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/

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/

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.

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

Moranbah’s housing market collapses, businesses struggle as coal prices remain depressed

The coal boom is over – that’s the verdict of businesses in the mining town of Moranbah in northern Queensland.

At the height of the mining boom, Moranbah real estate agent Bella Exposito did not have a rental property to spare.

The town, which was literally built on coal in 1971, was experiencing unprecedented demand for housing as workers and their families flocked to the region.

Even decades-old weatherboard homes were selling for upwards of $600,000 while tenants could expect to pay $1,800 per week for a roof over their heads.

But now it is obvious the good times have well and truly come to an end.

“Prices have changed dramatically,” Ms Exposito said, pointing at a three-bedroom home on leafy Leichhardt Street.

“They bought it for $800,000. It’s now only worth $200,000.”

As values fell, the vacancy rate climbed and there are now 300 empty rental properties in Moranbah.

Ms Exposito said she had never seen anything like it in her 27 years in the business.

“I have five houses myself and they have been empty for two years,” she said.

A string of recent announcements on job cuts and mine closures is likely to make matters worse.

Axe falls on jobs in the region

The biggest employer in the region, BHP Billiton Mitsubishi Alliance (BMA), is planning to axe 700 positions from six local coal mines.

Hundreds more could be without work when Brazilian miner Vale and Japanese trader Sumitomo cease production at Isaac Plains by January.

This week, Prime Minister Tony Abbott officially opened BMA’s Caval Ridge coal mine and said that coal was “good for humanity”, boldly declaring it had “a big future”.

But the Caval Ridge project is staffed by fly-in, fly-out workers who typically do not spend their money in the town.

If business did not improve, local baker and long time resident Steve Hanvey said he would be forced to close down by Christmas.

“This shop relies on residents coming in and buying our bread, rolls, cakes and pies,” he told 7.30.

Every morning, before the sun has come up, Mr Hanvey loads his delivery van with fresh bread to be delivered to workers camps around Moranbah.

There used to be nearly 1,000 hungry miners to feed at each camp, but numbers have dwindled and many mining companies now prefer to source their bread from the coastal cities of Mackay and Rockhampton.

“We’ve got two delivery vans. We’re down to one van doing only one trip each morning,” Mr Hanvey said.

“We’re down to four staff and it’s getting to the stage where I need to be making some decisions shortly about the number of bakers that we’ve got.”

Companies seek to address market oversupply

Prices for both metallurgical or coking coal, used for steel production, and thermal coal, used for electricity, have plummeted since 2012.

Most analysts attributed the fall to oversupply rather than weakening demand.

In fact, demand for Australian coal is increasing, according to the mining lobby and a leading consultancy firm.

Queensland Resources Council chief executive Michael Roche said India was set to triple coal imports.

The demand across Asia is enormous at the moment. We don’t see a slowdown in demand over the next 20 years.

Chris Urzaa

“Australia’s going to be a big source of that coal,” he told 7.30.

“Nobody has actually found a way of making steel without coking coal and we’re the world’s biggest exporter of coking coal.”

Director of commercial services at HDR Salva, Chris Urzaa, said Asia was a “bright spot” for thermal coal producers too.

“The demand across Asia is enormous at the moment,” he told 7.30.

“We don’t see a slowdown in demand over the next 20 years.”

Mr Urzaa said low coal prices were the result of the market being oversupplied.

“It made so much sense to produce every single extra tonne of coal that you could during the boom years because you were making so much money,” he said.

Now the boom years are over, Mr Urzaa said mining companies were trying to correct the oversupply by slowing down production.

“There are a lot of shutdowns going on in the coking coal space,” he told 7.30.

“Those shutdowns are bringing the market back into balance much quicker.

“We expect coking coal to come back into balance in 2016, but we believe thermal coal will come back in 2015.”

In the meantime, exporters are being hit hard. A recent survey by HDR Salva revealed a third of all Australian coal exporters were trading at a loss due to the low prices.

Families contemplate their future in Moranbah

At a crowded park full of mothers and their children, Moranbah Mayor Anne Baker is reminded of her hope for the town.

“We need to have permanency and people living in the community,” she said.

Moranbah’s population has always fluctuated in sync with the coal mining industry, and the latest downturn could force more residents to leave.

“It’s not a new risk, which is why I say people need to learn from the past,” she said.

“I’m asking for [mining companies] not to have such a slash-and-burn approach.”

Natalie Oram moved to Moranbah with her family last year, and while it took some getting used to, they have come to love the area.

The town has, however, become considerably quieter since they first arrived and the possibility of further job cuts weighs heavily on their minds.

“People are going to have to move if they’re going to lose their jobs because that’s what brings you here,” she said.

“My husband’s still got his job, so we’ll just have to see what happens.”

http://www.abc.net.au/news/2014-10-15/moranbah-businesses-struggle-as-mining-production-slows/5816290

Low price, oversupply is coal’s double whammy

AN INDUSTRY analyst has blamed factors in addition to a low coal price for the closure of Isaac Plains Coal Mine.

CQUniversity senior lecturer in management and organisational behaviour Paul Weight said there were two reasons for yesterday’s announcement.

“One of them is certainly a drop in the coal price,” he said.

“The second one is an oversupply of coal.

“Australia isn’t the only country that produces coal. We have to compete with the coal coming out of Indonesia, South America, Siberia and more.

“If you are running a coal mine in Indonesia, for example, it costs a lot less than it does in Australia.”

Mr Weight said mining companies could have been managed better to prevent losses.

“One of the things mining houses can do better is to run their companies in a much more lean fashion,” he said, “whereby they always have an eye out on expenditure and cost.

“When companies are making a lot of money, many are bedding out and employ more people that they don’t really need.”

However, Mr Weight said there was no easy solution in economically challenging times.

“Most of the mining houses are international companies, with many mines,” he said.

“If a mine becomes uneconomical, they’ll just close it down and open it again when the coal price recovers.”

Mr Weight said there was a glut of coal in the market.

“China stockpiled coal during the financial crisis and is not buying as much now,” he said. “The value of coal is reducing. When coal cost $120 a tonne things were great, but at $85 or $90 a tonne it’s not viable.

“The bottom line is when the price of coal is less than what it costs to get it out of the ground, it’s not a viable project.”

 

Fears house prices will be hit hard

THE announcement Isaac Plains Mine in the Bowen Basin will close early next year has put property investors on edge.

Moranbah real estate agent Geoff Williams said consumer confidence in the town had dropped.

“There are a lot of investors here who are really hurting badly,” he said.

Current Moranbah house prices were similar to prices in 2004, Mr Williams said.

“The average house price is in the vicinity of $400,000 to $420,000.

“This is unusual for the last two years, but historically Moranbah house prices have always gone up and down.

“Prices were held up because there were some really good quality investments.”

News of the mine closure came just days after BMA announced it would be cutting more than 700 jobs in its Bowen Basin mines.

 

Flow-on effect in Mackay

CLOSURE of the Isaac Plains coal mine will have a flow-on effect on businesses in the Mackay region, the Resource Industry Network has warned.

General manager Julie Boyd said mining contractors would be the worst hit.

“In the current circumstances we are seeing a very low coal price,” she said.

“This has left many contractors in a difficult financial position.

“It certainly will have a flow-on effect in the region.”

Yesterday’s announcement to close the mine was a blow to Leighton Holdings.

The mining contractor was one year into a three-year contract at the site.

The company was unavailable for comment.

Brisbane-based firm Ausenco was responsible for the operation of the Coal Handling and Preparation Plant at the site.

An Ausenco spokeswoman said she did not expect the closure of the mine to have a material impact on the company.

“At this point we are still working through the details of the transition with Isaac Plains Coal Management,” she said.

“We will work closely with our employees to support people whose roles become redundant as a result of this change.”

http://www.dailymercury.com.au/news/low-price-oversupply-is-coals-double-whammy/2404891/

Towns treated like mushrooms

THE Central Highlands have been left in the dark by mining companies.

After BMA announced that 700 positions would be cut from its seven Bowen Basin mines, Moranbah families and businesses are clambering to recover and adjust to the devastating news.

Moranbah Traders Association president Trehan Stenton said mining companies were happy to be well served by the region in the boom times but the lack of transparency made recovering for job cuts difficult.

“BMA are not giving any information about the nature of the workforce that will be cut,” Mr Stenton said.

“Mining companies need to engage with the community to at least work on a plan for the future.”

Mr Stenton said the state and federal governments needed to unlock funding to help local businesses transition from a reliance on the mining sector to industries such as service and agriculture. “We need short-term help for the wider community,” he said.

Isaac Regional Council Mayor Anne Baker said the job cuts would devastate the region

“The majority of these job losses are coming from BMA’s residential mines in our region, which directly impacts our communities,” she said.

“With six BMA mines is Isaac, many of these job cuts will affect Isaac residents.”

Ms Baker said the cuts would significantly affect every aspect of the communities.

Moranbah, Clermont and Dysart are expected to the most economic damage, with the majority of mine workers under threat living in those towns.

Union representatives used the announcement to launch an attack on BHP Billiton.

Construction, Forestry, Mining and Energy Union general secretary Andrew Vickers said the union was also seeking information about the jobs targeted in the cuts.

“BHP is demonstrating a horrifying disregard for jobs and for the future of central Queensland,” Mr Vickers said.

“BHP has profited enormously from central Queensland resources over many years, but they are showing their true colours as a ruthless multinational corporation.”

On Tuesday, BMA Asset President Lucas Dow said the “stubbornly” high Australian dollar and low coal price were drivers behind the review.