Download YIPA Inc - Yilgarn Iron Producers Association

YIPA Inc
Yilgarn Iron Producers Association Inc
PO Box 3047 Broadway Post Office
Crawley, West Australia 6009
ESPERANCE PORT UPGRADE
SIGNALS MAJOR BOOST to WA ECONOMY
Independent Economic Impact Study confirms major benefits to State’s economy during
construction and subsequent operational phases of a modestly priced and commercially viable 10
Million tonne per annum port upgrade and associated Yilgarn iron ore mining activity.
The list of benefits to WA include:

State Government royalty receipts of $95m per annum, given global iron ore prices of US$120
per tonne at the present exchange rate.

Employment for up to 1,000 workers during construction phase, which may generate
employment for a further 3,227 workers throughout the economy during construction phase

Yearly direct employment for up to 360 people during mine operation, which could create almost
1,170 full-time equivalent (FTE) jobs elsewhere in the economy.

A direct investment boost to the WA economy from mine and port construction worth up to
$550m initially, with an expected $641m flow-on effect to industry output to meet this initial
growth in demand during construction.

An annual direct boost to demand in the WA economy during mine operation of up to $540m,
and an additional yearly flow-on effect to industry output during mine operation of $627m in
order to meet the initial demand growth.

Direct wages of around $131m during mine construction and $46m per annum during mine
operation.

Indirect wage benefits worth up to $122m per annum across the economy during operation
phase, and nearly $350m during construction phase from jobs expected to be created elsewhere
in the economy.

State Government payroll tax payments of up to $2.5m per annum during operational phase and
$7.2m during construction phase.

Goldfields/Esperance set for major boost to local economy

Modestly priced (under $200 million) Esperance Port upgrade (stage one) of about 10 million
tonnes per annum (Mtpa) supported by Aecom Engineering and Financial Studies

Solid case for Government to underwrite port expansion with only two years of Royalties paying
off the debt
January 2013 Perth WA. The results of the Yilgarn Iron Producers Association (YIPA) commissioned,
Esperance Port upgrade Economic Impact Study reveals a large boost to the WA economy. The
independent study was undertaken by AECOM, international engineering house
Mining of an additional 10 Mtpa in the Yilgarn Iron Province (YIP) will boost State coffers with
Royalty payments of $95 million per annum - assuming an iron ore price of $120 per ton.
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Yilgarn Iron Producers Association Inc - www.yipa.com.au
The above are conservative estimates as direct operating costs and employment at the expanded
port facility, as well as potential investment in rail and rolling stock are NOT included.
WA and the Goldfields-Esperance region will experience a jobs bonanza that frees the local economy
from the turbulence of gold and nickel price cycles.
During the construction phase, the new wave of iron ore mining and export is set to deliver 1,000
direct full-time equivalent jobs (FTE) jobs, with a further 3,227 indirect workers throughout the
economy, totalling 4,227 during the mine construction phase.
And the even better news is that permanent jobs will receive a solid boost, with mine operations
delivering 360 direct jobs, with 1,170 FTE jobs elsewhere in the economy, totalling 1,530
This study provides yet further evidence that an Esperance Port upgrade is essential to boosting
output from the Yilgarn Iron Province through relatively low capital expenditure to achieve a
sustainable and affordable new export facility.
The Economic Impact Study draws together three major Studies carried out by Aecom, which
support a modest Esperance Port Stage One Upgrade as the way forward.
1.
Supply Chain Study (completed October 2012) Examined rail and port infrastructure and
concludes a modestly priced (under $200 million) Esperance Port upgrade (stage one) of
about 10 million tonnes per annum (Mtpa) capacity is the way forward.
2.
Esperance Port Financial Study (completed December 2012) The Financial Study modelled
key parameters including: capital intensity, return on investment, period of investment,
tonnage and tariff structure and rates. Echoing the findings of YIPA’s October Supply Chain
Study, the new Financial Study's results suggest that a low capital (sub $200m) and
incremental upgrading of infrastructure can be used to cater for the stage one export of 10
Mtpa DSO material through Esperance Port.
3.
Economic Impacts Study (Completed January 2013) concludes over 4,000 jobs to be created
and big Royalty flow to the State.
YIPA chairman and Radar Iron managing director Jon Lea said: “The additional 10 Mtpa mining
capacity and an upgraded port to export this will be a major boost to the Goldfields Esperance
economy and WA.”
“$95 million in Royalties to the state government will flow as well as significant jobs during
construction and operational phases,” he said
“We now have further evidence that a modestly priced (under $200 million) Esperance Port upgrade
(stage one for DSO) of about 10 million tonnes per annum (Mtpa) capacity is the way forward.
This project must be fast tracked and the workers and people of WA will be the winners, Mr Lea said.
“Strong infrastructure provider interest also supports the modest upgrade option”.
The modest upgrade includes a new 750,000 tonne storage shed, twin car rail dumper, ship loader
upgrade and ancillary conveyors and rail within the Port.
This Study, once again has the unusual situation where WA miners are lining up to co- operate
closely with each other to facilitate Yilgarn to Esperance infrastructure upgrades.
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Yilgarn Iron Producers Association Inc - www.yipa.com.au
Yilgarn Iron Producers Association members Mindax Ltd, Radar Iron Ltd, Legacy Iron Ore Ltd,
Golden West Resources Ltd, Mineral Resources Ltd (MRL), Cazaly Resources Ltd and Cliffs
Natural Resources (Cliffs) awarded the contract to Aecom with the study being completed this
month.
Cliffs Natural Resources already export approximately 11 Mtpa through Esperance and Mineral
Resources are building up to 4 Mtpa through Kwinana, with more proposed for Esperance.
In November, the Yilgarn Iron Producers Association welcomed Brookfield Infrastructure Group
Australia (Brookfield) and Qube Holdings (Qube), entering into a Memorandum of Understanding to
jointly pursue the proposed development of the Multi User Iron Ore Facility (MUIOF) at Esperance.
Detailed discussions between YIPA members and infrastructure providers are continuing.
YIPA members are individually involved in EPSL’s (Esperance Port Sea and Land) current market
sounding process for a new multi-user iron ore facility and believe that the Study findings will
provide a valuable contribution to this exercise
A stage two upgrade, focussed on magnetite, would require the construction of a second berth,
and could boost the total port potential above 50 Mtpa - this could be reached over time through
a number of environmentally sound sequential expansions.
About YIPA
The Yilgarn Iron Province has a JORC of 785 Mt tonnes of DSO and CET of 1.1 Billion tonnes of DSO
(JORC of 4.7 Billion tonnes of Magnetite and CET of 14.5 Billion tonnes of Magnetite).
YIPA is approaching three years old and has a strong track record of working together with
government and industry to boost the infrastructure capabilities of the Yilgarn Iron Province. Ten
miners are currently members. www.yipa.com.au
Detailed Economic Impacts and Notes
This study aims to estimate the direct and ‘flow-on’ economic impacts likely to be associated with
the development and export of an additional 10 million tonnes per annum (Mtpa) of iron ore
through Port of Esperance to service the nascent iron ore sector in the Yilgarn region of Western
Australia (WA). Although there are many iron ore developments under consideration in the Yilgarn
region, this study does not make an assumption in relation to which of these will be developed.
Rather, the study adopts a first principles approach to estimating the expected economic impacts by
estimating the generic construction costs of ‘typical’ mine/s in the region of up to 10 Mtpa in
capacity
Overall, the direct economic impact from the construction phase of the port expansion and mine
construction phases could yield up to $558m to WA economic output, which in turn could generate a
flow-on effect of approximately $649m in industry output to meet that initial demand growth.
Furthermore, an estimated 1,000-strong workforce earning wages of $131m from the construction
phase could be expected to generate a further $349m in wage income across WA industry sectors,
and create almost 3,300 FTE jobs elsewhere in the economy.
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Yilgarn Iron Producers Association Inc - www.yipa.com.au
Additionally, the on-going benefits from the operational phase of the mine/s could directly add up to
$637m per annum to WA output with a further flow-on effect of around $741m in industry output to
meet that initial demand growth. Around $46m in wage income may be directly generated every
year from the operation phase, yielding further wages worth around $122m per annum across
industry sectors and around 1,170 jobs elsewhere in the economy (Table 1 summaries these
estimated impacts).
Importantly, direct operating costs and employment at the expanded port facility, as well as
potential investment in rail and rolling stock cannot be accurately determined at this time and are
therefore excluded from the study. This results in a more conservative estimate of the value of
potential economic impacts.
Table 1
Total Estimated Economic Impacts from Construction and Operational Phases
Economic Impact
Output Effects
($m)
Wage Income Effects
($m)
Employment
Effects (FTE)
Construction Impacts
Direct Impact
$558
$131
1,000
Flow-On Impact
$649
$349
3,227
$1,207
$481
4,227
Total Impact
Annual Operational Impacts
Direct Impact
$637
$46
363
Flow-On Impact
$741
$122
1,170
$1,378
$168
1,533
Total Impact
Estimated economic impacts should be taken as only indicative of the likely benefits to accrue from
the development and should not be used for investment decisions.
Media
David Utting
YIPA CEO
0416 189 462
[email protected]
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Yilgarn Iron Producers Association Inc - www.yipa.com.au