South Australia or bust

South Australia is expected to play host to 40 mines by 2020. Infrastructure tops the agenda as the State tries to implement a strategy for the future.

South Australia has cemented itself as an Australian mining superpower. A few years ago, there were four mine sites operating across the State. Today, there are nine minesites and the outlook is for future growth.

South Australia is expected to play host to 23 mines by 2015 and 40 mines by 2020.

While it is believed the infrastructure currently in place has been adequate, there is no doubt infrastructure will be needed in the future, some of it quite urgently, as the number of operating mines across the state increases.

By all accounts, the infrastructure in place needs to be updated.

The South Australian Chamber of Mines and Energy (SACOME) commissioned a study on mining infrastructure requirements for the State and found that mining companies were planning to spend $25 billion between now and 2015. However, the State Government is concerned that the upgrades will be plagued by similar problems as those faced by Western Australia.

Duplication of infrastructure, fights over infrastructure rights and monetary squabbles are just a few of the problems that have plagued the State in the past.

Eager to avoid a similar pitfall, South Australia has established the Resources and Energy Sectors Infrastructure Council (RESIC) which is made up of the State’s most senior public servants and resource sector leaders.

The aim of RESIC is to establish a plan for shared infrastructure that will satisfy the State’s mining companies.

RESIC chairman Paul Dowd told Australian Mining that infrastructure was one of the impediments currently facing South Australia’s future prospects.

“What we are seeing nationally is not a mining boom,” he said.

“Booms are usually followed by a long period of bust.”

According to Dowd, Australia is currently enjoying the benefits of an international super-cycle rather than a boom, the difference being that it is possible for Australia to never experience the bust that follows every cyclical boom.

“When demand inevitably slows, metal prices will begin to receed but this will be from much higher levels,” Dowd said.

“In a super-cycle almost every single commodity, from base metals to precious metals, simultaneously rises to historically high levels.”

Dowd has worked in the industry for over 40 years and cannot remember ever experiencing anything like the present climate.

“For planning purposes, to treat this as another boom is an opportunity lost. The Government and private companies need to look long term and take risks that are not feasible during a boom but are feasible during a super-cycle.”

According to Dowd, the infrastructure in place is grossly inadequate and will be unable to deal with the demand from China and India.

South Australia needs to have a fresh outlook and a common plan for infrastructure in order to capitalise on new market demand.

“We are absolutely crazy if we do what has happened elsewhere. That is, put stakes in the ground and have certain areas controlled by individual companies,” Dowd said.

“South Australia has limited time but a maximum requirement to put adequate infrastructure in place, and it is simply not feasible to have multiple ports operated by multiple companies.”

South Australian Chamber of Mines and Energy chief executive Jason Kuchel told Australian Mining that RESIC will help avoid the duplication of infrastructure and will advise Government on appropriate regulation and access regimes.

“We’re quite bullish that the demand from new markets such as China will remain at all time highs, leaving commodity prices high,” he said.

“Increased demand will ultimately lead to an increasing number of mines. South Australia currently has four iron ore depositis that are looking to go into production between 2009 and 2010.

“However, as it stands, mines will not have the suitable infrastructure to export the product. Unless this can change quickly and these private companies can perhaps work in tandem with the Government to establish adequate infrastructure, the mine development will not be able to proceed.”

According to Kuchel, South Australia needs an immediate infrastructure make-over.

The infrastructure currently in place is already starting to become obsolete.

“BHP Billiton is considering building a dedicated haul road stretching from Port Augusta to Olympic Dam just to be able to continue to bring up supplies, large trucks, replacement trucks and anything else necessary for continued production,” Kuchel said.

Similarly, Iluka is looking to build a haul road from the Eyre Highway west of Ceduna to their mine, as the mine is situated in a regional reserve where there were no roads.

To find out exactly where the problems areas were, the South Australian Department for Transport, Energy and Infrastructure (DTEI) released a strategic infrastructure plan.

The plan presented opportunities for improved management and use of the State’s existing infrastructure assets as well as options for managing demand better to defer costly capital expenditure.

The infrastructure plan highlighted two key priorities for industry transport, ports and rail.

South Australia’s Department for Transport, Energy and Infrastructure office of major projects and infrastructure executive director Rod Hook, said steps were already being undertaken to improve the Sates’ ports.

“The port at Outer Harbor has been deepened,” Hook told Australian Mining.

“The container terminal capacity has been increased. The site now has a new grain wharf, grain terminal and new, improved road and rail access.

“A lot of the State’s mining activity, particularly uranium and copper, is exported through the Port of Adelaide. Now there is a viable port operation at Outer Harbor, the amount of available export can grow.”

According to Hook, the Port of Adelaide at Outer Harbor is providing part of the solution, but more deep water ports need to be established.

Port Bonython is currently in the Government’s sights for a new bulk loading and export facility.

The DTEI has taken the necessary steps to reserve the land to make development possible.

“The DTEI is currently working with the mining industry to look at how the facility will be developed and then used,” Hook said.

“One of the challenges the industry has, is identifying what the infrastructure needs are and when they will occur.”

“Most of the State’s mining projects are located in remote areas. Getting access to a convenient deep water port is the key to success.”

The DTEI will soon call for expressions of interest in the development of Port Bonython.

Projects like these are a valuable way of bridging the gap formed through 20 years of neglect.

“South Australia, as much as any state, has privatised its infrastructure,” Hook said.

“The State has under invested in infrastructure over the last 20 to 30 years and the response has been to bring in private companies. What is needed now is for Government and industry to be working together to deliver commercially based and cost effective solutions.”

Report card crisis

In 2005, Engineers Australia commissioned an nfrastructure report card that highlights the state of infrastructure in South Australia.

The report looks at every aspect of the State’s infrastructure and makes recommendations for the future.

The study revealed that while the infrastructure is in generally on par with the Australian average, some sectors require significant upgrading to meet the State’s current and future needs.

South Australia’s Engineers Australia president Bill Filmer told Australia Mining that the State’s major problem was many of the smaller mines that will soon go into production are off the beaten track.

“There needs to be adequate roads to the minesites to help transport the material. There needs to be adequate rail to transport the material from the trucks to the ports. Finally there needs to be adequate ports to export the material,” Filmer said.

“As it stands, the infrastructure in place does not cater to remote minesites.

“Ironically, most of the State’s mine sites are in remote regions.”

Filmer acknowledges the establishment of the RESIC board as a step in the right direction, however, he believes even with this board in place challenges will still be rife.

“RESIC can map it all out, but they won’t know for certain who is willing to come on board and make monetary contributions.

“The government could start as a joint investor and then as a second private company comes on board they pay back the Government’s investment. The Government is, therefore, an equity partner but it is a bit speculative.”

The establishment of RESIC looks to be a step in the right direction as far as developing the State’s infrastructure is concerned. However, with 31 mines looking to go into production in the next 12 years, it looks as though South Australia needs to pull its finger out to prevent a downfall in product demand and to ensure the State stays on the map as a force to be reckoned with.

Paul Dowd

Chairman

RESIC

paul.j.dowd@bigpond.com

Bill Filmer

President

Engineers Australia

South Australia Division

Bill.Filmer@NovaGroup.com.au

www.engineersaustralia.org.au

Rod Hook

Executive Director

Office of Major Projects and Infrastructure

Department for Transport, Energy and Infrastructure

South Australia

rod.hook@saugov.sa.gov.au

www.dtei.sa.gov.au

Jason Kuchel

Chief Executive

Chamber Mines and Energy

South Australia

jkuchel@sacome.org.au

www.resourcessa.org.au