Leighton wins billion dollar Pilbara mining contract

In a reverse of the current trend, Leighton Contractors has been awarded a $1.5 billion, full service contract in the Pilbara.

The award sees its provide mining services at Fortescue’s Firetail iron ore deposit.

According to Leighton, sits mining division will provide whole of mine management at the site, including operating and maintaining the open cut mining fleet, ore handling plants, and associated infrastructure.

It will add the miner in producing around 20 million tonnes of iron ore per annum from Firetail, which forms part of the wider Solomon Hub.

Hamish Tyrwhitt, Leighton Holding’s CEO, said the contract is evidence of the group’s ability to deliver long term sustainable growth.

“Leighton Contractors has worked with Fortescue to negotiate a win-win outcome whereby they provide the bulk of the capital to purchase the mining plant and equipment, and we bring our core competency of contract mining to add value for the client,” Tyrwhitt said.

Fortescue’s CEO Nev Power the award of the contract is a “key milestone in our expansion to 115 mtpa by the end of the March quarter 2013.

“This follows the commissioning of the second train unloader at Herb Elliot Port last week.”

Craig Laslett, MD of Leighton Contractors, said this “is underpinned by our expertise in iron ore, in which we have mined and processed approximately 500 million tonnes over the last five year.

“This contract also provides the opportunity to improve efficiencies through the introduction of the latest technology in the mining industry.”

Laslett added that the contract included a commitment to use graduates of Fortescue’s indigenous training and employment program VTEC.

Leighton will be operations this month, with the contract expected to run for five years, with a two year extension option.

It will initially employ around 600 workers at the site.


Mining Boom is NOT over

Well said Terry Ryder!

“There are too many instances of resources announcements to list in detail, but here are some snippets from the past couple of days: Aust Pacific LNG has issued a $280 million contract to WDS for site works for 345 gas wells; Mitsui will help fund a $380 million coal project by NuCoal Resources in the Hunter Valley; Fortescue Metals has finalized a refinancing deal to raise its borrowing capacity to $US12.8bil; Meijin Energy Group is making a $435 million bid for Western Desert Resources which has a Northern Territory mine; gold producer Focus Minerals has entered into a share subscription deed with Shandong Gold of China for $230 million; the WA Government has lent environmental support to Toro Energy’s Wiluna uranium project; Leighton Holdings has won a $134 million contract from Santos to build a 4km gas transmission tunnel from Gladstone to Curtis Island; Karara Mining has opened its 16mtpa iron ore terminal at the port of Geraldton … The Resources Revolution continues.”


RBA says plenty of life left in mining boom

The Reserve Bank board says reports of the death of the resources boom have been exaggerated, noting record export shipments of iron ore and thermal coal. The RBA minutes from its September meeting say the latest ABS capital expenditure survey suggests the outlook for investment in 2012-13 remains very strong, although if commodity prices continue to fall it could lead to lower investment. But given the large LNG and other mining investment projects already under way, a substantial increase in resource investment is expected over the next year or so.

Meanwhile, economists are forecasting a rate cut in October or November, as Australia’s home-building and retail sectors are yet to benefit from interest rate reductions in May and June. Mining towns ? high-risk single-industry markets. Not for the faint-hearted, but the rewards can be substantial.

FIFO workers prevent oversupply in mining regions

Temporary fly-in fly-out workers are helping prevent unsustainable growth in mining communities, according to research by the Reserve Bank.

Property Observer reports the research paper focused on the Pilbara and Bowen Basin, and said because of the rise in FIFO work towns were unlikely to see an oversupply of housing and infrastructure once the mining boom finished.

“Once the mining investment phase comes to an end, the utilisation of FIFO labour is likely to fall as labour demand in these areas declines,” it said.

“To the extent that much of the extra demand for labour in remote locations is temporary, an advantage of FIFO arrangements is that they can help limit the extent of housing and infrastructure required to service the workforce, and therefore reduce the extent of unused capacity when the boom ultimately passes.”

FIFO work is currently the subject of a Federal Government inquiry, and mining companies have drawn criticism from community members for their focus on temporary workers.

Earlier this month the Australian Medical Association WA branch called on the Government to produce an interim report on the inquiry.

The AMA said the Government needed to release its findings quickly because communities were already struggling with FIFO and there was a risk the mining boom would be over before the report was published.

BHP ditches another three coal projects

BHP Billiton (ASX, LON, NYSE:BHP) has added three new names to its growing list of shelved coal mine projects as defers its Red Hill and Saraji East coal projects, reports Mining Australia.

The miner has also stopped research into its underground coking coal mine near Moranbah, where it had planned to mine 14 million tonnes of coal annually.

The project was expected to cost the company more than $3 billion, given average industry project costs.

BHP blamed falling coal prices and weaker Chinese growth expectations for this decision, which follows the cancellation of plans to expand its Olympic Dam copper and gold mine in South Australia, as well as its Port Hedland iron ore harbour expansion in Western Australia.

On Monday, fellow miner Rio Tinto (ASX, LON:RIO) also announced more job cuts across its coal mines in Queensland as the state has raised its royalty rates and the commodity’s price continues to fall.

BHP suspends plan to build Red Hill coal mine in Queensland

BHP Billiton Ltd. has halted plans to build a coal mine (Red Hill) near Moranbah in Queensland, Australia, which was to produce 14 million tons of coal annually, The Australian reported online.

“The company is focused on the projects currently under execution,” a BHP spokesman told the newspaper on Wednesday. “In response to the challenging external environment, we have made some changes to the growth project arrangements.”

The mining giant has reportedly suspended studies on the Saraji East project, also expected to produce 14 million tons of coal a year, but BHP wouldn’t confirm the news, according to the newspaper.

Fly-in-fly-out workers preventing overbuilding of houses and infrastructure in mining towns: RBA research paper

The decision by mining companies to use a fly-in-fly-out (FIFO) workforce rather than base them in mining towns will prevent an oversupply of houses and infrastructure when the boom ends, according to new research presented by the RBA.

The report notes 2011 census data which suggest that mining-focused areas such as the Pilbara in Western Australia and the Bowen Basin in Queensland have a much higher proportion of FIFO workers, and a much smaller share of permanent residents, than other  townships (and capital cities) in Australia.

“The data suggest a little more than 30% of all people in these ‘mining areas’ on census night were FIFO workers, compared with about 15% in 2006, and 4% to 5% in other towns,” notes the report Implications for the Australian Economy of Strong Growth in Asia co-written by RBA assistant governor Christopher Kent,  Michael Plumb deputy head of economic research at the RBA  and James Bishop, an RBA economist.

“Once the mining investment phase comes to an end, the utilisation of FIFO labour is likely to fall as labour demand in these areas declines.

“To the extent that much of the extra demand for labour in remote locations is temporary, an advantage of FIFO arrangements is that they can help limit the extent of housing and infrastructure required to service the workforce, and therefore reduce the extent of unused capacity when the boom ultimately passes,” says the report.

However, the use of FIFO workers has angered mining towns, who claim they receive little financial benefit from the nearby mining projects as a result and are demanding mining companies base more of their workforces in their towns.

The issue is currently being examined in a parliamentary inquiry, which has to date received 226 submissions, having been launched in August last year, chaired by independent MP Tony Windsor.

Among the submissions, the Mount Isa City Council in north-west Queensland presented a list of ways to limit fly-in, fly-out (FIFO) mining work.

It recommends the government appoint an officer to determine what proportion of workers should live locally when granting mining approvals.

“An officer should be empowered to make recommendations when they are considering issuing a mining lease,” Mount Isa mayor Tony McGrady told the ABC.

“The job of this officer would be to recommend as one of the conditions of the mining lease whether or not fly-in, fly-out operations should be allowed.”

McGrady says regional towns across Queensland are emptying out because of the growing trend for miners to travel to work while their families live on the coast.

McGrady also wants the government to implement tax breaks to encourage workers to live in mining towns.

The findings of the research paper Implications for the Australian Economy of Strong Growth in Asia was presented by the RBA assistant governor Christopher Kent at conference in Canberra yesterday.

The conference was jointly hosted by the International Monetary Fund (IMF), Treasury and the RBA.


Blow to Gina Rinehart’s Roy Hill mine as rail infrastructure contract deferred

A CRITICAL piece of infrastructure for Gina Rinehart’s $9.5 billion Roy Hill project has been deferred.

Macmahon Holdings confirmed to PerthNow that tendering for a key contract for the development of the iron ore mine had been deferred.

PerthNow understands the tender process will not recommence until at least next financial year as Roy Hill attempts to sure up funding for the project.

Though the deferral of the project would have no impact on Macmahon’s bottom line, as no contract had been awarded, chairman Ken Scott-MacKenzie said earlier today it would impact the pipeline of work for the contractor and was an example of the slow down in the resources sector.

Macmahon, as part of the Roy Hill Rail Joint Venture with BGC Contracting and John Holland, had previously been awarded an early contracting involvement for the construction of the project’s railway line.

 Included in that project was a 340 kilometre railway from the Pilbara iron ore mine to port, and associated infrastructure.

Though the ECI process was ongoing the tendering for the contract has been deferred.

The Roy Hill project, which is 70 per cent owned by Ms Rinehart’s Hancock Prospecting, was supposed to have its funding secured by the first quarter of next year, but has previously confirmed it would not make that timeline.

As the iron ore price plummeted in recent weeks rumours have circulated that Ms Rinehart should join forces with

WA mining billionaire Andrew Forrest and share infrastructure – including rail – helping to save her $1 billion.
Fortescue Metals Group’s Cloudbreak backs onto the Roy Hill project.

Mining analyst Gavin Wendt said sharing infrastructure would be a win-win situation for the two companies as Fortescue tries to deal with lower iron ore prices and Roy Hill attempts to secure funding.

“It makes some sense, but as we know common sense doesn’t always come into it in these sorts of things,” he said.

“Sharing infrastructure is always easier said than done, particularly in the iron ore business.

“It makes economic sense, but whether it will come to fruition when you’ve got to fairly powerful egos it’s a different question.”

PerthNow understands the organisation is having ongoing discussions with a variety of proponents in the Pilbara, but is currently focussed on securing its funding.


Forge Secures Pilbara Mining Contract

Western Australia’s Forge Group has been awarded a US$70 million engineering, procurement and construction contract by Australia’s Rio Tinto for iron ore mining operations in Pilbara.

Under the one-year contract, Forge will provide services for fuel infrastructure at Rio Tinto’s West Angelas and Brockman iron ore mines. The work will include civil and concrete, structural, mechanical and piping, as well as electrical and instrumentation work, David Simpson, Forge’s CEO, said in a statement.

The EPC contract follows a US$280 million contract earlier this month awarded to Forge for a combined-cycle gas turbine power station at Rio Tinto’s Cape Lambert operations on the coast. Construction will begin in March 2013 and the plant will be completed in early 2015.