CQ property market is stabilising to pre-mining boom levels

THE property market throughout Central Queensland is stabilising with sales volumes and prices returning to pre-mining boom levels.

The boom triggered significant price rises in housing and apartments throughout the region, including out west to the mining towns of Moranbah, Emerald, Dysart and Blackwater.

The economies of these towns have struggled since the boom ended about 2012, with rising unemployment and limited opportunities for economic diversification.

However, for Mackay, Rockhampton and Gladstone, traditional economic bulwarks of tourism, sugar, beef, export and education are helping to stabilise the economy.

Many experienced property observers agree, property sales volumes and values are now finding their new normal.

Mackay has fared the worst of the three major centres, with the annual median sale price continuing to sink, now sitting at $365,000, down 10.1% on a year ago and 8.8% lower than five years ago.

Even though Rockhampton has a lower median house price, now sitting at $294,500, it’s only 5.4% below a year ago, and down just 1.8% on five years ago.

This indicates a more stable market and the REIQ is confident that the bottom has been reached.

http://www.dailymercury.com.au/news/CQ-property-market-is-stablising-to-pre-mining-boo/2900031/

150 locals not FIFO workers to benefit from Stanmore plan

FIRST in line for the 150 jobs created at a new Stanmore Coal mine will be workers from Moranbah and Mackay.

On Wednesday news broke that the Isaac Plains coal mine 6km east of Moranbah would reopen in February.

Gladstone-based Golding Contractors was awarded its contract late Wednesday afternoon and principal mining engineer Dylan Pieters said it would look to employ “those living closest to the mine”.

“To get a mining contract in this current market is a really good thing,” Mr Pieters said.

“We want to employ people where the mine is at and we’ve already started advertising some of the positions.”

But he said the bulk of the new jobs would be advertised soon, through seek.com and the company website.

Stanmore Coal’s managing director Nick Jorss said the company would not employ FIFO workers “because it did not suit the business model”, particularly with the mine on track to be one of the world’s lowest-cost metallurgical coal mines.

He planned to reduce the cost of production for each tonne of coal by around 35% compared to the mine’s previous performance.

Buying the mine for just $1 in July was a major cost-saving but Mr Jorss said it would also change its operation method.

“The model is definitely changing,” Mr Jorss said.

“We are changing the method and maximising the amount of dragline.

“Moving overburden with dragline reduces costs.”

More than $7 million in royalties, in addition to state and federal government taxes, would flow back to the state.

After the mine reopens in February Mr Jorss said the first coal shipments should leave in April, en route to Japan, Korea and Taiwan.

He hoped the mine would have a 10-year lifespan.

During that time it would set aside $32 million for the rehabilitation of the mine site.

http://www.dailymercury.com.au/news/fifo-not-part-of-firms-plan/2876997/

Stanmore Coal to reopen Isaac Plains mine near Moranbah despite resources downturn

The Mayor of the Isaac Regional Council says she hopes the reopening of a Bowen Basin coal mine will be a catalyst for other mining companies across central Queensland.

Stanmore Coal said it would reopen the Isaac Plains mine near Moranbah, that was closed by the previous owners in 2014.

The company said it would employ 150 workers through contracting firm Golding, when the mine reopens next February, half the workforce in place when it closed.

Mayor Anne Baker said it was unusual for mines to open during a downturn.

“Coal mines don’t generally open when you’re in the middle of a downturn, so this is certainly an encouraging step forward and potentially a catalyst for change of how history has been when we’ve seen a company like Stanmore Coal have the confidence to restart production at Isaac Plains,” she said.

She said the mine would bring flow-on benefits to local workers, contractors and suppliers.

“What they’ve made very clear to us is that the people in the local area and the regional area will have the opportunity to apply for these jobs,” she said.

“With that brings people residing in your community, support for your local businesses and at the current climate and the times that we’ve been experiencing, it’s very good news for Isaac council.”

Low-cost approach

Stanmore managing director Nick Jorss said it had implemented a low-cost approach to the operation.

“I think it’s going to stay tough for a while but in the longer term it will recover.”

Nick Jorss

“No we’re confident. I mean we’ve spent a year getting to this point, doing the numbers, working with the mining contractor, spent five months working with Golding to get to this point and the award,” he said.

“So we’re confident we’ve got a low cost base and we’ll get through this period.”

He said the fundamentals for coking coal were very good.

“Coking coal is a very scarce resource. The steel-making industry is not going anywhere and some of the best coking coal in the world is being consumed at a rapid pace,” he said.

“So people need cars, people need coal for all sorts of things, so absolutely, we’re very positive about [the] coking coal outlook.

“I think it’s going to stay tough for a while but in the longer term it will recover.”

‘Great synergies’ for coal company

The Queensland Resources Council’s chief executive, Michael Roche, said Stanmore had improved the mine’s efficiency.

“The company’s had a very close look at this asset and have worked out a way to make money from mining there and the company also has some other coal deposits nearby,” he said.

“So there are great synergies out of this operation for Stanmore Coal, so I think we will see more good news coming out of Stanmore Coal over the next year or so.”

By Harriet Tatham, Melissa Maddison and Paul Robinson

http://www.abc.net.au/news/2015-12-17/isaac-plains-coal-mine-near-moranbah-to-reopen-next-year/7036866

Bargain Isaac Plains coal mine returns with 150 jobs

A MORANBAH coal mine bought for $1 earlier this year will soon provide job opportunities for 150 local workers.

Isaac Regional Council Mayor Anne Baker said she met with Isaac Plains coal mine owner Stanmore Coal on Tuesday when they announced a scheduled opening in February 2016.

While she would not say if the mine had totally ruled out all elements of a fly-in, fly-out workforce, she was given “absolute confidence local people will be able to apply and work there”.

“It’s going to be open to everyone,” Cr Baker said.

“They never mentioned FIFO. There are 150 positions and everyone is welcome to apply.”

The mayor hailed the project, 6km east of Moranbah, as a boost for industry, local workers and the community.

Moranbah Bakery owner Steve Hanvey said if local workers really were prioritised for the jobs the project would be a “beaut thing for the town”.

“My partner was doing deliveries the other day and at the petrol station she saw five families packed up to leave town,” Mr Hanvey said.

“We need support and we’ve had a lot of doom and gloom for a long time.

“I have all 10 of my fingers crossed and my arms crossed that these jobs will go ahead and there will be more to come.”

The Moranbah resident of 24 years said it wouldn’t just be the workers who benefited but the whole community.

The mine was open-cut and Cr Baker said “real time air quality monitoring” would be in place for Moranbah residents.

Stanmore Coal bought Isaac Plains Mine from Vale and Sumitomo in July for $1, more than a year after about 300 jobs were lost when production halted in 2014.

After a program of exploration and refurbishment, Stanmore Coal will begin mining activities following government approvals.

http://www.dailymercury.com.au/news/bargain-coal-mine-returns-with-150-jobs/2875881/

Investors should approach mining town’s ‘recovery’ with caution

Investors are being warned to proceed with care after a new report claimed the property market in one of Australia’s most prominent mining towns had turned a corner.

Mackay’s real estate market is showing signs of recovery following its dramatic downturn, according to a recent report from the Real Estate Institute of Queensland (REIQ), but investors are being advised to treat the news with caution.

Real estate agents are fielding an increasing number of enquiries from local buyers, according to the report, leading to speculation by the REIQ that the market has reached a turning point.

Mackay has suffered greatly since the downturn in commodity-related exports.

Only in June the area was named by CoreLogic RP Data’s Pain and Gain report as the biggest loss-making real estate market in the country, with 45.5 per cent of sales resulting in a loss.

The current median house price in Mackay is $340,000 – a 15 per cent decline over the past 12 months – according to CoreLogic RP Data.

But the REIQ report argues that record-low interest rates, combined with cheap housing stock, is driving a new wave of first home buyer activity in the area.

Peter McFarlane, REIQ zone chairman for the Mackay district, argues that this represents the first signs of a turnaround for the region.

“There has been a distinct improvement in the Mackay property market in 2015,” Mr McFarlane said.

“More first home buyers are taking advantage of the low interest rates and the affordable property prices to realise their dream of owning their own home,” he said.

Future price growth in the region is likely to be more sustainable as the market adapts and becomes driven by local owners rather than interstate investors, according to Mr McFarlane.

“Mackay has been re-established as a true local buyers’ market in the post-global financial crisis era of adjustment and renewed gradual growth,” he said.

“As a result, market conditions have stabilised and confidence is increasing in the local property market and the broader local economy.”

He explained that moves to diversify Mackay’s local economy had led to a renewed optimism over the area’s prospects.

“Local government initiatives to broaden diversification of industry and facilitate development in the region have put Mackay on an economic development growth path in 2015, leading to a general feeling of optimism throughout the region.

“As outlined in the latest REIQ report, this positivity has now been reflected by the increased level of local buyers interested in investing in the property market,” he said.

But Ben Kingsley, CEO of Empower Wealth Advisory, cautioned investors to hold back on any entry into the Mackay market for the time being, stating that mining towns across the country have yet to see the worst of the downturn.

“In regards to mining towns, I would still be cautious before jumping in. I don’t think we’ve seen the bottom yet – we’re still seeing finalisations of capital expenditure and still some finishing off of expansions of some of the mines,” he said.

“So I suspect we’re going to see less rental demand than we’ve seen. That will obviously mean that as these construction jobs further decline, we’ll still see a bit of vacancy and so there will be very little appetite or demand, which will affect prices.”

But Mackay may be in a better position than most once the recovery does commence, according to Mr Kingsley, owing to its attempts at economic diversification and location.

“It’s too early yet. I’d definitely say that Mackay as a township has got lifestyle appeal, it’s next to the Whitsundays, so from that point of view it has got a little bit more of a diversified economy. I suspect that you’ll start to see more focus on other agricultural assets as growth drivers for the township,” he said.

Even so, not enough signs exist of the Mackay market entering a clear recovery phase for any confident investment decisions to be made, Mr Kingsley advised.

“I wouldn’t be jumping in just yet. I’d probably give it another 18 months to two years before I’d really want to see the bottom [and] the signs of picking the bottom are near on impossible,” he added.

“I’d prefer to see some uplift [rather] than some bottoming out. That’s probably my tip for most of those mining towns. I don’t want to be the trailblazer. I’m happy for others to trailblaze and then once I know the foundations are good, then it’s time to start.”

It’s a sentiment echoed by Philippe Brach, CEO of Multifocus Properties and Finance.

He believes that any recovery in the region will be led by a resurgence in iron ore prices – a distant prospect at this point in time.

“As much as I’m convinced that Mackay will pick up again, I can’t see any points at this point in time. Mackay will start picking up when the iron ore prices start picking up […] until they start moving I think the whole mining town real estate [sector] will remain subdued for sure. So I’m not sure where the REIQ has come up with a recovery in Mackay, because there’s no fundamentals for that at this stage,” he said.

In January this year, Trinity Property Consultants and the REIQ predicted that the Mackay property market would bounce back in 2015, claiming the region was set to become the “engine room for the Queensland economy”.

Source: http://www.smartpropertyinvestment.com.au/news/14687-mining-towns-recovery-in-doubt

2000 more Queensland jobs with new mine approval: Moranbah

A NEW Central Queensland mine project will be allowed to employ fly-in, fly-out workers as well as locals under strict workforce requirements.

The Coordinator-General has approved BHP Mitsubishi Alliance’s Red Hill Mining project north of Moranbah.

Mines Minister Dr Anthony Lynham said the BMA proposal would create 2000 construction jobs and 1500 operational jobs at peak production.

The Coordinator-General’s requirements forbid a 100% FIFO workforce, stipulate people from all regions can apply for jobs and calls for detailed and regular reporting on workforce composition and operations, along with an audit of existing housing capacity.

BMA intended to use a 100% FIFO workforce for Red Hill, following a track laid by its Daunia and Caval Ridge mines.

An end to 100% FIFO workforces was signalled by the former LNP Government following an intense campaign by Australian Regional Media, the publisher of this website.

The project involves construction of a new underground coal mine and expansion of the existing Broadmeadow and Goonyella-Riverside coal mines.

Dr Lynham said it would increase coal output from about 18 million to up to 32.5 million tonnes a year at the mining complex centred on Goonyella-Riverside.

The approval comes as a Queensland parliamentary inquiry investigates FIFO and drive-in, drive-out practices in regional Queensland.

“This development will provide a valuable job boost in Central Queensland regional communities and businesses, as well as the rest of the state,” Dr Lynham said.

“But it’s also critical that development takes into account the economic and social impact of 100% FIFO on resource communities.

“The Coordinator-General’s conditions represent a whole new approach to dealing with this workforce issue.”

He said the Coordinator-General had found that BMA’s EIS addressed the predicted outcomes, and he has set conditions to avoid, mitigate or offset these impacts, including groundwater, ecology, surface water, land impacts, traffic and transport, noise and air quality.

“The proposal now enters the next stage, which involves environmental authorities, public consultation, and potentially Land Court hearings,” Dr Lynham said.

Junior miner Atlas Iron to restart production at Mt Webber

Junior miner Atlas Iron will restart production at its Mt Webber mine in Western Australia’s Pilbara in July.

It expects the Mt Webber project to produce 6 million tonnes of iron ore per year for more than eight years.

In a statement issued by the ASX, Atlas said it would pay its contractor BCG Contracting between $17.1 million and $19.6 million in shares and cash to cover the termination costs of its Wodgina mining contract.

It will also cover the suspension, remobilisation and other costs for the Mount Webber mine.

Under the revised agreements, Atlas and BCG are aiming for cost savings of between 10 and 12 per cent, meaning the company’s break-even price would be approximately $US50 per dry metric tonne of iron ore.

That is compared to today’s market ore price of $US61.50.

Last month, Atlas announced it had reached a deal with its contractors to allow it to bring its three Pilbara mines back into production, after the tumbling iron ore price forced the company to halt production in April.

It also accepted a royalty relief package from the West Australian Government worth $12.5 million.

By Irena Ceranic
http://www.abc.net.au/news/2015-06-02/junior-miner-atlas-iron-to-restart-production-at-mt-webber/6516180

 

Fly-in, fly-out review to meet leaders in Mackay, Moranbah

A second review into fly-in, fly-out (FIFO) work practices in the mining industry will hold hearings in central Queensland this week.

Isaac regional council Mayor Anne Baker is part of a four-member panel looking at the use of the practice for mines which are located near a town.

The panel has already done interviews in Brisbane and will meet local representatives from councils, unions and businesses in Mackay today, and in Moranbah tomorrow.

Councillor Baker said so far the talks had been “robust”.

“What I can say is they have all been very open and there’s lots of information and we need to take all of the information on board and not pre-empt or form any position before we’ve got everything and we’ve met with all stakeholders and make an informed decision at the end,” she said.

Cr Baker said the discussions had been open and informative.

“From my perspective it’s very healthy for people to have different opinions and it’s just as healthy to be able to air those opinions and work towards formalising a healthy recommendation for everybody,” she said.

By Melissa Maddison
http://www.abc.net.au/news/2015-06-01/second-fifo-inquiry-to-hold-central-qld-hearings/6511054

Don’t be fooled: mining towns can make great investments

I feel quite strongly that mining towns get an unfair rap in the media at times – people make flippant comments with irresponsible disregard of evidence.

During commodity price downturns like now, the uneducated often throw out the old “mining towns are bad investments” line. However, the evidence suggests that over the longer term some Queensland mining towns have performed significantly better than Brisbane.

While the property market of Queensland’s capital city is currently performing strongly, falling commodity prices have been the primary cause of property markets in traditional mining towns experiencing double-digit declines in value. The biggest pain has been felt in the central Queensland shire of Isaac, which consists of Moranbah and Dysart.

A typical house was worth $580,000 in December 2012 and has since declined in value to $237,500 over the two years (a decline of 36 per cent per annum). At the peak of the market in 2012, houses were rented for $1,350 per week. Today that same property would be rented for $320 per week.

Emerald median values have declined by an average of 15.3 per cent per annum over the last two years. Rental vacancy rates in Emerald are currently over eight per cent so rents have fallen from $700 per week (2012) to $270 per week.

The regional hub of Mackay provides a majority of goods and services to the coal face. In addition to a 33 per cent reduction in coal prices over the last two years, Mackay has built more properties than demand required. Median property values have declined by an average of three per cent per annum over the last two years. Rents have fallen from $500 per week to $380 per week.

In the far north west of the state, Mount Isa median values have remained unchanged. Mount Isa has a diverse range of minerals which it mines, whereas central Queensland is predominantly coal. Meanwhile, Brisbane median property values have increased by an average of 6.6 per cent per annum over the last two years.

In spite of Queensland’s recent mining town doldrums, the fact of the matter is that these markets have significantly outperformed Brisbane over the long term. Astute investors would be aware that property is a long-term asset class.

Over the 14 years since the turn of the century, which includes the recent downturn, Moranbah’s median property value has grown by an average of 14.8 per cent per annum compared to Brisbane’s 7.8 per cent. Emerald (10.9 per cent per annum), Mount Isa (8.5 per cent) and Mackay (8.5 per cent) have also performed better than the state’s capital city.

It wasn’t that long ago when the likes of Brisbane, Gold Coast and Sunshine Coast were having downturns of their own and the mining towns were setting record highs.

Investing in these locations is not for the faint-hearted. Timing is significantly more important when investing in locations where specific industries have such a significant impact on demand for housing. Often, the smart decision is to do the opposite to what the masses are doing. In the words of the world’s most famous investor, Warren Buffet: “The time to be fearful is when everyone else is greedy. The time to be greedy is when everyone else is fearful.”

A sophisticated property investor who purchased in Moranbah in late 2004 would have paid $150,000 for a three-bedroom house. Even with the recent downturn, the current value of $237,500 still represents 4.7 per cent average annual growth over the last 10 years, which is only slightly below Brisbane’s 5.0 per cent.

An investor who did purchase in Moranbah in 2004 and sold at the market peak of $580,000 in late 2012 would have made a massive 18.4 per cent average annual growth over those eight years. That’s roughly three times better than what anyone could have achieved in any capital city. Let me spell it out for you. A $15,000 deposit (10 per cent) paid on a Moranbah property in 2004 would have become $430,000 equity over eight years. Extraordinary!

On sheer numbers alone, one could argue a very good case that now is a good time to buy in Moranbah. An investor could pick the best property of the litter with no real competition, pay only $240,000, and rent it out for $320 per week. That 7.2 per cent rental yield is far superior to anything that any capital will offer.

Propertyology’s research suggests that an upswing in coal-related locations is on the horizon. Lower labour costs and the lower Australian dollar have improved the viability for mining giants such as BHP and Rio Tinto.

There are multiple new mining projects in the approval pipeline throughout Queensland and the Hunter Valley. The untapped Galilee Basin is the biggest coal province in the world. Propertyology’s research has calculated five large mines with combined project values of $53 billion having potential for up to 31,500 new jobs if they all proceed. Emerald, Mackay and Brisbane will be the biggest beneficiaries.

By Simon Pressley

http://www.rebonline.com.au/blog/9083-don-t-be-fooled-mining-towns-can-make-great-investments

Mining towns make rich list, Tieri on top

THE PEOPLE in Moranbah and Tieri are the most cashed up in Queensland.

That’s according to data released recently by the Australian Taxation Office which showed during the 2012-13 financial year the average Tieri resident earned $100,833 a year, the highest in the state.

Moranbah came in third on the list, with the average person getting $89,211.

Although the data was taken at the mining boom’s peak, Central Highlands Regional Councillor Peter Maundrell believed the data would be similar today because of Tieri’s uniquely uniform demographic.

“I’m sure the data would be similar this financial year,” he said.

“But most people in Tieri are young people with high paying jobs, you don’t have that cross section (of different demographics) you get in a normal town.

“It is owned by a mining company, it’s not your typical country town.”

Central Highlands Mayor Peter Maguire said Tieri had been on the rich list for the last 10-15 years.

“It’s a small town that doesn’t have many facilities,” he said.

“So I’m sure with so many people there earning such a high disposable income, the other surrounding towns in the region would benefit.”

Isaac Regional Council Mayor Anne Baker said while Moranbah might have one of the highest disposable incomes it was an affordable place to live.

And despite the money reported to be in town, the council was starting up a program designed to support local business owners.

May Downs and Middlemount came in sixth with people getting $86,674 while the rest of the top 10 were made of Brisbane’s richest suburbs.

Barney View area, south of Beaudesert, had the poorest residents who on average earned only $30,296 annually.

The top five richest suburbs (2012-2013 financial year)

Tieri: $100,833 average income

Ascot, Hamilton, Hamilton Central (Brisbane): $96,404

Moranbah: $88,829

Balmoral, Bulimba, Hawthorne: $88,829

Bardon: $87,920

Source: The Australia Taxation Office