WEST Australian Premier Colin Barnett says he expects the reinvigorated iron ore market to drive further growth in the state’s mining industry, countering wide perceptions that the mining investment boom has passed.
Speaking at the official opening of Rio Tinto’s expanded Pilbara port and rail facilities at Cape Lambert in Western Australia, Mr Barnett said he believed Rio would push ahead with a further major expansion of its export capacity in the coming years.
Yesterday’s opening was a major milestone in Rio Tinto’s $US11.6 billion expansion of its Pilbara iron ore export capacity from 220 million tonnes a year to 290 million tonnes. The company is expected to decide by the end of the year on whether to push ahead with a further expansion to 360 million tonnes, although some investors have called for caution amid concerns the global iron ore market could move into oversupply.
Mr Barnett tipped Rio to give the further expansion the green light.
“Rio will time that (expansion to 360 million tonnes) according to the market, but I’ve got no doubt they will achieve that well before the end of this decade,” Mr Barnett said.
Mr Barnett said Western Australia had a unique opportunity to continue growing its resources industry.
“In my view (China’s steel production) will continue to grow and start to level off around 2020, so this is the decade in which Australia needs to grasp the opportunity to expand its iron ore capacity, and also in other areas like natural gas,” he said.
“We as a government and the companies here are not missing that opportunity, they are going flat out to build projects like this.”
Rio Tinto Iron Ore chief executive Andrew Harding, speaking publicly for the first time since he replaced now Rio Tinto chief executive Sam Walsh earlier this year, declined to share his thoughts on the merits and likelihood of the proposed expansion.
But he, too, was positive about the outlook for iron ore.
“We’ve been very thoughtful about how we designed (the 290 million tonne expansion) and the timing (for bringing) it into the marketplace,” Mr Harding said.
“I remain very confident about China’s need to continue to expand its economy, build houses and transition from very low-rise accommodation to more demanding steel structures, such as high rises and modern cities. There’s still many, many years for that to play out, and that underpins the sort of work we’ve done today.”
While Mr Harding was unwilling to discuss the plans for 360 million tonnes, work on infrastructure that would support the planned expansion was continuing apace at site.
Infrastructure such as car dumpers, conveyor belts and stockpile yards were well into construction in and around Cape Lambert.
Separately, Mr Barnett told reporters yesterday that the government still had no intention of reassessing iron ore royalty levels. But he noted that the government continued to review royalty levels in other commodities, such as gold and alumina, working on the principle that royalties should reflect about 10 per cent of the commodity’s in-ground value.
Source : The Australian