Rio Tinto's $3.5 billion Pilbara mine is a welcome investment for WA, are we in for another mining boom?
Australia's three major iron ore miners have now committed to spending a total of almost $9 billion on new mining projects across Western Australia's Pilbara, creating thousands of new jobs.
Rio Tinto has confirmed it will spend $3.5 billion developing the Koodaideri iron ore mine near Newman, in what is set to become the most technologically advanced iron ore mine in the world.
It is expected to create more than 2,000 jobs during construction and 600 ongoing production roles.
Earlier this year, BHP announced it would construct its $4.7 billion South Flank minein WA's central Pilbara and Fortescue Metals Group approved development of its $1.7 billion Eliwana mine.
There have also been significant investments in the development of lithium mines across the state on the back of growing demand for battery storage devices.
The large spending comes after a dearth of mining investment in the state over the past five years.
So is this the start of another mining boom?
Well, it is certainly an uptick, but it in no way matches the simultaneous investment made during the so-called "once in a generation" mining and resources boom experienced between 2004 and 2012.
'It's chalk and cheese really'
According to the Deloitte Access Economics Investment Monitor report, at the peak of the boom in December 2012, WA had $287 billion in investment projects either under consideration or under construction, while the value of resources projects under construction or committed was $148 billion.
By comparison, Department of Mines figures for September 2018 show WA had $108 billion in resources investment projects either under consideration or under construction, with $36 billion of this total actually under construction.
"It's chalk and cheese really," said John Nicolaou from consultancy firm ACIL Allen, who said the previous boom was an "order of magnitude" different in comparison.
"Boom is not a dirty word, but I don't think we can talk about boom in the same way we saw during the resources boom in the last decade.
"What we're seeing now is an extension of that boom as miners like Rio Tinto are expanding their operations and maintaining their production levels, so it's a sound financial decision.".
That's not a boom, this is a boom
During the height of the mining boom, there were six major oil and gas projects and several large iron ore mines being developed simultaneously.
It put immense pressure on the state's labour force, which drove the state to fly in tens of thousands of workers from interstate and overseas to keep up with demand, which in turn led to huge wages growth.
That in turn squeezed essential services like schools, hospitals and housing, forcing the WA Government to spend billions upgrading infrastructure.
The Government also had to compete with the sector's rapidly rising wages when filling public sector roles.
The previous Barnett government was subsequently criticised for squandering the proceeds of the "once in a generation" mining boom — emerging from it with huge debt and deficit figures.
"They built the rail line down to Mandurah, they expanded the roads to the airport, they expanded the airport, they had to build new sporting facilities, new police stations.
"Because of population growth, the state needed an extra 76 new schools over the next 10 years to cope with all the kids."
Industry plea to avert skills shortage
While this round of investment is far from what was seen a few years back, the uptick is already putting pressure on the local workforce, with skills shortages emerging in some sectors.
"The key constraint we saw then was the constraint around people — the human capital of the state — where we didn't have an adequate skills base or the capacity of the working population to manage in a resources boom of that magnitude," Mr Nicolaou said.
So how does the state avoid a repeat of the pressures experienced last time around?
Commentators agree the WA Government must make sure it trains and re-trains enough locals to undertake the work.
"We need to get ahead of it. If we look forward, I think it's important state and federal governments work together to ensure those opportunities will be there for future generations," Mr Nicolaou said.
"We need to ensure the education and training and skills development programs of the state governments and industry are there to meet that future need.
"The key challenge for the McGowan Government now is making sure they're putting the right policies in place, whether it be approvals processes or human capital development or infrastructure development."
The view is also shared by the state's Chamber of Commerce (CCI WA), which warned the Government against going on a spending spree.
"We've got the highest per capita debt of any state in the country. Until we pay that down, that's going to make things very difficult to pay for services like schools and roads and hospitals.
"The royalties that flow from this project will go a long way to addressing that debt."
Rio Tinto feels the pinch
Being the last of the major miners to announce its expansion, Rio Tinto is already experiencing some workforce pressures.
"It is a sign in general of the economy picking up, but at this stage it's manageable and there certainly is some inflationary pressure coming through in terms of costs for contractors, and some specialist skills, particularly say in mining engineering."
While most agree this is not a return to last decade's boom, it is a sign of confidence in the long-term growth of the industry, with the major miners all committing to projects which will maintain their production levels.
"The economy is strengthening, confidence is coming back, important projects are being approved and we want to maximise the jobs for West Australians," WA Premier Mark McGowan said.
"That boom that happened between 2004 to 2012 or 2013, I don't think that will be repeated again. I think what we are seeing is a strengthening and a strong improvement in the state's economy."
A "Blade Runner" mine of the future
Rio Tinto has been a trailblazer in the world of automated mining, becoming one of the first globally to adopt autonomous trucks, drills and trains in an effort to drive down costs.
Its Koodaideri mine is a culmination of the work it has undertaken in the automation space over the past decade. It is set to become the company's most technologically and digitally advanced operation.
"These are Blade-Runner-type mining operations," Mr Strachan said.
"It's all remotely controlled by someone working in Perth."
While the company would not say if automation resulted in fewer jobs, it reiterated the importance of creating more highly-skilled jobs.
"Six hundred jobs is a sizeable number of jobs in anybody's language, and I think it's also important to think about the different types of jobs. We're actually creating new career roles for people as well," Mr Salisbury said.
"Because of the automation it means the jobs are safer, more interesting, more challenging."
KATHRYN DISS - 30th November 2018 - ABC News