five submarines were in the water at the same time alongside at Diamantina Pier at Fleet Base West — a great achievement for the Australian Submarine Enterprise partners and the RAN. “It was a proud moment for all of us at ASC to see the five submarines in the water at the same time,” he says. “At ASC we are proud to be delivering Australia’s strategic naval deterrent as a partner in the Australian Submarine Enterprise, keeping submarines at sea.” ¢ AUTUMN 2017 WA WORKS 27


DEFENCE

GETTING SHIP SHAPE Integrate opportunities or risk losing out to well-oiled overseas supply chains, says defence expert

BY ROBYN MOLLOY

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A businesses wanting a bite of the defence cherry need to speak the language of defence, woo the main players, invest in getting their business defence ready and prove they’ll be around for at least 20 years. And they shouldn’t just focus on ship building, but concentrate on where the long-term dollars come from. That was the advice of KPMG’s Lead Partner Defence Industry Mike Kalms, pictured below, at the recent sell-out CCI Doing Business with Defence conference. Kalms says he has confidence in Defence Industry Minister Christopher Pyne’s ability to “shuffle the money out” and there was no reason not to trust the Federal Government’s $195 billion defence acquisition project, of which $89 billion would be spent in naval

capability in the next decade. “Having been in this game for a while, the settings have never been better. Normally either government, the Department of Defence or industry are out of sync in terms of what they are trying to achieve. I feel like we’ve got five or six years of alignment and actually if you were staring at this ecosystem as an outsider, industry is at the biggest risk of failing,” he says. Kalms, who has worked in the field for more than 20 years and was on the expert panel that supported the development of the 2016 Defence White Paper, does not believe WA businesses are ready to even have a conversation with established prime contractors. “Your ability to have a sensibly conversation with them, it simply isn’t a case of turning up and describing in your language — the oil and gas language — what you do and why you can help,” he says. He says there is a series of

YOU NEED TO BE ABSOLUTELY FOCUSED AROUND WHEN YOU ARE GOING TO SPEND YOUR MONEY

28 WA WORKS AUTUMN 2017

steps around strategy, balance sheets, the way companies communicate readiness in the defence language and how they demonstrate longevity that has to be taken first. “When we did the Defence White Paper review there were 47 programs designed to help companies be successful. There’s a myriad in each state. You’ll be overwhelmed by the support that’s offered,” he says. Kalms says primes are disappointed when potential businesses fail to show they were capable. “Their frustration is you are never ready for that conversation because you haven’t used the resources to get the strategy and speak the language of defence to describe how you are going to be there at the end of this program, which is often in 20 years. “When you become capable for one of these guys — the BAE Systems — you are immediately attractive to these other players. They all set very high bars. I think it is an investment that pays off in multiple ways. And it is an investment — it is hard work. “You need to use the network of tools around you so that it does land. They are who they are, they have spent 20 to 30 years in uniform, and they speak a certain language and talk about things in a certain way.”

Kalms says it was important to diversify into other segments such as oil and gas, mining, telecommunications, other government areas or into global supply chains. “The guys that really struggle in this space are the SMEs that are 98 per cent focused on defence. A bunch of them, not so much here but in other states, become so dependent on defence spending that it becomes painful for the department and the primes to deal with them.” A good option for new entrants is to set up a specialist defence division to ensure their existing operations weren’t compromised by the shift in focus, he says. “That global supply chain story, where you hitch a ride with, say, Lockheed Martin, that to me is most interesting if you are starting to think about your strategy,” he says. “JSF (Joint Strike Fighter) is a tremendous indicator of how this is going to play out. “JSF was a multi-billion dollar global program, but in Australia it’s a $1.5 billion global supply chain opportunity for those big 17 — the Marands, the Lovitts, the Levetts, the Quicksteps — that have been able to bootstrap themselves from being rail fabricators to global-integrated suppliers of high technology parts that they can market around the world. “There is going to be another cadre of 40 companies that will go on that journey on the back of naval ship building. You’re going to be sucked up into Lurssen, Damen, BAE Systems or Navantia and you’re going to be taken places if you can get to the start line.” He says while the West Australian business is largely a navy ship building story, there are opportunities in the land, aerospace and cyber that will play out in WA. “But that doesn’t mean you haven’t got issues around time on your investment — you


DEFENCE absolutely do. You need to be absolutely focused around when you are going to spend your money, when you are going to invest in the systems — the IT, the infrastructure, the people — and ensuring that is just in time for the opportunities that land, because you can be too early or too late in this game. “There are a myriad examples of when people went too early or too late. “Get a laser like focus on where you’re going to play and then build yourself to the point where you can have that initial conversation, probably with a prime.” “One of the things I think is a distraction is the South Australia versus Western Australia debate. The workforce we have got today, a small 25,000 defence industry employees across 3000 companies simply cannot deliver the investment spend that is on offer here. There is more than the market can consume.” Kalms says the secret to growth in the defence sector for WA is collaboration.

“Collaboration is the route to success in defence, not just working with a prime, but exercising the collaboration muscle routinely with people around the table in your geography, in your sector, academia and internationally. That’s the secret source to me. “What Israel does better than anyone is it gets government, academia and industry on the same page and fails fast and moves on. “You guys need to be the best at that. WA needs to be the place where that absolutely happens most often and most successfully.” He recommends looking at opportunities around frigates and OPVs because they are going to move quicker than submarines. Kalms says it doesn’t matter whether the government sticks to the schedule “because the sustainment story is where 70 per cent of the action is and it’s happening under your feet”. “For businesses that have a sustainment story that sits on both coasts, that’s an opportunity you need to be part of.” ¢

The Joint Strike fighter is a good indicator of how global supply chains work.

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DEFENCE

BAE HAS RUNS ON THE BOARD FOR FUTURE FRIGATES We focus on stronger, more strategic ties between industry investment and Defence capability needs BY SHARON WILSON

30 WA WORKS AUTUMN 2017

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s Australia’s largest defence company, BAE Systems has invested in local industry for more than 60 years, and a defence industry leader, we are passionate about the role Australian industry will play in delivering outcomes from the 2016 Defence White Paper. Building on the DWP, the Defence Industry Policy Statement (DIPS), also released in 2016, provides the foundation to take the partnerships between Defence and industry to new levels of co-operation, with a focus on stronger, more strategic and closer alignment between industry investment and Defence capability needs. The SEA 5000 Future Frigate program provides a timely platform to showcase precisely how BAE Systems can translate the DIPS into meaningful action. No other company in Australia can draw upon the experience and investment that we’ve made in forging successful partnerships between defence, industry and academia, across the breadth of the Defence landscape. Although we wait to see what industrial requirements are mandated in the Request for Tender, our Australian Industry Capability strategy will be a staged approach to growing the level of industry engagement across the project phases. It is prioritised around achieving program objectives

without compromising the capability, cost and schedule requirements of SEA 5000. BAE Systems has consistently invested in our Australian supplier engagement approach and remains uniquely positioned to deliver on AIC. We have currently over 1600 approved Australian suppliers resident in our Approved Supplier List, decades of local investment in the areas of Australian supplier engagement and development, and over five years of involvement in the Commonwealth’s Global Supply-Chain program.

positioned to professionally and transparently deliver against the AIC commitments that are likely to be a key priority of the SEA 5000 program. Key to our success is our ability to draw upon the thought leadership and best practice capabilities that we have developed in Australian supplier engagement, enabled through the ongoing efforts of our industry-leading Commercial, Procurement and Global Supply-Chain teams, as well as our partnerships with CDIC, industry associations and the Industry Capability Network.

WE HAVE CURRENTLY OVER 1600 APPROVED AUSTRALIAN SUPPLIERS Consequently, BAE Systems regards its approach to the execution of AIC & GSC commitments as industry “best-practice”. This is underpinned by the proprietary knowledge, systems, processes and infrastructure we have built to successfully identify, select and manage the execution of AIC & GSC commitments. This is a “whole-of-life” approach to defence programs in a standard, auditable and repeatable way. For SEA 5000, this means that the Commonwealth can be assured that no other company in Australia is better

Leveraging these capabilities, we have been engaging with Australian industry for the past three years to compete on packages for the UK Type 26 program. Our engagement included an event last September in Canberra at the National War Memorial, attended by more than 120 company representatives. This highly-successful occasion resulted in partnerships being established between our UK and Australian supply chains well in advance of the SEA 5000 RFT. Sharon Wilson is Head of Industrial Strategy, BAE Systems Australia ¢


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ELECTRONIC SYSTEMS Leading the Way

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Integrated Bridge Systems Communication Systems Maritime Ranges – Test and Evaluation Hydrographic and Spatial Solutions Situational Awareness Platform System Automation Specialised Marine Systems

L3T.com/Oceania AUTUMN 2017 WA WORKS 31


RESOURCES

PORT POWER Already the world’s biggest bulk export terminal, Port Hedland is embarking on a $230 million works program that will make it even busier

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RESOURCES

BY STEPHEN BELL WA Works Editor

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ho said the boom was over? The WA mining industry has just suffered one of its worst downturns, but you wouldn’t know it by counting the number of iron ore carriers coming and going at Port Hedland. On some days up to 30 massive vessels — some as long as 327m, roughly twice the length of the MCG — can be seen queuing 12km off the Pilbara coast, waiting for a slot to enter the harbour and load their precious cargoes destined for Asia’s steel mills. The ore arrives 24 hours-aday, trained and trucked in from mines dotted throughout WA’s vast interior. So the construction binge may be over but, as far as Port Hedland goes, the production boom remains in full swing. Trade volumes at the port — the key export route for BHP Billiton, Fortescue Metals Group

and Roy Hill — have increased by more than four-fold over the last 15 years. At its peak, China’s once-ina-century urbanisation program needed massive tonnages of iron ore for its steel mills and needed it fast. And, even with China’s moderating economic growth in recent times, the pace hasn’t slowed. This year the port is expected to post a new record for throughput (total imports and exports) of more than 500 million tonnes. Just a decade ago, it was Australia’s first port to top 100Mt in a year. The vast majority of the trade, about 98 per cent, is iron ore. But the ups and downs of the price is not something that Roger Johnston, Chief Executive of the Pilbara Ports Authority (PPA), needs to follow day-by-day. “Whether the iron ore price is $10 a tonne and the ship is full or $100 a tonne and the ship is full — it makes no difference to us,” Johnston says. “What does make a difference is the amount of traffic, and that has been

increasing rapidly over the last few years. “Back in the 2011 financial year, Port Hedland did 200Mt throughput for the year. There has been a big increase in vessel movements, so therefore your revenue jumps.”

driver’s seat of what is probably Australia’s most economically significant collection of export infrastructure. Trade through PPA represents about 25 per cent of the world’s iron ore market, 10 per cent of the LNG export market and 4 per cent of Australia’s GDP.

ON SOME DAYS UP TO 30 MASSIVE VESSELS CAN BE SEEN QUEUING 12KM OFF THE PILBARA COAST The port’s revenue is bundled into the financial returns of the PPA, the State Government entity formed three years ago by merging the Port Hedland and Dampier authorities. Johnston, who’d started as CEO of the Port Hedland Port Authority in 2012, assumed the CEO role at the new organisation on its inception on 1 July, 2014. It is a job that puts him in the

And, in the near future, PPA will be making its mark in agriculture, with plans to resume live cattle exports this year at Port Hedland (see breakout story). In FY 2016, PPA — its remit stretches from the Port of Ashburton near Onslow in the south, to Port Hedland in the north — delivered a profit before income tax of > p34

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RESOURCES

> $171.1m and a dividend return to WA of $100.5m. Nevertheless, PPA has been conscious of the resources downturn and its impact on some of its users. “We haven’t changed our shipping fees and charges for three years,” he says, despite fees in PPA’s ports typically being low by comparison with other Australian and international ports.

any fees and charges up.” But with trade volumes now much higher than ever envisaged by the early planners, some of the port’s ageing infrastructure is starting to show its age. Iron ore shipments began at Port Hedland on 27 May 1966 when the Harvey S. Mudd sailed to Japan with 24,900 tonnes of ore. Five years later, following the discovery of BHP’s giant Whaleback deposit, a control tower was installed to

THE VOLUME WE SHIP IS SO BIG WE CAN AFFORD ON A PER UNIT BASIS FOR THE FEES AND CHARGES TO BE RELATIVELY LOW “The volume we ship is so big, we can afford on a per unit basis for the fees and charges to be relatively low. We have been managing revenue increases and controlling costs — that has enabled us to deliver our margins without putting 34 WA WORKS AUTUMN 2017

manage the increased shipping movements. That antiquated tower is still operating, but suffering from concrete “cancer” that has to be constantly managed. Likewise, many of the port’s navigational channel markers, guiding the

ships in and out, were also installed more than four decades ago. When Johnston arrived in 2012, Port Hedland’s throughput was about half of what it is now. “There were already proposals on the table saying, ‘Guys, with what the projections are, we need to build infrastructure.” After a detailed consultation process with the State Government and other stakeholders, it was agreed that infrastructure improvements would be funded by a Port Improvement Rate — a relatively small levy charged on vessels entering and leaving the harbour. The levy is funding three key initiatives; building a new Integrated Marine Operations Centre, replacing channel markers, and dredging parts of Port Hedland’s channel to minimise shipping risks. The collective cost of the three ventures is $231 million spread over three years. PPA’s Channel Risk Optimisation Project, or CROP, is the most expensive item at $121 million. It is seen as critical

to improving port capacity through targeted dredging of the tidally-constrained 42km-long shipping channel. The work will deliver several benefits including an improved safety zone and emergency passing lane. “It’s a risk mitigation project that allows ship slowdowns and engine failures to be managed without disrupting the follow-up shipping,” Johnston says. “And because we have more comfort in things like the safety zone and being able to move a ship to one side, it means we’d be able to shorten the departure windows and therefore get more ships on the channel. By default it allows us to increase shipping throughput.” PPA expects to finalise planning and seek environmental approvals for CROP in coming months, and to seek expressions of interest this year for the dredging work. No official timeline has been released, though the bulk of the project’s budget is allocated for spending in FY 2019. Back on dry land, a new eightstorey high control tower at the


RESOURCES

CATTLE EXPORTS BACK IN BUSINESS

port will be the most visible symbol of change. The tower is the centrepiece of the $71m Integrated Marine Operations Centre project, slated to come on line in 2018. WA-based Pindan won the $39.5m contract to design and build the tower last July. The contractor was due to start major construction this April. “We are a regionally-based organisation and like to make sure that the local people get a look-in at all of the work when we tender,” Johnston says. “All of that would have been assessed when we looked at Pindan, a Perth-based company who have local premises up here. And to a large extent they will be using local suppliers.” IMOC will become the central hub for controlling all marine operations, including vessel movements in the inner harbour through the channel and offshore anchorage. It will house a Vessel Traffic Services (VTS) system to help manage movement of about 6000 vessels through the port each year. In February, Australian

Maritime Systems won the contract to design and install the VTS system, which integrates radar, radio, CCTV and scheduling information to oversee the increasing number of vessels through the port. The Channel Marker Replacement Program, meanwhile, aims to exchange 35 offshore and three land-based structures. “Some of these navigational aids go back to the early 1970s,” Johnston says. “Whilst we’ve replaced the tops we still need to replace the poles, because we don’t know what’s below the surface. You don’t want to have a massive cyclone go through and find that it has knocked over a whole bunch of navigation aids.” Iron ore prices may wax and wane but, judging by the scale and nature of the three PIR projects, PPA is expecting a bright future for trade flows at Port Hedland for decades to come. “All three of those projects are critical to setting the port up for the next 25 years in terms of its shipping,” Johnston says. ¢

Port Hedland is set to resume live cattle exports following a three year hiatus, providing the port with a potentially valuable sideline to its core iron ore shipping operations. And, with the PPA investing in purpose-built double-decker loading ramps, the new-look business should be able to compete more effectively with other northern livestock ports such as Darwin and Broome, says PPA CEO Roger Johnston. “It does enhance our capacity to put livestock ships on the public berths and will allow much faster loading of cattle,” he says. “The ship is alongside for a lot shorter time, which means that they save money on berthing charges.” When Johnston first came to Port Hedland, the cattle industry was in turmoil following the Federal Labor Government’s shortlived blanket ban on live cattle exports to Indonesia. “There was an export ship that was due to be loaded off Port Hedland and cattle in the holding yards,” recalls Johnston. “Obviously that ship wasn’t allowed in and there was a drama trying to get the cattle back to the stations. They had to be fed and then trucked, and it cost everybody an arm and a leg.” In the years following, Port Hedland went through a major iron ore construction boom to accommodate expansions at BHP Billiton and Fortescue Metals Group and, later, Roy Hill’s start-up. “We had considerable congestion on our berths but, as those projects fell away, it occurred to us that there are a lot of cattle stations in the Pilbara trucking through Broome, right down to Fremantle. “So a year or two back I started speaking to some of the station owners who said they’d love to be able to ship through Port Hedland.” About a year ago PPA started the Livestock Export Forum and invited station owners and shippers to discuss the viability of restarting exports and what investment would be required, with some of the holding yards having fallen into disrepair. “We started a process of engaging with the market and are getting to the end stages now, where we are building infrastructure, and hopefully that will allow us to offer good, competitive pricing for these people to ship cattle.” The modular loading ramps were scheduled to be completed in April, in time to cater for the Pilbara muster season, which generally begins in about late March onwards. “It is an entire supply chain and we are just one component of it, making sure that we can provision for this,” Johnston says. “There has obviously been sufficient interest to put our money where our mouth is and say, ‘We are open for business’. AUTUMN 2017 WA WORKS 35


RESOURCES

NOVA LIGHTS UP WA NICKEL

Brighter prospects for nickel are buoying WA mines, including the new Nova project near Norseman BY STEPHEN BELL WA Works Editor

36 WA WORKS AUTUMN 2017

T

here are signs that the State’s 50-year-old nickel mining industry is on the road to recovery after a three-year downturn. The renewed optimism has been driven by better demand from China’s steel industry and a net reduction in global supplies due to mine closures — some of them in WA. Several investment banks, including UBS, are tipping a deficit in supply this year as China’s production of stainless steel — the major consumer of nickel — rebounds strongly. UBS is forecasting spot nickel prices to average US$6.25 in 2017, implying upside from prices of about US$5.00/lb as WA Works went to press. The better price outlook, combined with years of costcutting, has also driven better corporate results. BHP Billiton’s Nickel West division, the State’s biggest producer and also a major processor of third-party nickel

concentrates, returned to the black in the first half of FY 2017. It reported underlying earnings of $US37 million — a startling $US146 million turnaround on the $US109 million loss from 1H 2016. Perth-based Western Areas also reported a return to profits in the first half, posting a 58 per cent increase in underlying earnings. The sunnier market conditions are also a boon for diversified miner Independence Group, which is in the midst of ramping up its new $443 million Nova mine to full production. Discovered in 2012, Nova produced its first nickel concentrates in October and is expected to achieve its rated capacity — producing nickel, copper and cobalt — later this year. “It’s very rare that you see a project discovered, drilled out, financed and permitted in four-and-a-quarter years,” says Independence managing director and CEO Peter Bradford.

When Nova is in full production later this year it should be the “new lowest cost nickel producer in Australia”, Bradford told WA Works. The mine is forecast to produce the metal more cheaply than incumbent Western Areas, which has set the standard for low-cost WA nickel mining in the past decade. Despite the tentative recovery in early 2017, nickel prices are “not of a level that makes the average Australian nickel project attractive, and it is really only those outstanding low-cost projects that are still running”, Bradford says. Though not of the same scale as the huge iron ore mines that came online during the boom, Nova nevertheless provides a lifeline to many service companies and customers hanging off its success. One of those customers is Nickel West, which received the first ore concentrates from Nova in November at Kambalda under a three-year deal. BHP has agreed


RESOURCES to buy half of Nova’s total nickel production, which is expected to average 26,000 tonnes a year over the mine’s 10-year life. The other half is shipped out of Esperance to Glencore, which also has a three-year agreement.

strengthen site management and appoint additional workers. The contractor also added a fifth Jumbo drilling rig at the mine. Nova’s location — the deposit was discovered by previous owner Sirius Resources in

UBS IS FORECASTING SPOT NICKEL PRICES TO AVERAGE US$6.25 IN 2017 The mine has provided work for multiple service providers, including GR Engineering, R.J. Vincent and Barminco, all riding off the success of the mine (See breakout). Barminco provides Nova’s underground mining and development via a contract that runs until May 2018. Independence says development rates at Nova are improving after lower-thanexpected rates in a three-month period to the end of January deferred access to higher grade, larger stopes planned to be mined from 4Q17. It says the rates improved after actions undertaken by Barminco to

uninhabited country in the Fraser Range, approximately 120km east of Norseman — means that the majority of the mine’s 200odd workers are FIFO from Perth. But Nova has achieved traction in employing Indigenous people, who account for about eight per cent of the mine’s workforce, Bradford says. Independence has also awarded contracts to two Indigenous firms. CV Lomag, a joint venture between the Ngadju business Lomag and Cross Verwijmeren, has a three-year earthworks contract at Nova. Ngadju start-up company Bromus, meanwhile, provides industrial cleaning services on site to

catering contractor Cater Care. On a more technical level, Bentley-based HiSeis, a consultant that uses technology spun out of Curtin University, has carried out a seismic survey line across the whole of the Nova mining lease. “It is aimed at giving us an understanding of what the geology is doing down to a depth of about 2km,” Bradford says. “The idea is to develop as much understanding as possible of what the geology is doing, before we transition to the higher expense of drilling. If we find another Nova, that adds $1-2 billion of value to Independence.” IGO’s aspires to increase its overall exploration budget to about $50 million in FY 2018, up from $30-35M this year, with a large part of the increase due to activity on the company’s various Fraser Range prospects outside the mining lease. Last year Independence increased its exploration “footprint” on the Fraser Range — a huge region north of Albany that was originally identified as promising for minerals by veteran prospector Mark Creasy — by nearly 3000 square kilometres.

The company recently hired three geoscientists to guide the exploration effort and field workers will likely be recruited later this year as work programs begin. Bradford is also excited about new, growing markets for nickel and cobalt. The two metals are increasingly finding their way into heavy duty lithium-ion batteries used in many electric vehicles. Cobalt, in particular, has attracted a good deal of interest from investors this year after the price nearly doubled in 2016. Independence is expecting to sell about 900 tonnes of cobalt each year, with half of that going to BHP. “Cobalt is getting a lot of traction,” he says. “We get some investors who say we should rename Nova a cobalt mine with nickel and copper credits,” he jokes. In reality cobalt provides just 10 per cent of the mine’s total revenue. Nova’s ultimate performance — and that of its loyal network of service companies — rests on how brightly nickel can shine in the years ahead. ¢

NOVA’S SUPPLY CHAIN The development of Independence Group’s Nova nickel mine started on Australia Day in 2015. Its remote location east of Norseman called for plenty of help from the WA supply chain. EPC contractor GR Engineering had major teams on site during the construction of all surface infrastructure and plant, as did civil engineer RJ Vincent. And there are plenty of service companies still contributing to what GR Engineering described as “one of the more significant Australian base metal resource developments of recent times”. The major contracts on site at Nova as WA Works goes to press are: „ Barminco – 154 workers; „  RUC – 10 (Raise drilling sub-contractor to Barminco); „ Swick – 34; „ Zenith Pacific – 5 (Power Gen); „ Catercare – 19; „ Bromus – 5 (sub-contractor to Catercare); „ Bureau Veritas – 8 (laboratory); „  CV Lomag – 11 (indigenous earth moving contractor); „ Watpac – 6 (short-term contract); „ North OZ – 3 (project works).

AUTUMN 2017 WA WORKS 37


RESOURCES

JUNIORS JUMP ON THE ORE WAGON More stability in the iron ore market has spurred a rush of new mine plans, from the very small to the very large

BY STEPHEN BELL WA Works Editor

T

he Pilbara majors may have put their respective cues in the rack in terms of big iron ore expansions, but that hasn’t stopped their smaller competitors from chalking up development plans. A rebound in iron ore prices since November has helped the cause of the juniors, including Atlas Iron, the former multi-billion dollar producer which narrowly staved off collapse during the downturn after striking life-saving deals with its contractors and lenders. The leaner and more profitable Atlas recently approved development of its $50M Corunna Downs replacement project, one of several small iron ore mines now in the WA pipeline. After settling at about US$50 per tonne for much of last year, iron ore prices increased sharply to about US$90/t in 1Q 2017, contrary to most analysts’ forecasts. Global supply remains plentiful, but analysts say clean-energy 38 WA WORKS AUTUMN 2017

policies are forcing China’s steel industry to modernise, which creates more demand for highquality imported iron ore. Despite expectations that the price of the steel-making ingredient will weaken in the second half of this year, the improved outlook has lured a diverse range of proposals, ranging from a rebuild of a flooded Kimberley mine to an infrastructure-heavy Pilbara project backed by one of New Zealand’s biggest companies. Privately-owned Todd Corporation is the majority shareholder of BBI Group, which is working to lure customers and investors to its $5.6 billion Balla Balla iron ore project in the central Pilbara after it signed a State Agreement in January with the WA Government. The 50Mtpa venture, the first major Pilbara infrastructure project to emerge since iron ore prices crashed in 2015, would link stranded iron ore deposits with a new export facility at Balla Balla, near Whim Creek, via a 162km purpose-built railway. Should it proceed, BBI would generate about 3300 construction

jobs and more than 900 in production, said BBI Chairman Jon Young in describing the State Agreement as a “crucial milestone”. “The BBI project is positioned to be the next tier-one, lowcost, large-scale iron ore export infrastructure facility in the best address for producing iron ore in the world,” Young said. Flinders Mines, 53 per cent owned by Todd Corp, is a potential foundation customer courtesy of its 1 billion tonne Pilbara Iron Ore Project. BBI said it would be working closely with Flinders to seek a “mutually beneficial solution” to provide access to the proposed infrastructure. BBI was also engaged with a “number of parties” who were interested in the supply of iron ore sourced from the central Pilbara and/or an investment in the project, it added. Established in 1884, Todd Corp. has interests in oil and gas, electricity generation, energy retailing, property development, minerals, healthcare and technology. There are three other mooted

iron ore mine developments in WA’s North West, but none as grandiose as BBI’s. Nevertheless, Mount Gibson Iron’s plan to restart its Koolan Island mine in the Kimberley would certainly turn heads. As WA Works goes to press, a $90 million restart of the mine looked increasingly likely after Mount Gibson CEO Jim Beyer said a decision would be made soon. “It is looking positive for us with our work on Koolan,” he told investors during a teleconference. First ore production was due about 18-20 months after a go-ahead for rebuilding Koolan’s Main Pit seawall which failed in late 2014, flooding the pit. The aftermath of that event made global headlines when a news agency reported that a large crocodile, dubbed Eric by company employees, took up residence in the newly-created saltwater lake. Once the pit is drained, crocodiles relocated and the seawall reinstated, Mount Gibson is targeting a project delivering at least 15 million tonnes of iron ore over three-to-four years of production.


RESOURCES

Koolan Island, above, off the Kimberley Coast, is set for a rebirth, while Port Hedland’s Utah Wharf, top right, will see more ore from Brockman’s Maverick minesite, right.

Beyer welcomed the improved market conditions but said Koolan’s economics looked promising even in a lower price iron ore environment. However, Beyer cautioned that a go-ahead still depended on final technical studies delivering a safe and viable engineering solution for reinstating the seawall. Mount Gibson had opted for three independent reviews by engineering consultants Coffey, Golder Associates and Fugro, he said. Koolan Island is regarded as one of the richest and highest quality sources of direct shipping hematite in the world, and was mined by BHP Billiton up until the mid-1990s. Back on dry land, Atlas Iron’s new Corunna Downs replacement mine expects to ship its first ore out of Port Hedland in the first quarter of 2018. New Atlas Managing Director Cliff Lawrenson said the project would be funded from operating cashflow after the company’s lenders agreed to amend the terms of a loan facility. “This is a strong vote of confidence in Atlas by our lenders, several

of whom are significant Atlas shareholders,” he said. “Corunna Downs, together with Mt Webber, will rebuild our production rate to approximately 12Mtpa after Wodgina and Abydos cease production in the first and second half of 2017 respectively.” The company forecasts production of 4Mtpa from Corunna Downs over a five to six-year mine life. Infrastructure needed includes a 22km public road upgrade and 13km mine access road, a 152-man camp and a dry crush and screen processing plant. The plant would be owned and operated by a contractor, the company said. Atlas also plans to use contractors for mining and road haulage to Port Hedland’s Utah wharf. Meanwhile, Chinese-owned Brockman Mining was hatching plans for a small greenfield development, paving the way for a much larger mine down the track. Brockman aimed to start building its $60 million Maverick mine in coming weeks after signing a port access and land

leasing deal with Pilbara Port Authority. A subsidiary of Hong Kong-based Wah Nam International, the company said it planned to truck iron ore to Port Hedland’s Utah Point bulk handling facility for export.

significant and important step in the development of Project Maverick as the cornerstone for a larger-scale operation at Marillana,” said Brockman business development director Hendrianto Tee. “It provides a

SETTLING AT ABOUT US$50 PER TONNE FOR MUCH OF LAST YEAR, IRON ORE PRICES INCREASED SHARPLY TO ABOUT US$90/T Slated to begin production in the first quarter of 2018, Maverick would be the first stage of the much larger Marillana project, touted as a multi-billion dollar infrastructure development during the boom. Maverick is forecast to produce up to 3 million tonnes a year of upgraded product grading 61.5 per cent iron, with Brockman confident that the relatively high grade would justify the 270km road haul to port. “Gaining port access is a very

key element of infrastructure certainty and a strong platform from which to advance other project milestones.” The company has agreed to terms with Qube Bulk for the transport and export through Utah Point for a minimum of seven years. In December, Brockman engaged engineering consultant Engenium, which had awarded the detailed study for the processing plant to three separate contractors via an early contractor engagement process. ¢ AUTUMN 2017 WA WORKS 39


RESOURCES

I AM WOMAN, I MINE ORE

Fortescue’s career pathways are empowering women into a mining career

Electrical apprentice Dakota Roy, left, mechanical engineer Maryanha Lee, with Linda O’Farrell, right. BY LINDA O’FARRELL GM Fortescue People

M

ining is a great industry. It’s exciting, challenging, innovative and collaborative. According to Australia’s Workplace Gender Equality Agency, it is also the most male-dominated industry in Australia. Women comprise just 16 per cent of the total workforce. Fortescue Metals Group firmly believes the industry has a responsibility to ensure as many women as possible have an opportunity to participate and make a strong contribution to Australian mining.

sustainable career opportunities which has a positive ripple effect on our community. Fortescue has been a leader in promoting women into senior leadership roles, including the Board of Directors, and we are also committed to achieving diversity across our operations with a range of programs in place to specifically improve female and Aboriginal participation. Fundamental to this objective is providing sustainable training and career pathways for women to ensure we have diverse talent pools within our workforce. To achieve this Fortescue has established several training options, including the graduate and

OF THE 34 TRAINEES ACCEPTED FOR OUR MARCH INTAKE, 32 PER CENT ARE WOMEN We know that to achieve this, it is vital to provide women with 40 WA WORKS AUTUMN 2017

Aboriginal cadetship programs, the apprenticeship program and

Fortescue’s Trade Up. Trade Up is an award-winning initiative that was originally designed as a program to provide the necessary skills to enter an apprenticeship for Aboriginal employees. In an effort to empower more women who want to learn a trade, late last year Fortescue offered all female employees the opportunity to apply for Trade Up. It was an immediate success. Of the 34 trainees accepted for our March intake, 32 per cent are women. We were extremely impressed by the quality of applicants for this intake, with some women coming forward with previous trade skills and qualifications. In response, we gave them the opportunity to proceed straight into an apprenticeship. By being flexible and responding to the needs of our team, seven new apprenticeship positions were created, three for Aboriginal women. Our graduate program is another critical element in providing pathways for women into professional careers in the mining industry. The program

has been running for five years with 100 per cent of graduates securing employment at the end of the program. We are incredibly proud that 70 per cent of the current cohort of graduates are women. One graduate, Maryanha Lee, a mechanical engineering graduate currently at our Solomon site, began her journey with Fortescue as a vacation student. On completing her vacation program rotation, she accepted a position in our graduate program. Asked to reflect on what it is like working in the mining industry, Maryanha said: “I try to focus on being a good engineer rather than a female in a male-dominated environment. There are so many opportunities available to women and it’s really important to challenge the stigma and take the initiative to grab every chance you get.” Ultimately, opportunity is what Fortescue is all about. By providing pathways for professional development, we are proudly supporting women to reach their full potential and championing their careers in mining for years to come. ¢


MAJOR WA PROJECTS LIST

TWELVE NEW MAJOR PROJECTS FOR WA BY STEPHEN BELL WA Works Editor

THE 12 NEW LISTINGS HAVE A COMBINED VALUE OF $7.3 BILLION

T

here was consternation in WA’s construction sector when the new Labor Government made good on its promise to scrap the controversial Roe 8 highway project in Perth’s southern suburbs. Ground work on the proposed 5km, four-lane extension of Roe Highway was halted in March when new Premier Mark McGowan was swept into office. Roe 8 is one of 11 entries deleted from the summer edition of WA Works’ latest Major Projects List, an exclusive feature updated each quarter for the benefit of our valued readers. The good news, however, is that deletions were outnumbered by 12 new listings — ranging from a long-mooted irrigation project to a new Perth railway initiative — with a combined value of $7.3 billion. However, the majority is accounted for by a single listing, BBI Group’s $5.6 billion Balla Balla Infrastructure project, the biggest iron ore development to be touted since the end of the resources construction boom. Privately-owned Todd Corporation, one of New Zealand’s biggest companies, is the majority shareholder of BBI, which is working to lure customers and investors to the Pilbara venture after it was granted a State Agreement by the WA Government in January. Although the Balla Balla deal was a welcome sign for the recovering iron ore sector, BBI has a few investment hurdles to overcome before construction can begin next year. In the meantime, there are several smaller projects coming out of the woodwork, including Atlas Iron’s $50M Corunna

The planned Scarborough pool. Downs replacement project and Brockman Mining’s Maverick development. Another landmark mining inclusion is Talison Lithium’s $320 million expansion of its Greenbushes mine in the South West, approved in March. The long-anticipated project is the latest instalment in WA’s lithium boom, driven by rising demand for Li-Ion batteries in electric cars and energy storage systems. A notable transport project is the Yanchep rail extension, a key part of the Labor Government’s Metronet project. The new administration aims to begin the Yanchep project in 2019, with the $386 million investment expected to create 1374 jobs. The other new metropolitan projects are the Scarborough Beachfront Redevelopment; the Armadale Justice Complex; the Telethon Kids Institute fit-out at the QEII Medical Centre Campus in Nedlands; and the Forgacs Marine and Defence Workshop at Civmec’s Henderson complex. The Busselton Margaret River Regional Airport (BRRMA) redevelopment, the State Government’s Spoilbank Marina at Port Hedland and Collie Water are the three regional infrastructure projects making the new list. BRRMA is expected to be a major boost for South West tourism once it is completed in the second half of next year, while Spoilbank Marina, the long-awaited recreational marina for Port Hedland, could also be a tourism lure. It envisages a facility with capacity for between 100-150 boat pens, with 50 to be built in the first stage. A two-lane boat ramp, and vehicle and trailer parking are also planned.

Collie Water, meanwhile, is a desalination and irrigation project aiming to lower salinity in Wellington Dam and utilise that water in the Collie River Irrigation District. It is a private-public partnership that could pave the way for major new construction and agricultural and opportunities in the South West. Talking of opportunities, the Federal Government’s $89 billion naval renewal program represents a juicy target for WA businesses and Hendersonbased Civmec plans to put an $80 million down payment on winning part of the prize via its new Forgacs Marine and Defence workshop. The latest Major Resource Projects two-part map, meanwhile, is provided exclusively to WA Works by the WA Government’s Department of Mines and Petroleum and is another must-see feature. Projects that are operating or currently under development with an actual or anticipated value of production greater than $10 million are shown in blue, while proposed or potential projects with a capital expenditure greater than $20 million are in red. Such is the detail that even projects under care and maintenance are shown on the map in purple. WA Works subscribers wishing to access the WA Works Major Projects List September 2016 and the Major WA Projects Historical List, please go to cciwa.com/waworks/major-projects-list or contact the WA Works Editor on (08) 9365 7445 or email waworks@cciwa.com. ¢ AUTUMN 2017 WA WORKS 41


MAJOR WA PROJECTS LIST TYPE

CAPEX A$M

START DATE

END DATE

LOCATION

Infrastructure

500

Mar-15

Q1 2018

Metro

Mining and mineral processing

Currently in Prefeasiblity

TBD

TBD

North West

Metalicity

Anketell Port and Strategic Industrial Area

Infrastructure

4000

2019

2021

North West

WA Dept of State Development

Armadale Justice Complex

Infrastructure

86

mid-2017

2021

Metro

State Government

Balla Balla Infrastructure

Mining and infrastructure

5600

2018

TBA

North West

BBI Group

LNG and Condensate

TBC

TBC

TBC

North West

Woodside (Operator), Shell, BP, MIMI, PetroChina

Aviation

70

Q1 2017

2H 2018

South West

City of Busselton

Infrastructure

220

Q1 2015

Q2 2017

Metro

Mining and mineral processing

3700

TBD

4 years from financial close

South West

Perdaman Chemicals and Fertilisers

Infrastructure

380

TBA

TBA

South West

Collie Water (Aqua Ferre and Harvey Water)

Corunna Downs

Mining and mineral processing

50

Q1 2017

Q1 2018

North West

Atlas Iron

Dalgaranga

Mining and mineral processing

86

TBA

Q1 2018

Mid West

Defence infrastructure

80

Jul-05

Jul-05

Metro

Civmec

Transport

2000

2016

2020

Metro

Public Transport Authority

Gorgon Expansion (1 LNG Train)

LNG

Unknown

Unknown

Unknown

North West

Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas, JERA

Gorgon Project (3 LNG Trains)

LNG

55000

Sep-09

2017

North West

Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas, JERA

Transport and Storage

384

2014

2019

Wheatbelt North

Main Roads WA

Oil

1900 (US)

2016

2020 (first oil mid-2019)

North West

Woodside 60% (Operator) Mitsui 40%

Greater Western Flank Phase 2 Project

Gas and Condensate

US$2 billion

2016

2020

North West Shelf

Woodside operated North West Shelf Project

Greenbushes Expansion

Mining and mineral processing

320

May-17

Q2 2019

South West

Talison Lithium, a joint venture between Tianqi Lithium Corp. and Albemarle Corp.

Gruyere

Mining and mineral processing

507

Q1 2017

Late 2018

Goldfields

Gold Road Resources

PROJECT 480 Hay Admiral Bay Zinc development

Browse Development Busselton Margaret River Regional Airport Upgrade Capital Square Tower 1 Collie Coal to Urea

Collie Water

Forgacs Workshop Forrestfield-Airport Rail Link

Great Northern Highway (Muchea to Wubin Stage 2) Greater Enfield

HMAS Stirling Redevelopment Karratha Health Campus Karrinyup Shopping Centre Redevelopment Kings Square Kwinana Lithium Plant Kwinana Waste to Energy Mandurah Forum Shopping Centre Redevelopment Maverick Metronet - Yanchep Rail Mitchell Freeway Extension – Burns Beach Rd to Hester Ave Mt Morgans

42 WA WORKS AUTUMN 2017

COMPANY/ ORGANISATION BGC Development Pty Ltd

Multiplex

Gascoyne Resources

Defence

$345.20

Jul-17

Jan-20

Metro

Infrastructure

130

Q3 2016

Q2 2018

North West

Doric Group Multiplex

Retail

TBC

TBC

TBC

Metro

Multiplex

Infrastructure

270

mid-17

Late 2019

Metro

Sirona Capital

Mining and Mineral Processing

400

Dec-16

Late 2018

Metro

Tianqi Lithium Australia

Power

Detailed Engineering

Late 2016

2019

Metro

Phoenix Energy Australia

Infrastructure

190

Q2 2016

Q1 2018

Peel

Mining and Mineral Processing

60

Q1 2017

Q1 2018

North West

Brockman Mining

Transport

386

2019

2021

Metro

State Government

Transport and Storage

236

Mid-2015

Mid-2017

Metro

Main Roads WA

Mining and mineral processing

220

Q1 2017

Q1 2018

Goldfields

Multiplex

Dacian Gold


MAJOR WA PROJECTS LIST New WA Museum

Infrastructure

265

Q2 2017

Late 2019

Metro

North West Coastal Highway (Mia-Mia to Barradale) Stage 2

Transport and Storage

128

Jan-15

Late 2016

Gascoyne

Main Roads WA

NorthLink WA Central and Northern Sections

Transport and Storage

837

2017

2019

Metro

Main Roads WA

NorthLink WA Southern Section

Transport and Storage

281

Mid-2016

Early 2018

Metro

Main Roads WA

Onslow Salt

Mining and mineral processing

350

2019

TBA

North West]

K+S

Persephone Project

Gas and Condensate

1200

Nov-14

2H 2017

North West Shelf

Woodside operated North West Shelf Project

Infrastructure

1200

2012

2016

Metro

John Holland

Metro

Metropolitan Redevelopment Authority, Public Transport Authority, City of Perth, Leighton Properties (developer, Kings Square precinct) John Laing, Brookfield Financial, Brookfield Multiplex and Brookfield Global Integrated Solutions

Perth Children’s Hospital

Perth City Link

Perth Stadium

Mixed use, transport

1300 (Government funding)

2011

2020+ Yagan Square mid-2017

Multiplex

Infrastructure

865

Q3 2014

Q4 2017

Metro

Pilbara Power Project

Power generation

570

2015

2017

North West

TransAlta

Pilbara Underground Power Project (Phase 2)

Power generation

100

Nov-14

Mid-2018

North West

Horizon Power

Mining and mineral processing

185

Q4 2016

Late 2017

North West

Pilbara Minerals

LNG

WND

2012

WND

North West

Shell Australia, INPEX, Kogas, OPIC

Infrastructure

100

Early 2017

Early 2018

Metro

Georgiou Group (Head Contractor)

Gas

WND

Unknown

Unknown

North West

BHP Billiton Petroleum, ExxonMobil

Mining

US$338

2016

Q4 2017

North West

Rio Tinto

Mining and mineral processing

2800

TBC

TBC

South West

Southdown Joint Venture (Grange Resources Ltd owning 70% and SRT Australia Pty Ltd owning remaining 30%)

Spoilbank Marina

Infrastructure

152

late 2016

late 2020

North West

LandCorp

Square Kilometre Array

Infrastructure

1000

2018

2026

Mid West

Stadium Rail (includes East Perth Station upgrade, Camfield Drive works and signalling)

Infrastructure

139

2015

2017

Metro

Power networks

109.3

Oct-11

Sep-17

Metro/Country

Western Power

Transport and Storage

50

End 2015

Mid-2017

Metro

Main Roads WA

Health

48

Aug-16

Oct-17

Metro

Multiplex

Power Generation

570

Late 2015

Early 2017

North West

Pilgangoora Prelude FLNG Project Scarborough Beachfront Redevelopment Scarborough project Silvergrass

Southdown Magnetite Project

State Underground Power Program (SUPP) Round 5 Swan River Pedestrian Bridge Telethon Kids Institute Fit-out Works TransAlta Power Station

Wheatstone Project

LNG and Domestic Gas

34000

Late 2011

2018

North West

SKA Organisation, Australian and Western Australian Governments PRISM Alliance (PTA, Laing O’Rourke, AECOM)

TransAlta Energy (procured by Horizon Power Chevron (Operator), Kuwait Foreign Petroleum Exploration Company, Woodside Petroleum Limited and Kyushu Electric Power Company, together with PE Wheatstone Pty Ltd (part owned by TEPCO)

Woodman Point Wastewater Treatment Plant Yandicoogina Oxbow mine life extension Yandin Wind Farm

Infrastructure

196

late 2016

end-2019

Metro

Civmec, Black & Veatch

Mine extension

US$190

2015

2018

North West

Rio Tinto

Power Generation

600

Late-2017

TBA

Wheatbelt

Altina Energy

Key - New since March 30 AUTUMN 2017 WA WORKS 43


MAJOR RESOURCE PROJECTS MAP

44 WA WORKS AUTUMN 2017


MAJOR RESOURCE PROJECTS MAP

AUTUMN 2017 WA WORKS 45


INFRASTRUCTURE

WATCH THIS AIR SPACE There may be fewer high-vis shirts at Perth Airport these days, but it’s hardly a portent of doom for the State’s upward-focused aviation industry BY CARRIE COX

W

A’s aviation industry has risen above the State’s cloudy downturn, with a raft of major projects either taxiing toward the runway or ready for imminent take-off. While the biggest game in town is the launch of direct Perth-London long-haul flights from March 2018, at least two regional airport projects — at Busselton and Cunderdin — have local residents and businesses rubbing their hands in anticipation. In the case of Cunderdin, those hands are few — the shire has about 1000 residents on a busy day — but they’re enthusiastic. If a proposal by private consortium Ascent Aviation bears fruit, Cunderdin’s Heritage-listed 46 WA WORKS AUTUMN 2017

WWII-built airport will become WA’s primary ‘diversion’ airport — the place airlines land when they can’t touch down at Perth due to inclement weather. For now, diverted planes land at Adelaide or Exmouth and have to carry hundreds of thousands of dollars’ worth of fuel each year for just such a contingency. Cunderdin could be an aviation game-changer for WA, a boon for Wheatbelt jobs and further developments, and at least one international airline has already signed on to the plan. In the meantime, the first sod has been turned on the $70m redevelopment of the Busselton Margaret River Regional Airport (BMRRA), an ambitious plan to lure firstly east coast visitors directly to the region and thereafter the international market.

On paper, it also opens up possibilities for the region’s food and producers to export quickly and directly to global markets, most likely Asia. Nationals MLA Terry Redman is particularly hopeful of this eventuality: “WA’s largest meat processor V&V Walsh in Bunbury said it could send 90 tonnes of chilled beef and lamb a week to China if the airport could handle international freight,” Redman told WA Works. “And the Southern Forests Food Council, which represents producers around Manjimup and Pemberton, is also investigating export opportunities as a result of the airport expansion.” But freighter capacity won’t be immediate. The airport’s initial footprint allows for ‘Code 4C’ aircraft only — namely A320s and B737s — precluding

the landing of wider-bodied jet airliners and cargo aircraft. This, says WA aviation expert Geoffrey Thomas, is a mistake. “If you’re going to do it, go the whole way right from the start,” he says. “Like the new Wellcamp Airport in Toowoomba — that had the longer 2800m runway and pavement loading to handle 747s right from the start.” But that was a $100m build and this is only $70m and anyway, says Busselton Mayor Grant Henley, international markets take time to nurture whereas east coast demand is already good to go. “Domestically, we’re already aware through peak events that draw a national audience, such as the Busselton Ironman and Cinefest, that about 10 per cent of those visitors are from interstate, and we believe


INFRASTRUCTURE The first sod is turned at the Busselton Margaret River Regional Airport site. From left: City of Busselton CEO Mike Archer, Libby Mettam MLA, Terry Redman MLA, Bill Marmion MLA and Busselton Mayor Grant Henley.

that’s plateaued and slipped,” Henley says. “We’re losing out to competitive markets that aren’t penalised by the travel differential. Flying directly into or out of here makes it a lot more competitive. Imagine jumping on a flight in Melbourne at 5pm and, due to the time difference, being in the Margaret River for dinner at 7.30pm.”

and timetables from Qantas, Virgin and Tiger Air, but all are reticent to commit so far out (BMRRA is due for completion in the second half of 2018). “They’ll likely come on board about six to nine months from the airport being operational,” he says. And so this really is a Field of Dreams development — building

THE FIRST SOD HAS BEEN TURNED ON THE $70M REDEVELOPMENT OF THE BUSSELTON MARGARET RIVER REGIONAL AIRPORT Henley says the project team has had “feedback” on routes

something in the hope that they’ll come. “Oh, I love that

movie,” Henley laughs. “But look, with something like this you have to take an educated punt. No-one can guarantee that if you will build it they will come — aviation is as fickle as any market — but we’ve got a good product and we’re far enough away from Perth that we get that Byron Bay-style appeal. “Economically, this is as much about benefiting the businesses we don’t yet have as those we do — it’s an imperative for innovation.” Henley says completion of the new Perth Stadium will drive a lot of new east coast interest in flying to WA for football games and making a weekend out of it — “and we’ll capitalise on that.” Accommodating plane loads of wine-tasting footy fans won’t be a problem, Henley says. “We

already have ample capacity — there are 15,000 beds in Busselton alone — and I know there are plans to construct a new hotel and to do a $30m upgrade on an existing hotel. “This new airport will really light a rocket under hoteliers that have sat on ageing stock for a while and haven’t been pushed.” Redman dismisses any Field of Dreams comparisons. He told WA Works: “Qantas has expressed the view that there is sufficient demand to justify the expansion and also supports the development of Busselton as an alternative airport in case of poor weather or other circumstances affecting the operation of Perth Airport. “Very conservative forecasts used in the planning for the project estimate more than 112,000 passengers a > p 48 AUTUMN 2017 WA WORKS 47


INFRASTRUCTURE

Arup Principal Kate West and Associate Principal Natasha Boshard go over plans for the $70m BMRRA project.

> year will be using the airport by 2033 and more than 207,000 by 2043.” Redman says the project is already reaping dividends before it opens its doors. “The south west has a well-developed

tourism industry with a range of accommodation options, but the announcement of the airport expansion has been the catalyst for further investment in the sector,” he says. “For example, supported by $4.5 million

SKY’S THE LIMIT A $14m upgrade of Perth’s T3 terminal is underway in readiness for the lift-off of Qantas’ Boeing 787-9 Dreamliner direct to London in March 2018. The Barnett Government contributed the funding to ensure T3 can handle the customs, border control and immigration services required for the international flight. It’s an interim measure as Qantas has committed to relocating to T1 — or ‘Airport Central’ as it will be known — by 2025. T3 will also process Qantas’ current international flights from Perth to Singapore and Auckland, until 2025. Perth-London seats go on sale in April and the take-up is expected to be swift. Qantas is banking on about 150,000 passengers using the direct service each year. WA aviation expert Geoffrey Thomas believes Perth-London will quite literally take off and provide a huge shot in the arm for the sector and for WA in general. “There’s a huge and well-documented appetite for nonstop flights globally,” Thomas says. “Having to stop is a huge impediment for many people and this direct flight from Perth to London will be extremely successful and provide tremendous opportunities for further growth — Frankfurt, Rome, Paris. “Just as we now think nothing of going to Melbourne for the weekend — something we’d never have dreamed of doing years ago — soon we’ll be saying, ‘Paul McCartney’s doing his final concert at Wembley Stadium this month . . . let’s go.’ “It’s 17 hours to get there and 15 hours’ return. In the broader context, and with added legroom on these aircraft, that’s not long at all.” 48 WA WORKS AUTUMN 2017

from Royalties for Regions, the City of Busselton has created three lots for accommodation developments as part of its foreshore redevelopment and has endorsed proposals for two highend hotels.” Geoffrey Thomas is far less effusive about BMRRA and its potential impact on the region. “I don’t think it will work,” he says. “I don’t think it’s got any chance. Three or four airlines have tried to make it work in the past and it never has. “Part of the problem is that the airport is not actually at Margaret River. Another is the issue of curfews [currently aircraft operations are restricted at the airport between 11pm and 6am]. It won’t work unless it’s a 24/7 airport.” The City of Busselton has plans to relax the curfew, but is presently juggling opposition from local residents concerned about nightly noise pollution. Regardless, works have commenced on the existing airport site, which will remain mostly operational for existing FIFO and general aviation users throughout the construction process. International design firm Arup won the contract for the landside component of the BMRRA

expansion, while Wangara-based contractor Ertech secured the airside works. Ertech will extend the current runway from 1800m to 2460m and build new taxiways and aprons — about 290,000 square metres of pavement in total using more than 44,000 tonnes of asphalt. Arup’s work will necessarily be the kind that turns more heads, incorporating a new $10.5 million terminal building and extensive landscaping. Arup Principal and BMRRA Project Director Kate West says the goal is to replicate the essence of the Busselton and Margaret River region in a modern way. “The South West Development Corporation obtained feedback from people on what the region means to them and overwhelmingly it’s the diversity of what’s on offer and also its welcoming feel,” West explains. “So we’ll be bringing that into the design, ensuring people feel very welcome from the minute they arrive. Timber will be an important feature and also the use of natural light to really open up the building to the natural landscape around it.” West says the tender process for landside works had been


INFRASTRUCTURE SMALL TOWN WELCOMES BIG IDEA

Cunderdin Airport. Photo: glidingwa.com.au

“very competitive and robust”, reflecting both interest in the market and the importance of the project. “Companies like ours look for defining projects that can help shape a region and this is one of those,” she says. “This airport is very important regionally for WA and this is a wonderful opportunity for us to make a mark on the region.” The UK-headquartered company first came to Australia in 1963 to undertake structural design of the Sydney Opera House. West believes Arup won the BMRRA project due to its integrated design approach. “Aviation is a complex stakeholder environment requiring maximum integration. The majority of the applicants were architects first and foremost, whereas our team has a slightly different approach in that we are an engineering company that basically comes in as lead consultant and integrates all the project’s components, all the disciplines, to ensure the client is getting the best project outcomes,” she explains. “There are some complex land development issues involved in how we interface with the airside and we took a broad view of those issues in terms of

carpark strategies, landscape redevelopment and ensuring the architecture itself was not only aesthetically pleasing but also adaptable. “Flexibility is a core driver of the design. The airport needs to accommodate new flights and new technology as they come online — for example, in baggage handling and immigration — and the potential for future expansion, both horizontally and vertically. “Sustainability is equally important and so we’ve looked carefully at the way we integrate the building with the landscape and how we maximise the use of natural resources, including rainwater harvesting. Also, regional airports tend to experience high peaks and troughs of activity and so we’re looking at ways we can ramp up and down the use of electricity and air-conditioning to minimise operational costs.” West says utilising local content and creating jobs for the region will be key drivers as the project moves forward. Already Bunbury firm MCG Architects is signed on to the project. Interested companies should contact the City of Busselton. ¢

Unlike the new Busselton airport, there’s no expectation that if a proposed $60m airport is built at Cunderdin, anyone will actually come. In fact, that’s the whole idea. And it’s a “brilliant” one, according to WA aviation expert Geoffrey Thomas. “It’s not surprising it took the private sector to come up with something like this,” Thomas says. “Of all the aviation plans on the table, this one makes the most sense. “Airlines will pay a fee just to have it available as a diversion, but it’s highly likely you won’t see a plane land there at all, or maybe just four or five a year. Hatcher of the big idea, Ben Reid, a former big-4 accountant and aviation enthusiast, formed Ascent Aviation five years ago to set the proposal in train. Since then, he’s successfully signed up two international airlines — the second just last month — and won over the Shire of Cunderdin. “A critical enabler of this project and has been the Cunderdin Shire Council and its executive staff,” Reid told WA Works. “They could not have been more supportive and encouraging since that first introduction.” Shire President Dennis Whisson, a Cunderdin resident for the past 65 years (“so almost a local”), is similarly enamoured with Ascent and what it could bring to his proud little town. “They knew we had a good aircraft facility here,” he says. “It was built for aircraft training for WWII and so had to be a solid construction to handle the big bombers. So the main air strip is of very good quality, although it would have to be lengthened. “And Ascent knew this was the logical spot in terms of geography. We don’t get the same winds here as the coastal strips and there’s very little air traffic — I mean, that’s why it was built here in the first place all those years ago.” Whisson is “quietly confident” Ben Reid’s vision will be realised. “Obviously there’s always a question mark until the shovel goes in the ground, but there are no hurdles to jump from our point of view,” he says. “Depending on what goes ahead, the employment opportunities during construction will be good for the town’s residents. But it’s the future generations that will really benefit — with business comes more business; it snowballs.” Reid says he’s similarly supportive of as much local involvement as possible. “Late last year we issued the Request For Tender to a number of contractors, but we are still evaluating the responses,” he says. “During construction, we expect as many inputs as possible — materials, equipment and people — to be sourced from Cunderdin and the surrounding shires, recognising that the principal contractor will need to be CASA-approved and will make the ultimate decision about the suitability of sub-contracted inputs.” And so now it comes down to winning a critical mass of support from the airlines whose wide-bodied aircraft now carry more fuel than they’ll ever likely need when flying to Perth. “Without question, the airline interest is there,” Reid says. “Of the airlines we’ve been working with, we’ve passed their internal assessment of technical suitability and it’s now down to the commercial negotiations. “The simple reality is that airlines want to save money while maintaining safety standards and passenger comfort, and this project hands them significant economic and operational benefits on their Perth sectors without compromising their safety standards. There is no technical reason that would prevent them from participating in the project. “Our primary constraint now is not a technical or an approval constraint; it’s the speed at which airlines’ internal review and approval processes work.”

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INFRASTRUCTURE

TIME TO HARDEN UP The steel sector faces interesting times as it prepares for a rail fabrication boost and gets familiar with a new ASI structural standard BY STEPHEN BELL WA Works Editor

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A steel fabricators are poised for favourable winds of change as local content and job creation take centre stage in the new Labor Government. There will be intense interest as to how, and when, the McGowan Government implements its local content policies, particularly with regards to its proposal to manufacture Metronet railcars locally. Steel makers are also waiting for clear signs that the Australian Steel Institute’s new structural steel standard, launched before Christmas, is being adopted by State Government agencies in their procurement processes. ASI State Manager James England says both developments offer potential benefits for local steel firms seeking work on WA Government projects. 50 WA WORKS AUTUMN 2017

“Railcar manufacturing is a mature industry and a competitive sector in all its formats,” England told WA Works. “But I think there is enough potential in WA, and enough opportunities with regards to things such as the common user facility ethos, to certainly have a go,” he says. “If Labor comes out and says, ‘We are going to build a common user rail manufacturing facility like the Henderson one for shipbuilding’, I think that would be a good thing.” During the election, Labor promised it would maximise local manufacturing of the $410 million build of railcars needed for its Metronet project, to create new jobs and apprenticeships. The 15-year rolling stock strategy would aim to achieve more than 50 per cent of locally manufactured railcars, it says. This would include 78 new passenger railcars for Metronet Stage 1, renewal of the passenger

railcars on the existing train lines, and replacement passenger railcars for the Australind train, Labor says. More steel work will be generated by the $386 million extension of Perth’s rail network north to Yanchep — the other element of Metronet Stage 1.

The Labor Government says the new stations will service Perth’s rapidly growing outer suburbs. The population between Jindalee and Two Rocks is expected to grow to 56,000 by 2020, it says. Meanwhile, England is optimistic about a quick take-up by industry of the ASI’s new

IF COMPANIES CAN’T COMPLY WITH THE STANDARD, THEY MAY FIND THEY’LL MISS OUT Under Labor’s pledge, construction of the Yanchep line is due to begin in 2019 and be completed by 2021, with the project expected to create 1,374 jobs. Three new stations will be built at Alkimos, Eglinton and Yanchep along the planned 13km route, with each stop to include up to 1000 car bays.

Structural Steel, Fabrication and Erection Standard, or AS/NZS 5131, launched nation-wide in December. The standard aims to lift the quality benchmark for construction steel. “Our fabricators are some of the best in the world, but an equal playing field doesn’t exist for us,” England says.


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The new Perth Stadium, above and opposite, has been a boon for the WA steel sector, while Labor’s Metronet means there’s more to come. “This scheme not only allows us to compete more fairly, but helps to ensure the design intent of the project is maintained, and that’s to the benefit of everybody, especially the owners,” he says. Fabricators, once certified, will also be able to differentiate themselves from competitors using imported prefabricated structural steelwork of uncertain provenance and quality, he says. WA’s steel industry is regarded as highly competitive, but has faced increasing pressure from cheaper imports, particularly from China. This has resulted in examples of delays, disputes and cost escalations due to buyers simply accepting the lowest price for materials. The Department of Commerce has worked with ASI and the CCI to promote the benefits of the standard in controlling risk, to achieve project completion on time, and do so within budget. Moreover, the State Government is helping businesses meet the cost of

accreditation through the latest round of the Industry Facilitation and Support Program (IFSP). The Department of Commerce in collaboration with the ASI is offering financial assistance of 75 per cent of certification costs (to a maximum of $10,000) to support eligible steel fabricators, galvanisers and finishers for the new standard. This 11th round of the IFSP seeks to help the sector to improve its competitiveness, capacity and capability to deliver steelwork to major markets and also improve local companies’ attractiveness in important markets such as resources, government and defence, the department says. England says progress on implementing the new standard slowed during the caretaker mode prior to the State election. “A substantial number of companies have expressed interest in signing up for accreditation,” he says. “But until businesses start seeing it (the

new standard) in Government tender documents a few will drag their feet.” With the new Labor administration in place, the trigger for broader compliance will come when government entities doing their procurement “start writing the requirement into their scopes of work,” he says. CCI CEO Deidre Willmott says the new standard will gradually become more relevant to contracts. “If companies can’t comply with the standard, they may find they’ll miss out on opportunities and we certainly don’t want to see that happening,” she says. “We believe very firmly that every decision to send contracts elsewhere ultimately costs business and jobs in our economy. “We therefore are immensely proud to partner with the Department of Commerce on the IFSP to ensure that WA contractors can comply with the

new standard and win more WA work, including on government projects, but also major infrastructure projects.” Wilmott said that CCI’s Industry Capability Network of WA, or ICNWA, could assist anyone who needed more advice on how to proceed with certification for AS/NZS 5131. England, meanwhile, says ASI has established a National Structural Steelwork Compliance Scheme to complement the new standard. This includes specification documents and drawing notes that could easily be implemented by designers and sit neatly alongside the existing Building Code of Australia rules, he says. “The enforcement of compliance is up to the project owner, and that will be the next phase of what we’re doing,” he says. “We’re trying to ensure that project owners are the ones who take responsibility for what is actually done.” ¢ AUTUMN 2017 WA WORKS 51


INFRASTRUCTURE

COLLIE WATER READY TO FLOW A desalination and irrigation project is poised to revive agricultural prospects in our South West BY HAMISH HASTIE

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public private partnership aimed at bolstering WA’s South West agriculture industry’s water and irrigation security is a step closer after a $37 million State Government commitment to the project. Collie Water, a special purpose company owned by Aqua Ferre and farming cooperative Harvey Water, wants to divert highly-saline water from the Collie River East Branch into a desalinisation plant in Collie. The aim is to lower salinity in the Wellington Dam, utilise the water in the Collie River Irrigation District and pipe it across to Myalup through 250km of new pipes while relocating the Burekup Weir further upstream. The project is expected to cost about $380 million and will be paid by state and private enterprise funding. 52 WA WORKS AUTUMN 2017

The State is also seeking federal funding support through the National Water Infrastructure fund. Submissions to the fund closed in March and successful projects will be announced in July. Collie Water director Mark Giles says Wellington Dam is the state’s second biggest dam, after the Ord River Dam, but it has been plagued with salinity issues for several years. “It’s been a problem that’s been around for quite a while so it’s well and truly time that something is done to improve the situation,” he says. “It was originally built as a drinking water source but with progressing salinity over the years it was deproclaimed as a drinking water source and targeted as an agricultural water source. “But with the salinity levels in the dam and the soil types in the irrigated areas that the dam provides water to, even now

it’s become problematic to use for irrigation. “We’ve now got a situation where the second biggest dam in the State is largely underutilised, so in a dry state with a drying climate to have this water resource sitting there but underutilised just seems like such a contradiction.

the water through the district and out for the first time to the Myalup horticultural strip as well, so both those regions would benefit from improved water quality.” He says it would generate “more than a hundred” construction jobs, including mechanical and electrical

DIVERT HIGHLY-SALINE WATER FROM THE COLLIE RIVER EAST BRANCH INTO A DESALINISATION PLANT IN COLLIE “No water from the dam flows out to Myalup but both the Collie River Irrigation District and Myalup are each confronting their own salinity issues and their own quantity of water issues. “The idea is we would pump

engineers, pipe welders and other trades. “The major construction will take place over the first three years,” he says. “It’s not an insignificant project by any stretch of the imagination.


INFRASTRUCTURE

A centre pivot irrigation sprinkler in full flight at Myalup, and below, Wellingtom Dam.

“I think in the short term it creates some local jobs in the area which is a good thing, and in the longer term it provides water for agriculture.” At the announcement in January, then premier Colin Barnett said the investment, through the Royalties for Regions program, built on the existing $5.7 million Myalup-Wellington Water for Food project. The project was investigating new water supply options for the South West in order to expand the Myalup Irrigated Agricultural Precinct and the Collie River Irrigation District. The primary objective of Water for Food is to identify water and land resources, as well as irrigation technologies, that can enable WA’s fresh food and animal protein production to increase its contribution to regional economies by at least 50 per cent by 2025, and twofold by 2050. The program is supporting

public and private sector investment decisions for new commercial scale irrigated agriculture precincts and the expansion of existing areas, by identifying where water is available, along with its quality and quantity. Its aim is to assist WA food producers to respond to the opportunity presented by the strong growth in demand for high-quality food both locally and in Asia. Giles says in order for WA to lead the charge in global agriculture they need reliable water sources. “We sit on the doorstep of Asia in terms of agriculture and Australia is a potential food bowl,” he says. “Of all of Australia, WA is geographically the best placed to be first cab off the rank but we are constricted by a whole raft of things, one of which is water. “If we can provide better quality and biggest quantity of

water to the agricultural sector then it does open avenues to increase our production, and that’s what we want to do.” Harvey Water general manager Geoff Calder says the partnership model has made the project viable. “Harvey Water represents the Collie River Irrigation District farmers and has been working for many years to find a solution

to the increasing salinity in the Wellington Dam,” he says. “Our co-operation with Aqua Ferre has enabled us to build an economically viable project that had not been previously possible. “The State Government’s support is another critical step in the project becoming a reality and our farmer members again having water better suited to farm irrigation.” ¢

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LIFE’S A BEACH

The long-awaited rebirth of Scarborough will breathe new life into an ageing and under-utilised Perth precinct BY TONY BARRASS

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t’s been 60 years since those wild and crazy kids stomped their summers away at the legendary Snake Pit, but a new energy has again engulfed Scarborough as it evolves from tired seaside suburb to worldclass tourism precinct. A $100 million beachfront revitalisation is now in full swing, with construction on a range of new features set to transform this iconic beach into one of Australia’s favourite beachfront destinations. By early 2018, Scarborough Beach will boast an engaging coastal hub that showcases people-friendly boulevards, a new surf life-saving club, a skate park, playground areas and public open spaces that will stretch from Brighton Road in the south to the northern tip of Scarborough Beach. The redevelopment will be finished in time for Scarborough to once again host “The Aussies”, the 2018 Australian Surf Life Saving championships. The driver for change has been a strong vision led by the State Government and the City 54 WA WORKS AUTUMN 2017

of Stirling. Having successfully completed the forward works contract in 2016, one of WA’s most respected builders, the Georgiou Group, has been recently appointed as Head Contractor for the project. Construction Manager Tony Ricciardello said the company was eagerly embracing the complexities and “unique challenges” the project presented. “Some of the challenges we face on this project surround working in coastal conditions, undertaking major roadworks and construction in a constrained and high traffic environment and working with our stakeholders to achieve integrated outcomes,” he told WA Works. “However, these are challenges we’ve faced before on the Elizabeth Quay Forward Works project and challenges that we have successfully overcome. “In terms of delivery, we will be simultaneously delivering a split-level promenade, integrating facilities and services into these levels and upgrading all roads, footpaths and walkways to improve access between the beachfront and the beach.”

Talking from Georgiou’s Osborne Park office, Ricciardello said that while he believed the redevelopment would eventually “look fantastic”, he was especially anticipating the “intergenerational plaza”, which would be a key aspect of the project.

Scarborough — not just the beachfront — and how they viewed the future of this iconic beach. MRA’s final Master Plan proposes four new destinations for the beachfront set around the existing amphitheatre; Scarborough Square, Sunset

BY EARLY 2018, SCARBOROUGH BEACH WILL BOAST AN ENGAGING COASTAL HUB “I think that’s what they’ll judge us on,” he said. “I am also looking forward to seeing the custom arbor design brought to life. These structures are sure to become a focal point of Scarborough, welcoming visitors to the beachfront and providing respite from the sun.” The project has had unprecedented public input. More than 3000 community members took part in an online survey by the Metropolitan Redevelopment Authority (MRA) about what they wanted for

Hill, Scarborough Clock Tower and the Beach Hub. Sunset Hill opened in late 2016 and quickly become a popular vantage point for locals. The master plan has also taken into consideration issues such as building setbacks, parking capacity and pedestrian movements and sets a basis for future development and investment. Scarborough Square will be at the heart of the beachfront with a pedestrian-friendly, piazza atmosphere boasting a mix of beachfront cafes, shops, bars


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Tony Ricciardello, left, onsite at Scarborough. The redevelopment of the beachfront is well underway and due for completion by early next year.

and markets protected from the prevailing sou’westerly winds. “We are working at the moment to construct the new transit hub and Scarborough Square which will provide an improved entry to Scarborough,” Ricciardello said. “It is a complex part of the construction program and one of the major pieces of work we need to complete so our aim is to make sure these works are completed as quickly and safely as possible to reopen this area and deliver part of the new Scarborough for the local community.” Ricciardello said Sunset Hill, which was created during the forward works contract, has quickly been embraced by the local community, with beachgoers already sunbaking on the elevated lush green grass that flows down to the beach. “When we created Sunset Hill, we left two areas unlandscaped which has been a point of great curiosity. Over the coming months, we will complete construction of the intergenerational plaza to the south, between the amphitheatre and Sunset Hill, and a striking children’s playground to the

north. Those gaps will soon make sense and will be a strong drawcard, particularly for young families.” The Beach Hub is the redevelopment showpiece. It is here the Scarborough Surf Life Saving Club and the City of Stirling’s beach services will have their new home. Located alongside the city’s $26m public swimming pool with a flagship restaurant and bespoke bars, this will be the hero piece of the project piece de resistance. The essence of Scarborough and its rich history of summer nights, surf, sand and fun will be celebrated and given new life through the revitalisation project currently underway. Ricciardello said it was a great pleasure for Georgiou Group to undertaken such visionary projects and be part of the transformation as it unfolds. “These projects are inherent with challenges; but full of possibility — people love visiting Scarborough and want new reasons to come back, and we look forward to providing a new Scarborough that will be sure to entice.” ¢

FUTURE-PROOF YOUR BUSINESS JOHN GEORGIOU CEO, Georgiou Group In the past 12 months, WA has been riding a wave of economic uncertainty. While many saw the mining boom peel away, other companies could never imagine the wider impact it would have on their business. In the past six months, a number of long-standing contractors, builders and sub-contractors have gone into administration for a variety of reasons. So how do other companies avoid the same bleak future? Georgiou has diversified its business over the last 10 years, which included regional and sector diversification. In this period, we established our Engineering, Building, Queensland and NSW business units. Adding new territories does not come easy — longterm trust and relationships only come with time and consistent delivery of promises. During this period, we also grew our resources and oil and gas client base.

The same can be said for our precast business. After establishing Geocrete in the early 1990s, the focus was on standard drainage products. Today, our precast business is vying to become a substantial producer of Tee-Roff bridge beams in Australia after recently picking up various Main Roads WA-related projects. What advice do I have to business looking to diversify to ensure their success? Know your client’s drivers: we’ve grown nationally thanks to our longstanding relationships with clients. People Development: retain and bring onboard the best people in the industry with a diverse skillset to help your business grow. Business Planning: this process is integral to the future success of any company. At the end of the day, know your markets, your clients and your people. These three elements make up a strong foundation for ongoing success.

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CURTIN RAISER LIFTS UNI’S SIGHTS The university has an enterprising plan to stamp its mark as an innovative urban space to stand the test of time BY ROBYN MOLLOY

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urtin University is undergoing a major revamp that will cast it not only as an innovative university, but a significant landmark in Perth’s south eastern suburbs. So ambitious is the plan — called Greater Curtin — that Project General Manager Tim Urquhart puts it up there with the likes of Boston, Cambridge and Oxford universities. “These models have stood the test of time. You go to any of those places and you don’t know where the university starts and stops, you’re actually just in the middle of that beautiful village or urban environment,” he says. “That’s ideally what Curtin will become, so it’s not just a campus — it’s a place for the community. “I like to think it is absolutely about creating a new piece of the Perth city, a very urban environment. Ideally, I see it as potentially the new urban heart of Bentley. It will be very exciting.” 56 WA WORKS AUTUMN 2017

Stage 1 of Greater Curtin is underway. It will see 3ha on the northern part of the campus transformed into an urbanised and integrated precinct. Known as a Superlot, it might be a small part of the 114-hectare campus, but with an end value of up to $500m, it will pack a lot in. Accommodation for up to 2000 students, a serviced apartment-style hotel with more than 50 rooms, 5000sqm of retail space, a new academic building, faculty headquarters and car parking. This is in addition to a bus interchange and public spaces, which will form part of the development, but fall outside the project area. Comparing it with Elizabeth Quay, Kings Square and Waterbank in East Perth, Urquhart says the precinctbased development is seeking a consortium to raise the finance, create the development value, undertake the construction, manage the asset and, in part, operate some of the buildings as student accommodation. It’s the first time the university

has outsourced to a third party rather than completing the works in-house. Proponents have been shortlisted and are a combination of local, national and international firms with offices in Australia. Ninety per cent of them have representation in WA. Urquhart says procurement should be finalised by the end of the year, with a deal to be executed by early next year and construction set to begin in the latter months of 2018. Construction should then move at a cracking pace with 75 per cent of construction delivered within 12 months. Students are eager, with immediate demand for 900 student beds. “Subsequent to that, the other 25 per cent would flow,” he said. It comes on the back of more than $100m worth of construction completed in 2016, including the five-storey Curtin Medical School — built by Georgiou — and the three-storey Agriculture Research Facility, built by Doric. “Greater Curtin Stage 1 is

about how we are procuring private sector participation to develop, fund, construct and operate the Stage 1 location up in the northern part of the precinct. That will bring third party finance to the table,” he says. “As always we are looking for businesses who may have a stronger desire to be involved with the university. For example, we have a very strong relationship with Cisco and we have the Internet of Everything Innovation Centre, which is a collaborative business space. “There is great opportunity if you have good ideas but it is about coming to the table and being prepared to risk your time as well. It’s not just about the university paying for that because you’ll get the benefits of co-branding. I’m happy to have people come to the table, but they have to be prepared to stump up, like we do.” Urquhart says Greater Curtin will eventually see the entire campus transformed, but how quickly that happens will depend of the variables, like the


CONSTRUCTION

The $49m Curtin Medical school was opened by then Premier Colin Barnett in February. Photo; Douglas Marcus Black possibility of light rail. “Greater Curtin is about the revitalisation of the whole campus, so it’s not just new development, obviously within the existing buildings some of them are coming to the end of their life so they’ll be retired and either redeveloped or re-imagined in some other form,” he says. “Stage 1 is specifically new development. It is just that 3ha is worth half a billion dollars. It’s not an insignificant quantum, but there could be further stages that roll out directly adjacent to Stage 1, which haven’t been called Stage 2 yet, depending on how that works.” Accommodation will also be offered on campus rather than on the periphery of the university. “This is really about how we bring that accommodation right into the middle of the campus, and have it together with teaching and research. It becomes an urbanised piece of campus. “We’re trying to create those real attractive vibrant urban

places underpinned by university but broader appeal in terms of what they provide for people in South Perth and Bentley.” He says the area is underserviced for short-term accommodation. “Most people tend to stay in the CBD. It will be quite modest, it’s not like we are talking hundreds of rooms, it might be 50-plus rooms, but it is hotel style.” Urquhart said the campus will be highly-urbanised by 2031 as it adapts to the changing face of education and what students want. “Previously it was all about the course. These days it’s all about the student experience; how they’re interacting, what are future employment opportunities, how are they business ready, how are they collaborating with creative thinkers — all those sorts of things are how universities are trying to put themselves in a place for the 21st Century. “Curtin University is the biggest employer in Perth with

4000 people. It has about a $1b turnover per annum, covering teaching, research, education and professional services.

WA via Perth CBD. “If light rail comes back on the agenda we have been future proofed around that, and have

THE CAMPUS WILL BE HIGHLY-URBANISED BY 2031 AS IT ADAPTS TO THE CHANGING FACE OF EDUCATION “Tertiary education is the third biggest sector in the Australian economy so that in its own right says it’s hugely important in terms of what it generates and the employment opportunities it creates.” Light rail would be a boon for development, Urquhart says. Progress of the entire Greater Curtin plan would hit top speed should light rail re-emerge as a State priority. The previously proposed ‘knowledge arc’ would link Curtin University to the University of

designed for the light rail corridor and we have the land where the rolling stock can actually position itself overnight, so that is there for the knowledge arc,” he says. “That would be a game changer in its own right if that came to fruition in the next 10 years. “It is about the accessibility. All of a sudden it becomes easier, and from a commercial point of view it becomes more attractive with that form of public transport, so there is a much greater desirability for businesses to set up in these locations.” ¢ AUTUMN 2017 WA WORKS 57


MENTAL HEALTH IN MINING

AMY ASKS; ARE YOU OK? There’s a new cop on the beat as mining tries to improve its handling of mental health problems

BY STEPHEN BELL WA Works Editor

58 WA WORKS AUTUMN 2017

A

n estimated 100,000 people work in the WA mining industry and Amy DouglasMartens is in a unique position to help every one of them. The registered psychologist was recently appointed as the State’s first Mental Health and Wellbeing Inspector of Mines — a giant step for an industry traditionally focused on protecting workers from more obvious hazards such as falls, accidents and rockslides. Attitudes towards less visible mining risks changed significantly during the recent boom, when thousands more workers left their city jobs to join the fly-in fly-out (FIFO) cavalcade. Alongside those boom-time salaries and restaurant-quality food offerings came 12-hour work shifts and isolation from loved ones. The issue came to a head in 2014 when WA Parliament launched an inquiry, chaired by Liberal backbencher Graham Jacobs, after a spate of Pilbara suicides linked to FIFO work practices. Jacobs made a total of 30

recommendations on issues such as suicide prevention, anti-bullying procedures and regulatory changes that are now starting to filter through the industry. Andrew Chaplyn, Director Mines Safety and State Mining Engineer at the Department of Mines and Petroleum, says the appointment of Douglas-Martens is a culmination of years of work by the department to improve its mental health expertise.

“Over time we have slowly expanded some of those psychosocial areas and this appointment of Amy is the next step,” Chaplyn says. “In addition, as part of the DMP’s graduate program this year we’ve also taken on a psychology graduate, Tyler van der Merwe.” Douglas-Martens says she is excited to join the department’s Winspection team and “figuring out how we can work together, and with industry, to improve

MENTAL HEALTH RISKS MAY SEEM MORE AMBIGUOUS OR LESS TANGIBLE THAN THE HAZARDS THAT MINE SITES ARE USED TO Some of the changes stem from the Jacobs report, others from various studies and committees that found DMP needed to incorporate more of the “softer” scientific skills in its directorate, alongside the traditional mining and engineering skills.

mental health and wellbeing” across the sector.“There will definitely be challenges, but I am optimistic about the progress that is possible and feel privileged that I get to be a part of it.” Having worked as a consultant psychologist on mine sites in Australia and internationally,


MENTAL HEALTH IN MINING

Amy Douglas-Martens (far right) alongside Department of Mines and Petroleum colleagues Andrew Chaplyn and Tyler van der Merwe.

Douglas-Martens is no stranger to the industry. She says mental health risks may seem more ambiguous or less tangible than the hazards that mine sites are used to dealing with, but the consequences of allowing them to go unmanaged can become “just as real”. Mine site inspections and audits will be part of her remit. “The intention is to be a direct resource to industry through regular visits, and an internal resource for the inspection and investigation teams. “I expect that I will have time for scheduled visits to site and availability to respond to specific needs as required.” She is not surprised it has taken until 2017 for the industry to establish her role in the department. “Given that there is still a stigma surrounding issues of this nature across society, it is not entirely surprising that what may be considered one of our most conservative industries has not employed a mental health and wellbeing inspector previously. “There are many organisations

and individuals working hard to make a change to attitudes towards mental health and well-being in the workplace through building awareness and contributing to the existing body of research,” she says. “The department intends to be a significant part of this.” Prior to her appointment, the department collected information from 126 companies involved in mining operations and 17 operators of petroleum and major hazard facilities over a 10-month period to October, 2016. The audit found there was room for improvement across all four criteria studied, but the most significant area needing improvement was the “level of consultation with the workforce on mental health and wellbeing strategies”. The results of this baseline study are being considered by the Mining Industry Advisory Committee Mental Health Strategies Working Group, which is tasked with identifying a framework to support good practice for positive mental health and wellbeing in resources sector workplaces. ¢

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DONE AND DUSTED

ATLAS IRON APPROVES CORUNNA DOWNS CPB WINS $175M NORTHLINK JOB Main Roads WA has selected CPB Contractors to build the third and final stage of the NorthLink WA road project. The $175 million contract with CPB was for the design and construction of the northern section of highway from Ellenbrook to Muchea. The final section involves construction of a free-flowing dual carriageway between Ellenbrook and Muchea, with new interchanges at Stock Road, Neaves Road and Brand Highway. Construction is scheduled to start in the middle of the year and finish in 2019. CPB, CIMIC Group’s construction subsidiary, said the northern section would provide a portal for traffic and freight movements to commercial and industrial areas north of Perth, as well as improved safety, reduced congestion and faster travel times for road users. “Delivering new and upgraded transport infrastructure within live traffic environments is a core capability for CPB Contractors, and the safe and efficient management of the traffic network during construction is a priority,” said CPB Contractors Managing Director Román Garrido. The section works include bridges built over local roads, railways and Ellen Brook, and separate cycling and pedestrian paths to provide safer and better connections between local communities, the company said. CPB Contractors had previously undertaken a number of projects for Main Roads, most recently leading the alliance that delivered the $1 billion Gateway WA Perth Airport and Freight Access project, it added. Once completed, the $1.12 billion NorthLink WA will complement Gateway WA and support regional traffic volumes to commercial and industrial areas such as Malaga, Kewdale, Perth Airport and the Perth CBD. ¢

60 WA WORKS AUTUMN 2017

A

tlas Iron has approved construction of a replacement mine in the Pilbara, with the $50 million Corunna Downs project expected to ship its first ore out of Port Hedland in Q1 2018. Atlas Managing Director Cliff Lawrenson said the project would be funded from operating cashflow after the company’s lenders agreed to amend the terms of a loan facility. “This is a strong vote of confidence in Atlas by our lenders, several of whom are significant Atlas shareholders,” he said. “Corunna Downs, together with Mt Webber, will rebuild our production rate to approximately 12Mtpa after Wodgina and Abydos cease production in the first and second half of 2017 respectively.

“The amendments to the facility will enable Atlas to capitalise on current and future opportunities provided by the stronger iron ore price.” In December Atlas released the results of its Corunna Downs feasibility study, which estimated total capital expenditure of $47-53 million, including contingency. The company forecasts production of 4Mtpa over a five to six-year mine life. Infrastructure needed includes a 22km public road upgrade and 13km mine access road; a 152 man camp; and a dry crush and screen processing plant. The plant would be owned and operated by a contractor, the company said. Atlas also plans to use contractors for mining and road haulage to Port Hedland’s Utah wharf. ¢

NRW SCORES ON LITHIUM

N

RW Holdings has secured a foothold in WA’s lithium boom after winning a $110 million contract at Altura Mining’s Pilgangoora project in the Pilbara. The five-year contract, for mine development and mining services, is subject to Altura completing project funding for Pilgangoora as part of a final investment decision, NRW said. Up to 60 people would be employed on site and NRW said it would work with the Njamal indigenous communities to offer work and subcontract participation. NRW CEO Jules Pemberton said he was delighted to win the contract, which extends the company’s involvement in lithium. NRW, via its Action subsidiary, also runs a drill and blast contract at Talison’s Greenbushes mine in the South West. “We look forward to working closely

with the Altura team and are ready to commence as soon as the final investment decision is made,” he said. Altura’s $140 million Pilgangoora project is separate to Pilbara Minerals’ $214 million lithium project of the same name. Both ventures are planning to produce lithium concentrates starting in early 2018. “The design for the process plant is progressing well and the project and procurement teams continue to advance a number of key tenders which will enable construction works to commence by the end of Q1 2017,” Altura said. The scope of work for the NRW contract includes construction of mining infrastructure, including a tailings storage facility and run of mine area; development of haul roads; drill and blast; and mining of ore and overburden, the company said ¢


Going for broke

HERE COMES THE SUN The market’s appetite for riskier investments is growing as the recovery in mining gathers steam, says Liam Twigger

2

EXCELLENT LOCAL OPPORTUNITIES ARE BEING SNAPPED UP BY OVERSEAS BUYERS

017 is looking much brighter for the WA resources industry as global commodity and equity markets build on the rebound that started early last year. As WA Works went to press, the ASX 200 Resources index was up about 75 per cent from its low point in January 2016, and the ASX Small Cap index had risen 85 per cent over the same period. Risk appetite has improved and this is best evidenced by investor interest in exploration floats — the high-risk end of the curve. There were nine exploration floats in the whole of 2016 compared with 4 IPOs that have listed in the first couple of months of 2017; and there are many more in the pipeline. The exploration drought experienced during the post-GFC “Nuclear Winter” from 2011 to 2015 has created a number of effects that are still being experienced by the market. With limited funds spent on exploration, discoveries have been few and far between and as a consequence only a small number of new projects have emerged to work their way through feasibility to a development decision. As a result, companies with development projects such as Dacian, Gold Road and Gascoyne are firmly in the cross-hairs of investors and have all experienced solid share market price appreciation over the last 12 months. The recent sale by Gold Road of a 50% interest in its

Gruyere project to Gold Fields via a JV transaction was at US$153 a reserve ounce. This is almost double that paid historically for development projects and closer to a production multiple reflecting both the quality of the Gruyere project and the shortage of new opportunities. The second impact from the Nuclear Winter was the replacement of CEOs with many companies swapping out growth-orientated senior management teams for accountants and chief operating officer types which were needed at the time to bring operating costs down and to survive. In my view, the market has turned for the better, but excellent local opportunities are being snapped up by overseas buyers who recognise that getting a good asset at the right time of the cycle is more important that procrastinating over whether an 8% or a 10% discount rate is appropriate. Commodity prices are up 30% across the board and the inflationary outlook has never been better, so now is the time to swap back in the entrepreneurial teams and for boards to have the intestinal fortitude to back them. The third impact from the Nuclear Winter comes from the banks which have also found themselves with capital to burn and limited financing opportunities. Australian banks are lending to mining projects at less than 5% pa which is cheaper than you can borrow to build a house. One would think

that the risks between the two would be at opposite ends of the risk spectrum, however the competition amongst the banks is such that they are prepared to do the business at breakeven prices to retain market share. We expect competition from the banks to continue and to evolve into takeover funding whereby banks will provide a line of credit to be drawn down to fund a takeover. One would have to go back to the late 1980s and the lines of credit that Robert Holmes a Court’s Bell Resources secured ahead of its bid for BHP to see the last time Australia saw that style of financing. Suppliers and contractors need to be mindful of the above market changes and intense competition for projects and funding. To secure business ahead of the pack or ahead of the release of a feasibility study, we are seeing more contractors prepared to move early and provide balance sheet support (such as longer payment terms, acquiring a project interest or taking equity at small premium) to win business and be assured of the contract. All this bodes well for an excellent 2017 and after hanging on by our collective fingernails during the Nuclear Winter, we may well look back upon as this year as the start of another bull run where we can all make some money, make a positive difference to those around us and have some fun in the process. Liam Twigger is managing director of PCF Capital Group. ¢ AUTUMN 2017 WA WORKS 61


MIND WORKS CROSSWORD

Across

Down

1. Sang in unison

1. Cools

5. Tiny amount

2. Smells strongly

7. Small island

3. Open wounds

8. Faintest

4. Injure

9. Camera glasses

5. Mean

12. Jury finding

6. Painter

15. Most pious

10. Not binding

19. Annul

11. Otherwise, or ...

21. Kept steady

12. Critically examine

22. Freezes, ... over

13. Talk excitedly

23. Ore seam

14. Novel thought

24. Esteems

15. Of medicinal plants 16. Inherited 17. UFO, flying ... 18. Tightens (muscles) 19. Plant stem lumps 20. False appearance

ROUNDABOUT Create as many words of 4 letters or more using the given letters only once but always including the middle letter. Do not use proper names or plurals. See if you can find the 9-letter word using up all letters. 12 Good

20 Very Good

SUDOKU Fill the grid so that every column, every row and every 3x3 box contains the numbers 1 to 9.

24+ Excellent

ANSWERS Across 1: Chorused, 5: Iota, 7: Isle, 8: Remotest, 9: Lenses, 12: Verdict, 15: Holiest, 19: Negate, 21: Balanced, 22: Ices, 23: Lode, 24: Respects Down 1: Chills, 2: Reeks, 3: Sores, 4: Damage, 5: Intend, 6: Artist, 10: Null, 11: Else, 12: Vet, 13: Rave, 14: Idea, 15: Herbal, 16: Innate, 17: Saucer, 18: Tenses, 19: Nodes, 20: Guise

62 WA WORKS AUTUMN 2017


YELVERTON

Yelverton embodies the characters that epitomise Western Australia’s pioneering spirit. It’s also the middle name of WA’s greatest engineer, C.Y. O’Connor. Any tips or suggestions – email: Yelverton@cciwa.com

PRINCE COLIN AND PRINCESS LYN? Yelverton hopes you’ve had a smashingly refreshing break and girded your loins for the year ahead (assuming, by the time you read this, Donald Trump hasn’t confused the “tweet” button for the nuclear codes in one of his late-night ravings). Speaking of rants, isn’t it wonderful to have One Nation back in the fold at State level! And didn’t that preference deal between Colin Barnett and the Flame-Haired-One work out well too! Yelverton’s advice: avoid Pauline Hanson One Nation Yucksters (PHON-Y) at all costs. Sadly, the Emperor lost and has by now no doubt retired to his Toodyay estate to shear his sheep. Yelverton suspects he’ll spend the next four years weaving hairshirts and writing angry letters to Nigel Satterley and the local paper. It’s been a cracking ride though, Colin, and we’re personally glad you beat the Courts for time in the centre! Perhaps you could take a leaf out of Prince Leonard’s book and set up your own Principality? Fitting. And vale Brendon Grylls after your quixotic tilt at the mining industry. That was $2 million well spent. Of course, it’ll take some time getting used to our Labor (no “u” for the uninitiated) masters. I, for one, welcome our new Overlords. Although Yelverton is slightly worried that Fran “I won’t forget you worked on Roe 8” Logan, has won a seat at the table. Somewhat appropriately given his anti-business spray during the election campaign, Fran has been

given the ominous-sounding “Corrective Services”. Welcome, comrade! Then there’s Premier Mark McGowan, who dislikes uranium mining, genetically-modified crops, shopping on Sundays except between 11am and 12.13pm, roads, and drinking in large bars. What this State needs at such an uncertain economic time is more jobs, not less. We need new industries! Yelverton has some ideas for the new government.

POLO FESTIVALS BY JULIE BISHOP AND DAVID PANTON

Regions-funded chain across the outback. Just look for the halo on the sign! Holy Smoke Ring!

GINA’S HOUSE DE BEAUTY Speaking of chains, surely this is a winner. Gina Rinehart has been cutting a fine figure lately. Now that her Roy Hill mine is up and running, perhaps she’ll have the time to turn her attention to a range of day spas for corporate leaders? That sly old silver fox Michael Chaney would be a natural as the face of the brand with those salt-and-pepper good looks. After all, he’s stepping down as Woodside chair soon,

and apart from the ballet, will be looking for something to do.

ROE 8 LANDSCAPING Someone get a barber down to Roe 8 now, if there are any left. All those do-gooder protestors need a good shave and a job. But Yelverton senses an opportunity. Labor will need to replant those access trails for services that ALREADY go through the site and have been there for years.

Yelverton

What could be more glamourous? The Foreign Minister and her consort David touring Western Australia on horseback? Throw in some Pol Roger, some white-linen marquees, water lilies and voila! Instant tourism boost. Plus, it’ll save taxpayers having to pay for flights to Victoria for the couple.

IAN BRITZA TEXAS-STYLE RIBS Perth has been crying out for some good honest American BBQ. The former pastor and former member for Morley is in a divine spot to help out now he’s no longer on the backbench. There were those terrible allegations that he took his family to Texas so often, only because his wife is from the Lone Star state. But like a good Christian, Ian will no doubt be prepared to turn the other cheek, and lend his skills that he honed on those trips to smoking some fine ribs. We could envisage a Royalties for AUTUMN 2017 WA WORKS 63


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64 WA WORKS AUTUMN 2017

WA Works Autumn 2017  

It's full steam ahead in this edition with in depth reporting on the incoming European invasion in defence, the national energy debate, and...

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