Industrial synergies

The Western Trade Coast has evolved over many decades into a complex industrial ecosystem of trade relationships that exist between tenants across the region. Through this study, ACIL Allen identified 122 bilateral relationships between tenants. The resulting industrial agglomeration has generated efficiencies and enhanced productivity of industries operating in the Western Trade Coast through lower transport costs associated with sourcing key inputs, reduced waste where byproducts from one industrial process can be used in another industrial process, and economies of scale through the concentration of infrastructure and labour. Industrial agglomeration in the Western Trade Coast has also catalysed the development of new industries from the development of waste to energy projects, and in the processing of future facing minerals.

In the absence of any one pairing of tenants where these synergistic relationships exist, both parties would have a need to find an alternative supplier for their particular product needs. All things being equal, this would increase their exposure to international market fluctuations, add shipping and logistic costs, and increase supply chain complexity. The existence of these synergies is a critical underpinning factor for the success of all tenants of the Western Trade Coast today. Collectively, the industrial agglomeration that has evolved in the region provides a unique source of competitive advantage for industries and has been a key reason why the Western Trade Coast continues to attract interest from around the world as a place to invest.

Unsurprisingly, tenants report there is no one “critical pillar” to these synergies, such is the interwoven nature of the network which has been built over time. There is an in-built resilience which has emerged over the decades. This is confirmed by the change in focus in the region away from petroleum product refining to refined fuel product imports. There were a range of synergies based on the refining of crude oil within the precinct which existed during the last comprehensive study of the region by the KIC. Despite the cessation of crude oil refining in 2021, the former synergy partner companies have adapted and found alternative sources of their inputs –through a combination of imports and alternative relationships within the region. While the networked aspect of the synergies is their strength, there is no one “dominant” player. As presented in Figure 1.4, it is clear the longest-standing tenants – Alcoa, BHP Nickel West, Coogee Chemicals and Wesfarmers – are amongst the most “embedded” parts of the synergistic supply chain in the region. Indeed, the likes of Coogee Chemicals and BOC are ostensibly within the Western Trade Coast due to their capacity to act as a synergistic honey pot with their variety of chemical products and processes.