ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
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PROUDLY SUPPORTING THE Roy Hill Iron Ore Project Strong relationships can be the difference between total commitment to delivering 110% that has seen achieving ordinary and extraordinary results. At BGC us continue to win repeat business with the likes of Contracting, we pride ourselves on the partnerships Roy Hill, Atlas Iron, Arrium, Rio Tinto, BHP Billiton & we have established, cemented and grown with our Cliffs Natural Resources to name a few. We put in the clients over the past 20 years. We believe that we’re hard yards and go the extra mile to ensure our clients only as good as our last project and therefore strive achieve their goals. When your project is ready to go, to work harder, smarter and safer everyday. It’s this we’re ready give it 110% to help you achieve yours. LEADERS IN MINING AND CIVIL CONTRACTING SHED_BGCC0058 Perth (08) 9260 2300. Brisbane (07) 3119 0900. Whyalla (08) 8647 8411. WWW.BGC.CC
Making history with Samsung C&T. A global leader in construction services – Samsung C&T is the lead contractor developing Roy Hill’s iron ore mining, rail and port infrastructure. Samsung C&T is a proud partner of the Roy Hill project, committed to developing projects that deliver great outcomes for the local economy and communities. Samsung C&T 2 Bagot Road Subiaco Western Australia 6008
4 The Roy Hill Project Wednesday, May 21, 2014 A message from the Premier he Roy Hill iron ore project is one of the most that well-planned projects are able to weather T significant projects to be undertaken in Western Australia in recent years. At an estimated cost of $10 billion, the Roy Hill changing economic climates. The iron ore industry is already a major pillar of the WA economy, employing thousands of project is the largest iron ore project under workers and contributing around $4.3 billion in construction this year globally, with a capacity of royalties in 2013. 55 million tonnes at full production. By 2020, WA could be exporting 850 to 950 Construction of this massive project, which million tonnes of iron ore, some 50 per cent more includes new railway and port facilities, will than current output levels. create around 3600 jobs, and ongoing operations First shipments from Roy Hill are expected by will require 2000 workers. the end of 2015, further cementing the State’s Recently, Roy Hill reached a significant position as a global leader in the iron ore market. milestone with the completion of a On behalf of the State Government, I would like US$7.2billion funding package to deliver to congratulate all those who have been involved the project, involving five international in this project’s progress so far, including Roy export credit agencies and commercial Hill’s parent company Hancock Prospecting, and banks from across the world. joint venture partners Marubeni, Posco, and The finalisation of this funding package China Steel Corporation. represents a vote of confidence in the ongoing I would also like to congratulate those within performance of West Australia’s resources Government who have worked to facilitate the industry from the international finance sector. development of this major project, including At a time when some onlookers are sceptical through the negotiation and implementation of a about future growth in the West Australian State Agreement, and in progressing native title, resources sector, the Roy Hill project is proof that environmental and other approvals. significant projects are still on the horizon, and Colin Barnett INSIDE From Roy Hill’s chief executive T he company we build today will determine how successful we are moving forward. To drive and maximise efficiencies across the business, we have integrated our corporate, marketing and operations functions through our new corporate head office and remote operations centre. THE ROAD TO ROY HILL P6-8 THE HOUSE OF HANCOCK P10-11 Because we are constrained at Getting the $7 billion needed to pay A chance sighting over the Pilbara in Port Hedland in regard to how much for everything was just the start. the 1950s changed history. we can export, we must do things differently. It is a business imperative our people know how to work smarter, apply fit for purpose thinking and focus on value to ensure a maximum return to our shareholders. A key driver of success is the foundation that is set in regards to how the company operates and the behaviours people bring to the HOW IT WORKS P12-16 THE NERVE CENTRE P22-23 workplace. Inside the Roy Hill operation — from The ore body may be in the Pilbara One of the unique challenges of mine to port. but Roy Hill’s brain is in Perth. being a greenfields project is embedding a culture that aligns employees to our vision and empowers them to achieve our goals. Our vision and values of lead, care, think and perform go to the heart of who we are, what we stand for and what each and every one of us needs to do to achieve success. Roy Hill is a landmark mining project which will deliver enormous benefits to the broader community. A RICH BENEFACTOR P26-28 THE END GAME P30-31 These are exciting times as we How wealth created in the Pilbara Inside the Chinese steel mills which continue to build one of the world’s pays for the great Aussie lifestyle. drive the iron ore industry. major resource-based projects. Barry Fitzgerald
6 The Roy Hill Project Wednesday, May 21, 2014 For A new kid on the red dusty block Roy Hill is a project 22 years in the making. STEPHEN BELL charts its history n a balmy March evening Gina Rinehart O and a host of international financiers signed a thick sheaf of documents in a Singapore business room. The Hancock Prospecting chairwoman had just made history by inking a US$7.2 billion loan agreement for her Roy Hill iron ore development — the biggest project financing ever completed for a mining venture. Groundbreakers: Hancock Prospecting’s John Klepec, Tad Watroba, Gina Rinehart and Roy Hill chief executive The backing of the five export credit agencies Barry Fitzgerald start work at Roy Hill’s corporate headquarters and remote operations centre in June, 2012. Gr and 19 banks was sweet vindication for Australia’s richest woman. recent Singapore function to celebrate the debt The forecast sailing of Roy Hill’s first cargo from rel She’d endured years of speculation that her $10 milestone. Port Hedland late next year will represent the A billion mine, rail and port project would struggle “So we set up a beautiful sit-down luncheon at high water mark of a remarkable 23-year journey Ri to secure debt funding as other Pilbara miners the side of the Fortescue River and I had the that began in March 1992 with the death of Mr ge slashed expenditure after a fall in iron ore prices pleasure of being able to personally meet every Hancock — the man credited with uncovering dr and rising Australian costs. participant and discuss the importance of their much of the Pilbara’s vast iron ore riches in the scr Credit was a scarce commodity and the cautious support.” 1950s. bankers eked out their painstaking due diligence The debt deal ensured the chairwoman would Pi for 15 months, including site visits to Roy Hill — achieve a long ambition of owning and running a oy Hill wasn’t among the deposits identified wi about 270km south of Port Hedland near the Chichester Ranges. “When the commercial banks came to visit, we Pilbara iron ore mine unrelated to the legacy of her famous father, Lang Hancock. So confident was she of wooing the bankers that Roy Hill was R by Mrs Rinehart’s father. It is a separate area to the north of Newman once held by competitor BHP Billiton. Ch ar M were determined to give them an experience that nearly one-third built by the time the bank deal “Fortunately our competitors’ drill holes were of they would never forget,” Mrs Rinehart said at a was finalised. not in the best locations and they had T P w PM
thewest.com.au 014 For all the latest news The Roy Hill Project 7 Road to Roy Hill MARCH 1992 Gina Rinehart assumes chairmanship of Hancock Prospecting after the death of Lang Hancock MID 1992 Gina Rinehart and Richard Paquay, Hancock Prospecting’s chief geologist, conduct their initial prospecting trip to Roy Hill JAN 13, 1993 Hancock Prospecting granted Roy Hill exploration licences JANUARY, 2010 Korean groups POSCO and STX Corp. make initial $332 million investment in Roy Hill JUNE 2, 2011 Dredging operations begin at Port Hedland’s inner harbour MARCH 30, 2012 Asian consortium led by Korea’s POSCO and Japan’s Marubeni pays $3.2 billion to complete 30 per cent purchase of Roy Hill JUNE, 2012 Construction starts on $47 million headquarters and remote operations centre at Perth airport MAY 25, 2012 Approval to hire up to 1715 foreign e workers under Labor government’s Grand scale: An aerial view of the Roy Hill mine site in April. Roy Hill is destined to be the biggest single-pit mine in the Pilbara. first Enterprise Migration Agreement generates media storm om relinquished the tenements,” Mrs Rinehart said. for the area to be pegged and exploration licences MARCH, 2013 Signs a $5.6 billion fixed price A few months after her father’s death, Mrs were granted to Hancock Prospecting in 1993. construction contract with South y Rinehart and Hancock Prospecting’s chief However, in those pre-boom days iron ore was an Korea’s Samsung Group geologist Richard Paquay flew to Newman and unloved commodity and Hancock was under drove 120km to Roy Hill, an unremarkable patch of financial stress, according to Mrs Rinehart. NOVEMBER, 2013 Workers move into ROC at Perth scrub named after one of the early settlers. “We could not afford to maintain all the rental Airport “It was different from the normal sites in the and exploration requirements and lost about half MARCH 20, 2014 Receives US$7.2bn in debt from five Pilbara in that it was a very extensive flat plain the area we had originally pegged,” she said. export credit agencies and a d with just a few small rises,” Mrs Rinehart said. “Despite this we still managed to implement an consortium of 19 commercial banks Mainly hidden under soil and scree near the exploration drilling program to help prove up the to complete funding of the $10 Chichester Ranges, many people drove across the resource that we knew was there. billion project area without suspecting it hosted a treasure trove “In fact, this drilling program never really of iron ore. APRIL 30, 2014 Roy Hill mines first ore from Kulbee ...................................................................................................................... The ground surveys proved encouraging enough ៑ CONTINUED P8 Creek location Proud to be associated with the Roy Hill Project. www.plantman.com.au y s!USTRALIA7IDEs PM 16641 1300 857 820
8 The Roy Hill Project Wednesday, May 21, 2014 Many people drove across the area without suspecting it hosted a treasure trove of iron ore. .................................................................................................................... ្ FROM P7 stopped as we did more drilling over the years, to the extent that we had completed 13,000 holes by the time we had secured the finance.” A shortage of ready cash wasn’t the only reason that Roy Hill stayed in the ground for so long. In the 1990s Hancock Prospecting was pouring millions of dollars into the Hope Downs project, Early days: Gina Rinehart and chief geologist Richard Ceremonial: Representatives of commercial banks on one of Lang’s original Pilbara discoveries. Paquay before the start of Roy Hill in 1992. the edge of the Fortescue River in June. Then, in the 2000s, Hancock Prospecting ran into political roadblocks when land it assumed Rinehart said. By late 2009, Hancock Prospecting acquired 30 per cent of the project at a projected was earmarked for Roy Hill’s port space was had spent more than $100 million and undertaken cost of $3.2 billion. allocated to other companies. 431,147 metres of drilling. The project ownership now stands at Hancock It eventually “re-secured” two berths at Port This, alongside a partly completed feasibility Prospecting 70 per cent, with Marubeni, POSCO, Hedland at the cost of extra dredging study, was enough to lure South Korea’s POSCO, and China Steel Corp holding the balance. commitments. which had been looking to secure more iron ore With debt and equity funds secured, the race for its Asian steel mills. was on for Roy Hill to finish construction and eanwhile, drilling continued to turn up Alongside STX Corp, POSCO invested an initial meet its 2015 shipping target. M more premium-grade ore. “Roy Hill is an outstanding iron ore project as the last billion-tonne, high grade, low $332 million to help complete a bankable feasibility study and bankroll the Port Hedland dredging. Key to that task was South Korean conglomerate Samsung C&T winning the lead construction role in March last year under a $5.6 billion contract. phosphorus, open cut deposit outside of the Two years later, in March 2012, it became clear The fixed-price deal helped Hancock and its majors in the Pilbara, in the world’s best address how much offshore investors valued Roy Hill’s partners bank the project, because the contractor for iron ore — near our Asian friends,” Mrs high-grade ore when an Asian consortium carries the risk of any cost blow-outs and delays. GUMA ICRG PROUD TO BE INVOLVED IN THE ROY HILL PROJECT Guma ICRG is a mining services company owned and operated by Nyiyaparli Traditional Owners, servicing the East Pilbara region of Western Australia. We provide well-trained and managed onsite teams, supported by our parent company ICRG’s experienced management group. Our people are the cornerstone of our business and we invest heavily in their development, safety and well-being. Guma ICRG has a site services contract at the Roy Hill Project, supporting civil maintenance, installations and other ad hoc works across the port landside facilities, rail camps, mine site and village. This involves earthworks, roadworks, logistics and landscaping, the construction of light steel structures, buildings, culverts, drains and fencing, as well as electrical, mechanical and concrete works. In partnership with NRW, Guma ICRG is also providing plant and labour hire across the Roy Hill Project. We are proud to be part of the Roy Hill Project, working to achieve objectives in a safe, sustainable and cost effective manner, while ensuring Aboriginal communities benefit and contribute to the success of the mining sector. www.guma.com.au (08) 6188 7300
10 The Roy Hill Project Wednesday, May 21, 2014 For The sight-seeing trip that f Lang Hancock’s vision for the After taking ore samples over 100km in the Lang and his long-time business partner Peter pa Hamersley gorges, the self-described “boy from Wright also wooed the Melbourne office of Rio Ri Pilbara has become part of folklore, the bush” was surprised to learn they assayed 2 Tinto. After initial scepticism, the British miner th STEPHEN BELL writes per cent higher in iron than the standard blast signed a deal with the Hancock-Wright in furnace feed used in the US at the time. partnership to form Hamersley Iron. Ri t was a chance few minutes of Pilbara In essence, he had discovered one of the world’s In 1966, Hamersley commissioned the Tom “h I sight-seeing that changed the course of Australian history. On a late November day in 1952, Lang Hancock, richest deposits overlooked by previous surveyors, possibly because the high iron content had bamboozled remote sensing instruments. Price mine and established Dampier — a key Pilbara port which today exports 150 million tonnes of iron ore each year. The Hancock family co on navigating his light plane through the Hamersley It is a remarkable prospecting tale now firmly and the descendants of Peter Wright still receive de Ranges alongside wife Hope, spotted rusty red entrenched in mining folklore, but the obstinate royalties from each tonne shipped. rocks in a gorge cut by the Turner River. visionary still had mountains to climb in order to Later in life Lang was a dividing figure because Pr Then a 43-year-old pastoralist and part-time profit from his find. The deposits were essentially of his outspoken brand of conservatism. But few La prospector, Lang only flew the unusual route worthless in the 1950s because Australian exports dispute his leading role as an iron ore trail-blazer am when heavy storm clouds forced him to drop of iron ore were banned (a legacy of World War 2 alongside less lauded figures such as prospector an altitude and change direction at the start of a when, ironically, the commodity was considered Stan Hilditch who, in 1957, discovered the huge be long trip back to Perth. scarce), and the WA Government wouldn’t allow Mount Whaleback deposit near Newman that’s Flying low, he noticed the gorge walls looked pegging of tenements. now mined by BHP Billiton. Ha like “solid iron” coloured deep ochre red. Lacking tenure and battling disbelief in The ensuing five decades have he Lang’s keen eye had picked out what many Canberra, Lang lobbied relentlessly over several been equally colourful, if not Au scientific instruments had missed — huge years, finally bulldozing his way to a partial more so, for the House of deposits of iron ore that would stoke the fortunes lifting of the embargo in late 1960. It took another Hancock. After Lang died in of a famous family empire and eventually become year for the pegging ban to be removed and March 1992, chairmanship Australia’s most valuable export commodity. Hancock finally had its foot on the rich ore. of the family company In ov ir Pioneer: Lang Hancock at Mt Nicholas.
thewest.com.au 014 For all the latest news The Roy Hill Project 11 for ever changed Australia passed to his then 38-year old daughter, Gina richest and most powerful women in the world. JUNE 10, 1909 Lang Hancock born in Perth Rinehart, who immediately set about rebuilding Similar to her father, Mrs Rinehart has become the brand. While acknowledging her father’s key a contentious national figure because of her NOVEMBER 22, Lang’s iron ore discovery flight with influence in Hancock Prospecting’s fortunes, Mrs forthright views on topics such as the cost of 1952 wife, Hope Rinehart dislikes being referred to as an labour, the mining tax and the development of the FEBRUARY 9, Gina born to Hope and Lang “heiress”, pointing out the perilous state of the North. 1954 company’s finances upon Lang’s death. She also faced court battles against several And the value of the Hamersley royalty really antagonists over the years. 1955 Lang establishes family company only took off in the mid-2000s as China’s iron ore Amid the legal stoushes Hancock has Hancock Prospecting Pty. Ltd. demand ballooned. diversified from its original reliance on 1960 Australian export embargo on iron It was in that boom phase that Hancock Hamersley royalties, reaping billions of dollars ore lifted Prospecting sold half of Hope Downs — one of from thermal coal assets in Queensland, mining 1960-61 Pegging of areas discovered by Lang’s key legacy assets — to Rio Tinto, enabling manganese in the Pilbara and investing in media Lang after WA lifts ban a multi-billion dollar development and forging assets Ten Network and Fairfax. another link in the long chain of association And in 2011 Mrs Rinehart took a definitive step 1961-62 Hamersley Iron formed after between the two groups. towards her long-cherished ambition of becoming development agreements When Hope Downs started production, an iron ore producer in her own right with the negotiated between Lang, Peter Hancock’s direct share of the iron ore profits effective start of Roy Hill’s development in the Wright and Rio Tinto helped propel Mrs Rinehart to the title of Pilbara. 1966 Hamersley’s Tom Price mine Australia’s wealthiest person, and one of the But that’s another story. commissioned, and port and town of Dampier established MARCH 27, 1992 Death of Lang Hancock; Gina In essence, he had discovered one of the world’s richest deposits Rinehart assumes chairmanship of Hancock Prospecting overlooked by previous surveyors, possibly because the high DECEMBER 1992 Hancock Prospecting pegs Roy Hill iron content had bamboozled remote sensing instruments. iron ore tenements JULY 2005 Hancock Prospecting sells half of Hope Downs project to Rio Tinto NOVEMBER 2007 Hope Downs mine begins production MARCH 2014 Roy Hill completes funding with US$7.2bn project debt
12 The Roy Hill Project Wednesday, May 21, 2014 Fo ANATOMY OF ROY HILL In the Pilbara, most things mining-related are bigger than Texas, whether it’s massive pits, monster haul trucks, or 2.5km-long ore trains snaking their way to the coast. The mine oy Hill will not be reinventing the wheel to Yet Roy Hill will still stand proud in this land of the giants. The $10 billion development is set to become one of the world’s biggest mines, R extract its multi-billion tonne deposit over the next two decades, according the mine’s general manager, Bill Lamb. It will rely on tried and tested open cut mining contained in a mineral tenement that stretches technology, operated by an on-site workforce of 1,000. for 34km. “Waste, low grade and ore material will be It will also boast the Pilbara’s single biggest ore blasted prior to excavation, allowing it to be dug at processing facility. Starting from September a higher rate,” Mr Lamb explained. “It will then be loaded into dump trucks and 2015, Roy Hill plans to ramp up its iron ore hauled to various destinations depending on its production to 55 million tonnes a year, dwarfing physical and chemical properties. “On average, the mining team will have to most Pilbara mine sites. remove four tonnes of waste and low-grade Nearly all of the other big WA iron ore mines material for every one tonne of ore mined. “At steady state, this equates to over 300 million have been developed in stages. Rio Tinto’s tonnes of total primary material mined each year, Yandicoogina mine has roughly the same which in anyone’s terms is a very large amount.” As a result of the large total volume mined, Roy An aerial shot of the Roy Hill mine taken in April. capacity as Roy Hill. But Rio grew its mine in Hill’s method of mining will allow for the bulk of stages spread over 16 years, expanding output the waste material to be backfilled into depleted which sit on the surface in the hills, to a to satisfy rising Chinese demand. Roy Hill, in pits, therefore minimising the final disturbance maximum of 110m depth in the southern extents footprint at the same time as offering countless of the deposit,” he said. contrast, is developing its giant-sized capacity short haul opportunities for the mining trucks, “Mined ore will be trucked to remote crushing from day one to make full use of port space. Mr Lamb said. stations, then conveyed to a central processing “The depth of the ore body varies from outcrops, facility.” G
thewest.com.au 014 For all the latest news The Roy Hill Project 13 ANATOMY OF ROY HILL Processing esigned to produce premium-grade lump D and fines products, the processing plant incorporates low-risk, proved Pilbara iron ore processing technology. The processing plant will treat ore from both above and below the water table. The amenability of the ore has been extensively tested with a wet scrubbing, screening and desanding process selected as a result. Earthmoving The majority of impurities in the ore body are equipment tied up in clay-rich shale bands which can easily preparing the pad be removed by gravity separation. for the mine The modular facility consists of multiple processing plant in components including three remote crushing August. stations; overland conveying; a crushed ore stockpile; multiple wet scrubbing, classification and dewatering circuits; several stackers and a reclaimer. After final processing, the mine’s lump ore product will range in size from 8mm to 40mm, while fines will be less than 8mm. From the product stockpiles, a reclaimer loads the product on to waiting train cars via a train load-out facility. The processing plant is one of the most technically challenging parts of Roy Hill’s supply Grade control drilling at the Roy Hill mine in February. Processing plant bulk earthworks. chain. SPEND MORE TIME DRILLING The Pit Viper Series rigs have everything you want in a blasthole drill: proven technology with our Rig Control System, increased productivity, fuel savings, ergonomical cab design and multiple service access points that lead to reduced downtime. To learn more go to: atlascopco.com/blastholedrills
14 The Roy Hill Project Wednesday, May 21, 2014 For A T W 20 de Piling construction for for East Turner River re rail bridge in po February. ph se va Mr Stacked, welded ANATOMY OF ROY HILL cars with a total payload of 32,062 tonnes, will rail steel at the operate each day. ma flash butt welding yard in February. Rail Due to the rugged, undulating terrain to the north of the mine, each train will be assisted by rear-located, manned banker locomotives for the first 30km of the journey. wh ar ar in oy Hill is building (and will own and Roy Hill will employ a state-of-the-art automatic R operate) a 344km heavy-haul railway to transport processed iron ore from the mine to a dedicated port stockyard located south-west of train protection and signalling system to improve safety and efficiency. It will also prepare the network for future autonomous rail operations. ex iro ca Port Hedland. This system will use “full vehicle tracking”, At full production, five ore trains, each which will be the first of its kind to be used in Rail construction locomotives ready to commence ra consisting of three locomotives hauling 232 ore Australia, Roy Hill says. track laying for the 344km railway in April. ca
014 thewest.com.au For all the latest news The Roy Hill Project 15 ANATOMY OF ROY HILL The port hile Hancock Prospecting had run W exploration camps over many years, it was dredging at Port Hedland in June, 2011, that marked the unofficial start of Roy Hill’s development The $230 million of dredging, to clear a channel for big iron ore ships, was a State Government requirement in granting the two-berth lease at the port. “It was a major risk when we undertook physical works of this magnitude without having secured the required equity or finance, and with The enormous scale of the port construction project is becoming clear. various government approvals still to finalise,” Mrs Rinehart recalled. Some of the 5.6 million cubic metres of dredged material was dumped in approved locations at sea, while the remainder was pumped to a holding area above land — Area G. After construction this area will be handed to the port authority for industrial usage. First piles in place for the Point Stanley Wharf. Roy Hill’s port will receive, stockpile, screen and export 55 million tonnes a year of direct shipped After reclaiming, ore is conveyed to an iron ore as lump and fines. The stockyard will be 800m-long wharf and a 12,700 tonnes per hour capable of storing over 5Mt of ore. ship-loader, which moves the finished product Port facilities include an 11,250 tonnes per hour onto giant ore carriers bound for Asia — the final rail car dumper, which removes ore from each rail link in a long chain that stretches back to the car ready for conveying to stockpiles. excavators at Roy Hill. Bulldozers move dredged spoil material in 2012. We Deliver in the Pilbara. Brookfield Multiplex has established a strong What sets us apart is our unique combination presence in the Pilbara having completed the of contracting expertise, financial strength and Roy Hill Mine Accommodation Village in 2013. long term collaborative relationships, meaning clients and partners trust us to deliver safely We were also awarded the contract for and efficiently - on time and on budget. the Roy Hill Non Processing Infrastructure Image: Roy Hill Mine Accommodation Village, Western Australia project, demonstrating our ability to remain competitive on small as well as large projects. CONSTRUCTION DEVELOPMENT ENGINEERING INFRASTRUCTURE brookfieldmultiplex.com SYDNEY PERTH MELBOURNE ADELAIDE BRISBANE For Perth enquiries please call 08 9483 0899
16 The Roy Hill Project Wednesday, May 21, 2014 Hungry work: Roy Hill’s dining hall, one WA’s biggest. Picture: Bill Hatto ANATOMY OF ROY HILL Home away from home: Roy Hill’s main accomodation camp in December, 2013. Housing 10km from the mine’s airport, is arguably WA’s most luxurious resources camp. Each air-conditioned room is 4.2m wide — bigger than the standard 3.5m room — and is uilding a town nearly the size of Kalbarri in furnished with a king-sized single bed and B the middle of the Pilbara — from scratch — is a daunting task. Building one that is an attractive place to live is even tougher. ensuite. Each unit has internet, a phone and a TV which has its own Roy Hill information service. Employees have access to a tavern, gym, tennis The Roy Hill accommodation village currently courts, putting green, volleyball and basketball has about 900 residents and at its peak it will have courts and an indoor cricket facility. 2000 people living in it. Each week tonnes of supplies are trucked to the The yet-to-be formally named complex, about village from Perth and Port Hedland. Amenities: The village’s tavern.
We’re excited to be an integral Working together part of the Roy Hill Project, partnering with Roy Hill to deliver early mining services at the mine, including load to deliver value and haul, drill and blast, and mine-related infrastructure. In operation for over 90 years, we are a leading industry supplier of open cut mining services in Western Australia. We’re looking forward to working safely and innovatively with Roy Hill, and bringing employment and local business opportunities to the West Australian economy. Ph: (08) 6212 9500 www.downergroup.com/mining
18 The Roy Hill Project Wednesday, May 21, 2014 THE FACES OF ROY HILL Ian Crawford Chief operating officer an Crawford is the man who has to link I seamlessly the mine, processing, rail and port operations so that the Roy Hill project is ultimately capable of shifting 340 million tonnes of material every year. That’s 340 million tonnes which need to be blasted with explosives, lifted onto trucks, processed and separated into lump and fines-grade ore, transported by locomotive for hundreds of kilometres and finally dumped into waiting cargo ships at Port Hedland. It is an enormous task but one which the 53-year-old father of two relishes. Mr Crawford has had to work to link the various arms of the business in the full glare of the public spotlight — as well as under the watchful eyes of the project’s financial backers. “It’s a once-in-a-lifetime experience being funded from export credit agencies,” he said. “We have had to prove ourselves to the lenders as well as prove the quality of the project.” Mr Crawford has been with Roy Hill for less than three years but mining is in his blood — he was born in Edinburgh and worked in the British Picture: Iain Gillespie coal industry before moving overseas 20 years ago. A big vision needs the right partners. Securing US$7.2 billion of finance is never easy. As a leading natural resources bank in Which is why the partners in Roy Hill, one of Australia we are proud to have supported Australia’s highest quality iron ore projects, the Roy Hill project. had confidence in ANZ’s support. anz.com Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. ANZ’s colour blue is a trade mark of ANZ. 05/14 16671-2
Alinta Energy powering the Pilbara and Roy Hill • Alinta Energy owns and operates the Newman Power Station. • Alinta Energy will construct a new high-voltage transmission line from its Newman Power Station to supply the full power requirements of the Roy Hill Mine. • Construction of the 123km 220kV transmission line has begun. The completed line will have capacity to supply additional potential customers. • Alinta Energy will also construct a 33kV distribution system and a 6MW diesel-fuelled power station located at the Roy Hill Mine. • Roy Hill and Alinta Energy have worked closely to take an initial supply concept through to a fully-developed solution that ensures the long-term power needs of the Roy Hill Mine are secure. • Alinta Energy’s construction project, which will employ up to 150 people through WA-based suppliers at its peak, is scheduled to be operational in early in 2015. • The recent termination of a State Agreement now allows Alinta Energy to continue to expand its footprint in the Pilbara through development of additional generation capacity and competitive power solutions.
20 The Roy Hill Project Wednesday, May 21, 2014 THE FACES OF ROY HILL Sanjiv Manchanda Project director roject director Sanjiv Manchanda’s tongue is P firmly in his cheek when he talks about his role. “I have a simple job. I just have to build it.” The 50-year-old electrical engineer has a daunting job. He is responsible for overseeing contracts for the engineering, construction and commissioning of the mine, processing, rail and port infrastructure that gets ore to market. It is a role which sees him “live and breathe” Samsung C&T — the company tasked with Picture: Lincoln Baker delivering much of Roy Hill’s infrastructure, which is now more than one-third complete. Samsung C&T was “critical to the project”, Mr procurement and construction contractor Australia, Africa, India, Malaysia and Indonesia. Manchanda said, for delivering construction of certainly helped to give a level of confidence to the He played a considerable role in delivering the the project on time and budget to the required export credit agencies when they were conducting infrastructure required such as the quality. their due diligence on the project,” Mr accommodation camps, internal mine roads and Samsung C&T’s reputation also gave “comfort Manchanda said. the Ginbata Airport at the mine, which has and certainty” to Roy Hill’s bankers. Mr Manchanda brings significant experience to ensured that the Roy Hill project can keep ticking “The appointment of a company of the size and the project in the design and construction of big off the milestone’s now the debt finance has been stature of Samsung C&T as our engineering, mining and minerals processing projects in secured.
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22 The Roy Hill Project Wednesday, May 21, 2014 Fo Inside Roy Hill’s Perth nerve centre The ore body may be in the Pilbara but, as STEPHEN BELL explains, Roy Hill’s brain is in the city echnology and automation are mining buzz It also means that Roy Hill hits the ground architect and I had hoped to include. Maybe later T words and Roy Hill believes it has caught the vibe well before shipping a tonne of iron ore. In November, hundreds of Roy Hill employees running thanks to a quick turnaround on planning and construction for the new HQ. Gina Rinehart joined other key Roy Hill and some can be incorporated, after Roy Hill achieves shipments and revenue.” Mrs Rinehart’s influence is apparent in the started moving into the project’s new Hancock executives in turning the first sods of soil sleek, three-storey edifice of stonework, stainless headquarters and remote operations centre, a hub at the site in June, 2012, nearly two years before steel and glass, which overlooks a commercial that amalgamates operations, marketing and the Pilbara mine-rail-port development was precinct just a few minutes drive from the corporate services near Perth Airport. ensured by a US$7.2 billion bank funding deal. international terminal. Illuminating: A “It allows us to manage the operations in an Construction of the building took 16 months. Roy Hill’s new hub aims to bring high-tech night-time view integrated way — identifying challenges, “I’m pleased to say it was built on time and savvy to the dusty business of mining but doesn’t of the operations solutions and new productivity improvements,” within budget,” Mrs Rinehart told Roy Hill’s lack in aesthetics. centre near Perth Roy Hill’s general manager demand chain Mike financiers at a recent Singapore function. Inside reception visitors are confronted by the Airport. Lomman said. “Yes, it meant trimming a few things the gorge wall — a collection of 137cm Samsung Re screens adorning a wall like a giant puzzle. Alongside a countdown clock for milestones, vid such as the date of first exports in late 2015, it the displays a “virtual” waterfall, though screens can life be individually tuned to all manner of visual R popcorn such as Pilbara beauty spots. be The building’s interior is punctuated by vie sandstone features sourced from the Kimberley: wh the carpet design recalls the red rocky ground of an the Pilbara and the reception desks and internal rea elevator bring to mind rusty iron ore. T A boardroom with all the latest mi Iron awe Something important is happening in the Pilbara region in West Australia, the world’s premier iron ore province: the $10 billion Roy Hill Iron Ore project. One The Roy Hill project is changing the face of Australia. Local, regional and indigenous employment and contracting opportunities Roy Hill will have around 4,000 construction workers at its peak and 2,000 of Australia’s largest independent integrated mining, rail and port projects, operational staff once the mine is operational. and the largest mining project finance deal of its kind in the world, Roy Hill is significantly contributing to the Australian economy. Expanding our trade credentials The project will add even more weight to our exceptional export flow. Roy Hill We’re backing Roy Hill because we’re passionate about projects that will deliver export volume greater than our national wheat exports; or double have such vast potential for Australia. the nation’s annual wine exports; or greater than the total of Australia’s combined wool, seafood and lamb exports. Owned by Hancock Prospecting Pty Ltd (70%), Marubeni Corporation of Japan Creating innovation (15%), POSCO of South Korea (12.5%) and China Steel Corporation (2.5%), the project will also create change across the region, providing a high quality and Roy Hill is a powerhouse of innovation, using state-of-the-art, high-technology reliable iron ore supply, especially to Asia. systems, automation and processes to deliver reliable, sustained and low cost production of iron ore that’s known for its quality and grade. We’re backing Roy Hill – providing the structuring, expertise and finance that will bring the project to life – because we’re passionate about projects that have Only the best could make a deal of this scope work – that’s why we invested such vast potential for Australia. the very best of NAB into the Roy Hill project. As joint debt adviser, mandated lead arranger for the project financing and transactional bank to Roy Hill, we’re Here’s a snapshot of what the project will bring to our economy: proud to be involved in this significant project. To find out more call Brad Calleja, Global Head of Resources +61 3 8641 4596 © 2014 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686 A108315-0514 SBPJ759WA
014 thewest.com.au For all the latest news The Roy Hill Project 23 ‘The port limit means that we always have to maintain a disciplined focus on cost minimisation; it also encourages innovation to introduce r s new efficiencies.’ Mike Lomman, general manager demand chain s chain, consisting of one mine, one rail line and one port, as opposed to the multiple sites operated by Rio Tinto, BHP and Fortescue. Roy Hill, however, insists the new ROC is vital. t “Because Roy Hill has a 55mtpa throughput limit, set by its port capacity, the onus is on achieving absolute end-to-end integration and Remote control: The centre is designed to achieve ’absolute end-to-end integration’. Picture: Simon Santi efficiency to support the business model,” Mr Lomman said. videoconferencing gadgets is overseen by one of flat screens. It is impressive, and Roy Hill has the “The port limit means that we always have to the chairwoman’s favourite oil paintings of her advantage of using proved technology. maintain a disciplined focus on cost n life in the Pilbara. Rio Tinto launched its remote operations centre minimisation; it also encourages innovation to Roy Hill won’t confirm this but Mrs Rinehart is near Perth’s Domestic Airport in 2010, and is in introduce new efficiencies. believed to have a dedicated office near the the process of automating some of its Pilbara “It is already the thought-centre of the project viewing area for the remote operations centre, operations, including driverless trucks. with weekly planning sessions to ensure where up to 70 Roy Hill personnel will monitor BHP Billiton Iron Ore opened its integrated operational readiness for each of the milestones and control the giant mine, rail and port project in remote operations centre, located inside its new ahead — in doing so, nothing is left to chance.” real time. office tower at Brookfield Plaza, mid last year. When construction winds down next year, the The myriad data include 3-D animations of Some have queried why Roy Hill requires an ...................................................................................................................... mining and construction displayed on super-sized ROC, given that it involves a simpler logistical ៑ CONTINUED P24
24 The Roy Hill Project Wednesday, May 21, 2014 For TH S En S div an en de sh zo Team effort: Staff from the remote operations centre at their new office in December. de ...................................................................................................... pr ្ FROM P23 attempts to “industrialise” the mining, ac processing and transport of iron ore. ‘It is already the thought- leg ROC will be front and centre as Roy Hill’s As at other mine sites, the holy grail of co demand chain team — responsible for the automation is to deliver safer workplaces centre of the project stu planning, scheduling and execution of re production activities — kicks into top for employees, while making production activities cheaper and more reliable. with weekly planning sig gear. The technology will be used to ensure Roy Hill also believes it has the jump on competitors by embedding the potential for sessions to ensure wi activities conform to the mine plan, while instigating continuous improvement to later automation into the design of its operations from day one. operational readiness.’ rig de “optimise” production. This should minimise “retrofitting” po After start-up, automation of some issues encountered by some other Mike Lomman, general manager so activities will be an objective, as Roy Hill organisations, Mr Lomman said. demand chain ma SUPPORTING ROY HILL FOR THE LONG TERM J000178A SKILLED is proud to be supporting the Roy Hill project from our position as Australia’s leading provider of workforce solutions to the mining industry. With experience and expertise across mining, rail and port we look forward to working with Roy Hill throughout construction and operations. Our industry leading safety systems, local presence and market leading training, apprenticeship and Indigenous employment programs make SKILLED a partner of choice for Australia’s mining leaders. FOR MORE DETAILS CALL 1300 361 582 OR VISIT WWW.SKILLED.COM.AU 243
014 thewest.com.au For all the latest news The Roy Hill Project 25 THE FACES OF ROY HILL Innovative healthcare Susanna Beech solutions for the Mining sector Environment and approvals manager usanna Beech, manager environment S and approvals, joined Roy Hill three years ago. “Roy Hill is being constructed across a • Tailored and Flexible Healthcare Solutions • Environmental and diverse range of environmental landscapes Public Health and within areas containing significant environmental values, such as the • Aero-Medical Evacuation (AME) development of a port ore-handling and ship-loading facility within the intertidal • Occupational Health zone of the Port Hedland Port,” she said. • Training and Consultancy “Our success so far has been the early development of business systems to identify, prioritise, implement and track achievement of approval requirements and legal obligations. Furthermore, comprehensive baseline environmental studies along with solid stakeholder ISO 9001 ISO 14001 ISO 18001 relationships enabled us to achieve a Quality Environmental Occupational Management Management Health & Safety Management significant number of project approvals within short timeframes. “We have undertaken a three-year rigorous debt-financing process involving detailed assessments of the project risks, potential impacts to environmental and social values and the development of management practices to reduce risk.” WE CONNECT BUSINESS, IDEAS, LIFE. J000178A Ansaldo STS is proud to be delivering a signalling and communications solution for the Roy Hill Iron Ore Project that sets a new benchmark in operational flexibility and efficiency for heavy haulage mining railways. www.ansaldo-sts.com 2436504πHSRM210514
26 The Roy Hill Project Wednesday, May 21, 2014 For Bankrolling the A pl Mining in the Pilbara is fundamental to the national accounts — and our way of life. Economics editor SHANE WRIGHT reports — ro he WA Budget lives or dies by how much iron of recent years — but the WA Government has m T ore is shipped out of the State. And it’s almost as important to the Federal Budget, as the long-awaited surge in exports benefited also. The WA Government is the ultimate owner of the iron ore. And it’s the Government that has G pumps cash back into the barren coffers of grown ever more dependent on the royalties on lik Canberra. that iron ore for its day-to-day operation. Au Iron ore now accounts for almost one in every The State Treasury lives and breathes on the fin three export dollars raised by Australian iron ore spot price. businesses. Royalties from miners account for 20 per cent of co Most of those dollars are funnelled through Port the revenue that helps pay for the State’s teachers, Hedland — the world’s biggest iron ore port. police officers and nurses. pe Over the past year, exports through Port A fifth of the State’s teachers, a fifth of the police Hedland to China have climbed by 50 per cent. force and a fifth of the State’s roads are paid for tr They were up by 7 per cent in April alone. from the red earth being shipped out to Asia. gr While this growth is being pursued by The surplus in State Treasurer Mike Nahan’s companies such as Rio Tinto, BHP Billiton and first Budget came in no small part from activities Fortescue, many of the benefits flow back to in the Pilbara. Of taxpayers at the State and Federal level. As that dependence has grown, so to the se The communities of the Pilbara and the fragility of the State budget. employees, managers and shareholders of the big The rule of thumb for the State Budget is that a co Prime Minister mining companies are the biggest direct $US1 dollar movement either way in the price of a th Tony Abbott beneficiaries of the mining and construction boom tonne of iron ore changes WA’s royalties take by su
thewest.com.au 014 For all the latest news The Roy Hill Project 27 e Aussie lifestyle plus or minus $45 million. It is a volatile game. When things go awry for miners, so to for the d Mining royalty income has one perverse effect Federal Budget. — for every $100 million increase in iron ore The most obvious impact occurred in 2009-10. royalty revenue, the State will lose about $90 Company tax to Canberra fell by 10 per cent. million (over a period of time) through reduced The tax collected from the mining sector dropped GST. by 50 per cent. It’s not just the State that depends on iron ore. It was a decline that added many billions of At a macroeconomic level, iron ore exports are dollars to that year’s $55 billion Budget deficit. likely to add about 0.3 percentage points to Deloitte Access Economics, in its most recent Australia’s total increase in national income this analysis of the state of the Federal Budget, noted financial year. the best proxy for understanding the nation’s That would be a threefold increase of the finances used to be the unemployment rate. of contribution made the previous year. No longer. The best proxy is now coal and iron s, In terms of GDP, iron ore will add about 0.8 ore prices. percentage points to growth. According to these respected forecasters, if the ce Given the way the rest of the economy is price for both commodities follows the trajectory tracking, that will amount to a third of total GDP of past commodity booms and busts, then the hole growth. in the Budget would be $36 billion. That’s just shy All this feeds into the Federal Budget. of the annual cost of the age pension. s Recent figures from the Australian Taxation Both thermal and coking coal prices have Office highlighted the importance of the mining slipped by more than 50 per cent since their high sector, and particularly iron ore producers. point in 2010. Iron ore has fallen, but not by quite Miners paid $15 billion of the $64 billion in as much, while it has been more than offset by an a company tax receipts collected in 2011-12. Much of increase in sales. a that $15 billion came from big iron ore miners ...................................................................................................................... Premier such as Rio, BHP and Fortescue. ៑ CONTINUED P28 Colin Barnett Laing O’Rourke Engineering the future Working in partnership to deliver Western Australia’s infrastructure needs for more than 30 years laingorourke.com
28 The Roy Hill Project Wednesday, May 21, 2014 Fo CONGRATULATIONS SPOT IRON ORE PRICE ROY HILL $US/t 200 140 2430642πBLRM210514 80 20 2002-03 2013-14 Source: World Bank ............................................................................................... ្ FROM P27 “Second, Australia is the lowest cost producer of iron ore, so that even if However, there is some good news for overall demand for iron ore slows, other the Budget (both Federal and State) even producers are likely to see cuts before if iron ore prices slip a little further. there is a reduction in demand for HSBC chief economist Paul Bloxham Australian iron ore.” argues that though there has been a All of which is positive for both Dr RED is proud to be slowdown in the overall Chinese economy, the bit that keeps buying Nahan, Federal Treasurer Joe Hockey and their respective budgets. delivering construction Australian iron ore is still strong. And it has been good for the nation’s “While China’s growth has weakened, standard of living: Australia has moved services to the world class much of the slowdown has been in from the 13th richest nation in the world manufacturing, while growth in (as measured by exchange rate adjusted Roy Hill iron ore project. infrastructure investment — which is per capita GDP) to about 6th. the key driver of demand for steel — has Once Australia rode the sheep’s back. remained strong and is expected to Now we’re all passengers on a bulk www.redengineers.com.au continue,” he said. carrier headed to Asia.
thewest.com.au 014 For all the latest news The Roy Hill Project 29 THE FACES OF ROY HILL WORKFORCE SNAPSHOT Colyn Louw ᔡ Peak construction workforce: 3800 ᔡ Operations phase: approximately 1800 employees at full Human resources general manager production, consisting of 1500 FIFO employees and a number of olyn Louw, general manager for human C resources, says Roy Hill is a chance to work on a tier-one project and be part of something special. employees living in Port Hedland. The balance is based at the corporate head office and remote operations centre in Perth. “We are building a major mining project that ᔡ Operational employee numbers 4 will be a market differentiator,” he said. “Roy Hill will increase by 320 in 2014, 530 is a truly WA-based company, with 95 per cent of in 2015, 250 in 2016 and the our operations workforce to date hired from remainder over the period 2017 to within the State. We want people who are skilled 2020. and business savvy, think and act like business r owners, understand and apply effective use of cost drivers and embrace productivity as a way of doing business. It is these qualities which will deliver sustainable value to all our stakeholders.” According to Mr Louw, innovation lays the foundation for long-term business growth and positions companies for future success. “We aim to evolve our business by adopting the d processes, technologies, and mindsets necessary ld to strengthen our long-term operation,” he said. d “We want to be a high-performing business where people realise their potential. Our values, k. supported by defined capabilities and behaviours, are a constant reminder of what we are working Picture: Iain Gillespie towards and forms the basis of our culture.”
30 The Roy Hill Project Wednesday, May 21, 2014 Fo Iron ore end game: Inside the m hina’s premier steel factory, Baosteel, is the been because it is a dangerous part of the facility. China’s Baosteel complex is one-third bigger than Rottnest. KIM MACDONALD describes life C quintessential expression of Chinese toil. It is a groaning, steaming behemoth that produces 43 million tonnes of steel a year in a Just over a year ago two people were killed and 13 injured, one with third-degree burns to 99 per cent of his body, when molten steel spilled from a fr in relentless, round-the-clock operation. refining furnace. th inside the final destination for The West Australian gained an insight into the 30sq km area of land in Shanghai to which WA The workers had been cleaning molten slag from the furnace when a hook lifting the furnace failed, co much of WA’s iron ore owes much of its current standard of living during toppling the 270-tonne structure. m a guided tour organised by the Australian As we passed we saw sparks fire out of the top in al Institute of Management WA. a reminder of its ferocious force. al Baosteel, China’s biggest listed steelmaker, is The scene soon disappeared from sight when the an one of WA iron ore’s biggest customers, and its tour bus veered back into tree-lined streets. orders not only create mining jobs but help Baosteel’s green belt sprawls for more than 40 50 finance the schools, hospitals and infrastructure per cent of the facility, which is the size of Macau sl that rely on mining royalties. and a third bigger than Rottnest Island. That thought was top of mind on that drizzly Baosteel’s official website claims its air quality th winter’s morning in February as we watched is on par with a State-level scenic spot and it is the ships come into the Yangtze River and deliver the first metallurgical company to meet new tr rocks all the way from the dust bowl of the environmental standards. an Pilbara. Visitors tend to walk away impressed by its The ships were unloaded at Baosteel’s port and greenery, even though the heart of the operation — w the ore taken directly to the blast furnace a few the heat strip mill — looks like a post-apocalyptic — kilometres away within the same facility. scene. do Our tour bus did not stop at the blast furnace, The cavernous mill is dark and loud — you have much to our disappointment. to shout to be heard above the clanging sounds of ap End product: Workers walk past rolls of steel at a Baosteel production line. No explanation was given, though it could have industry. w Leading The Way. Centrals are proud of our ongoing contribution to the Roy Hill Iron Ore Project. Our involvement includes the construction of eleven Rail Bridges, civil and in-ground services for the Mine Non Process Infrastructure Buildings and provision of civil resources for the construction of the Main Processing Plant. Successfully delivering multi-disciplined construction services for the Mining, Oil & Gas and Infrastructure sectors across Australia. www.centralsystems.com.au Preserving Today. Constructing Tomorrow. Perth | Port Hedland | Newman | Brisbane | Townsville 46 Edward Street, Osborne Park, WA 6017 t: 08 9443 2928 e: info@centralsystems.com.au
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