Contents

Autumn 2010

The official Journal of Shipping australia ltd Level 6, 131 York Street, Sydney NSW 2000PO Box Q388 Sydney NSW 1230 (02) 9266 9911 4 (02) 9268 0230 www.shippingaustralia.com.au

ediTorial executive editor - Llew Russell feature writer - Archie BayveladminiSTraTion Sarah Abrahams artwork@showpub.com.au adverTiSing co-ordinaTorFor Advertising in the next issue Call Steve Moxey (02) 9211 7422 steve.moxey@showpub.com.augraPhic deSignerAnne Mackintosh artwork@showpub.com.au

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Announcements from the bridge 2efficiency is key to viability

Viewpoint 6Port prices must compete

Profile 8Paul edward McLeay MP

the cruising boom 10Message or wake-up call, writes Ann sherry

Retrospect 12What will happen to the price of gas?

the Lithium enigma 16An energy revolution right before our eyes

Revolution Pilbara 22Civilisation soon for Port Hedland and Karratha

Book review 26Voices from the ships by Diane Kirby

Coastal shipping 28It would be here, says Chris Mangan, were it reliabletradegate news 32Why are the three C’s so difficult to achieveGrain safety 36Packing standardsthe scene 38sAL Golf Day

signal 40Industry Updates

training 42sAL Annual Report 2009 44Advertiser’s list 160

Cover photograph by James Morgan

Cover pictures:

1. Cruise ships in Sydney Harbour

2. Paul McLeay

3. Ann Sherry

4. Nicole Lockwood321AUstRALIA

4

Ceo’s note

AUstRALIA2 Autumn 2010

I hope that 2010 so far has been kind to all our readers

and that, as the year progresses, matters will improve even further. In the international shipping industry, financial challenges still remain as a result of the global financial crisis.

It will be a few years yet before trade recovers to the point of providing positive returns to shipping lines in almost all categories of shipping with perhaps the exclusion of the cruise industry. Whilst Australia has come through the recession without too much damage, this is certainly not the case in the major world trades bearing in mind, for example, the projected 40 per cent increase in capacity in the international container shipping industry over the next four years; which will not be matched by trade growth.

This is our normal, bumper edition, with the annual report and we have made some changes to the format of both the magazine itself and the annual report. We would very much appreciate readers’ feedback on what you think about the new format. In particular, we have decided this year not to provide a major policy issues section but rather to provide more comprehensive reports by both the chairman and CEO to avoid duplication and hopefully make the annual report more readable.

In Viewpoint, there is a debate about what trade facilitation means to individual ports and how it could be handled within the national port development strategy currently being prepared by Infrastructure Australia and the National Transport Commission. There are many issues with Australian ports at the present time and a number of them are facing increasing pressure from State Governments, for example, for increased dividends and return on assets. Readers will be well aware of the proposal by the Queensland Government to sell the port of Brisbane and Shipping Australia is concerned that prior to sale there are good governance procedures put in place to ensure that the future development and operation of the port conforms with the requirements of the Queensland and Australian Governments to facilitate trade. It is emphasised that SAL is not proposing any concept of subsidy but rather recognition of the important trade facilitation role of ports by their owners.

A problem in Australia, at least as far the major

container ports is concerned, is the lack

of competition between them because of the vast distances and the cost of

land transport. Shipping Australia welcomed the selection of Hutchinson Port Holdings as a third stevedore at Port Botany when the third terminal has been constructed. There has been debate in the media that competition should be inter-port and perhaps different stevedores selected for individual ports assuming that State Governments see the benefit of moving in that direction. The point is the third stevedore is facing a strong market position by the two incumbent stevedores and stevedoring contracts in Australia tend to be on a national basis. This is understandable given that stevedoring is very much a volume business and

efficient intermodal terminals key to commercial viability

Announcements from the bridgeby Llew Russell

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it faces high capital costs which in turn, requires viable and sustainable terminals. In SAL’s view, there appears to be considerable advantage in having the same third stevedore in each major container port to enable that stevedore to compete in the current marketplace. This will be relevant as Melbourne considers the future development of Webb Dock as a container terminal and SAL has urged the Government to bring forward that development to provide the necessary degree of competition. SAL continues to support the introduction of a third major container stevedore in Australia where it is commercially viable to do so and where it would not have a negative impact on future investment in stevedoring terminals in Australia.

To assist that commercial viability there is, in SAL’s view, the need to develop port based data community systems and there is considerable debate on that issue in the annual report. Furthermore, commercial viability will be assisted by efficient intermodal terminals that will effectively increase the capacity of existing container terminals to handle increased trade growth, particularly when it fully recovers from the downturn.

There has been considerable debate, particularly in Sydney, Melbourne and Fremantle regarding the future development of these intermodal terminals but an inhibiting factor has been in recent times, an increase in congestion at empty container parks, again in Sydney, Melbourne and Fremantle. Shipping Australia has been working with Tradegate to make the process much more transparent and assist both the parks and road carriers as well as the shipping lines in terms of much better demand and supply information being available to the parks and stakeholders. In addition, Shipping Australia has been working with Sydney Ports Corporation to determine how best to increase the opening hours of

empty container parks and whilst it is not simply a matter of transplanting one port’s procedures in another, nevertheless important lessons can be learned and specific arrangements made to assist the situation in other ports such as Melbourne and Fremantle.

It is interesting to speculate that a third stevedore in Melbourne could perhaps increase capacity to the port, that would allow empty containers, that are to be evacuated overseas, to be sent directly back to the container terminal. Another reason to bring forward the development of Webb Dock.

Shipping Australia believes that all stakeholders need to approach the subject of empty container parks on the basis of collaboration and cooperation to develop sustainable solutions. SAL stands ready to fully play its part in that debate.

Ann sherry, Ceo of sAL member Carnival Australia, challenges us all to think about what facilities we require in our ports to

exploit the potential growth in the cruise sector, the fastest growing area of

tourism.There has been a lot of discussion in the media regarding our mineral and resource development in Australia and we take the opportunity in this edition of the magazine as a major feature to discuss the challenges in the Pilbara, for example, in developing sustainable cities for the future and the little known lithium story. Readers who have read up-beat high-flying reports about the fortunes to be made from mystery lithium companies can give themselves a solid background briefing on this almost unknown new industry. The story, so as we know, is

the first in Australia to take an in-depth look at what the writer calls the lithium enigma. We also take the opportunity in Retrospect to update a number of the stories that we presented for your perusal in 2009.

We take great pleasure in profiling the new minister for ports in New South Wales, Paul McLeay and we look forward to working closely with him in relation to a number of urgent port issues in New South Wales that need addressing.

The Federal Government is currently continuing to examine the need for a new coastal shipping policy or in fact, a new maritime policy for Australia and we have provided an extract from a speech by Chris Mangan of the Multimodal Freight Council in Queensland that provides a new insight.

We are very pleased again to present Tradegate News as part of the SAL magazine and we also provide a outline of initiatives that have been taken in New South Wales to develop training and career opportunities for those wishing to be involved in the transport and logistics industry.

A serious problem has been experienced with grain leaking from containers and included in this edition is a fact sheet on the recommended packing procedures for grain in containers which should help eliminate that problem if adopted by all the packers.

We are looking forward positively to the future but do not underestimate the challenges that we will face, particularly in the next few years. Nevertheless, I have confidence that the strong commitment of our members and their continued active participation in the affairs of SAL will provide a strong foundation to move forward.

4 Autumn 2010

Announcements from the bridge

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AUstRALIA6 Autumn 2010

Most ports in Australia, either publicly or privately owned and whether specialising in

container, motor vehicle, breakbulk or the bulk trade tend to accept that, at least, part of their role involves facilitating Australia’s trade. As both Infrastructure Australia and the National Transport Commission have already stated in their early preparation of a national strategic port development document, ports are a vital and very important link in supply chains connecting Australia with the rest of the world and therefore, clearly have an important trade facilitation role.

However, dig a little deeper and it becomes apparent that different port corporations and their shareholders or stakeholder Ministers, appear to have different ideas of what trade facilitation actually means. Certainly from SAL’s point of view, it does not involve subsidy of port operations. What it should involve is the provision of safe and efficient services at prices that are internationally competitive. It is possible that some ports under pressure from shareholders and State Governments, do not pay sufficient attention to the requirement for prices to be internationally competitive both from a statutory and in-port service provider point of view.

It is appreciated that the power and influence port corporations have over service providers in ports may be limited in some cases. Where they are a major trading port, it is important that port corporations do all they can to ensure such service providers meet trading community requirements in uniformity with both State and Federal Government policies.

When one examines the land valuations adopted in a number of Australian ports, the price increases that have been levied at a time of severe financial hardship for the shipping industry and their customers, as well as proposed increases by a number of service providers within these ports gives rise to serious concern.

Land valuations are often based on the commercial value of land but it cannot be fair value as no commercial land can duplicate the services a port provides in terms of trade facilitation. Surely land values should recognise the unique role of ports and their massive contribution to the economic development of not only the State but also of the country as a whole?

A number of ports have produced studies outlining their contribution to economic development but in SAL’s view, it would be beneficial for States to publish a state-wide assessment of the contribution their ports make to State development, which would not only facilitate an assessment of trends over time but also could well influence government policy in terms of their dividend and taxing requirements of their ports and access to infrastructure funding.

Regulations under which ports operate and as applied by port corporations should be as light-handed as possible, consistent with the provision of safe and efficient services at a competitive price. To do otherwise, will seriously inhibit trade facilitation.

The functioning of an efficient pilotage and towage service within a port is especially important. In many cases, such services are provided by private companies but it is up to the port authorities to ensure costs are kept to a minimum to promote the competitiveness of their port. Pricing of these services is important to ensure those vessels requiring higher bollard-pull tugs, for example, are not subsidised by those requiring smaller tugs only and there is precedent for this approach. SAL supports the sharing of assets, when required, between tug operators where that results in less cost to industry and we also encourage port authorities not to require more powerful tugs then are necessary to meet existing anticipated demand.

The ports of Sydney, for example, have been charged by the State Government to become more involved in improving

the efficiency of the sea-land interface and assuming this role is implemented in the spirit of close consultation and collaboration with industry, it can lead to facilitating trade. Port corporations must become involved in improving the efficiency and transparency of operations involving connections to and from ports. This also requires adoption of information technology systems in support of that endeavour. SAL fully supports the development of port based data community systems, especially in the container ports and the new PortBIS system presently under trial by Tradegate could well fulfil that role.

In addition, ports must work with their shareholders and stakeholders in the development of the required supporting infrastructure, reservation of corridors and buffer zones against urban encroachment as well as facilitating cargo throughput by, amongst other issues, the development of intermodal terminals and what have been referred to as inland ports.

Intermodal terminals in our major capital city ports, can play a very useful role in increasing the capacity of container terminals in ports without the need for significant new infrastructure investment. The geographical location of these terminals is vital to ensure their efficient operation as will be the governance of their operation to ensure the flow of containers to those intermodal terminals is destined for distribution to nearby locations. A considerable amount of work still requires to be carried out in that respect.

The effectiveness and efficiency of empty container parks in the main capital city ports are also an important component in the efficiency equation.

Overall SAL looks forward to the discussion paper which will be circulated early this year by Infrastructure Australia and the National Transport Commission and we will be eagerly waiting to see what they have to say about ports and trade facilitation.

Port service prices must compete at international level

Viewpoint

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AUstRALIA AUstRALIA8 Autumn 2010

ProfileBy Archie Bayvel

Profilewonders how such a suggestion could apply to him.

“I recognise the importance of the shipping industry as the gateway to our prosperity.

“Within a week of getting this job I’d attended a SAL luncheon,” he says. – “Well, it was a free lunch. – Free lunch? I’m not exactly short of them, mate.”

“Soon after that I had a private briefing with Llew Russell and Michael Phillips right here at this table ... And that’s not all! Just before Christmas, SAL presented a delegation of shipping people from Asia that I was really pleased to meet.”

He could have added: “Now here I am talking to you.”

He went on: “Nobody will feel neglected during my tenure. I came into this job with no baggage, no blinkered views I recognise the importance of the shipping industry as the gateway to our prosperity.”

What about the Newcastle coal ships’ queue and the trial solution currently underway despite its unpopularity in some shipping circles? - “Every now and then we need the hand of government to improve a situation and to nurture our assets.

“Port Kembla is a notable example. When it was first suggested many shipping people were against it. Now, five years later, I would say it’s the best thing that could have happened for everyone involved.

“I have concerns about government intervention in some things such as the coal ships’ queue at Newcastle. We are reluctant to interfere but if we have to we will. I’m aware not everyone in the shipping industry is in favour of the trial scheme but let’s just see what to do at the end of that trial.

“What we need to do is balance the different approaches suggested for the best result. I have a love of transparency and fairness and in measuring. If you don’t measure something you can’t manage it.

“Governments need to be cautious. that’s one

reason why so many people fume over not

getting a quick response.“The interesting thing about Newcastle’s port is that its multi-level participants are all working together to improve it.

“If we can get the supply chain from Gunnedah to Newcastle right, I don’t see why we can’t get it right from there to its market.

“The port’s coal throughput is expected to rise to 140 mtpa by 2016 and new take or pay contracts that have been introduced will ensure everyone’s commitment to success; take or pay exerts a certain amount of pressure to perform.

“Public opinion is often deceptive. When it sees a long line of ships waiting some people see it as a sign that business is booming while others see it as inefficiency at the port. They’d be a lot more concerned if they couldn’t see any ships at all. We need to balance it all out.

“I believe in bringing people together and in them collaborating because in my experience the group is usually smarter than the individuals.

“We did an exercise in my electorate of Heathcote last year when we had our $300,000 share of The NSW Government’s $35 million Community Building Partnership program to distribute among 47 community cultural and sporting groups.

“We built a website and listed all proposed projects on-line. We told the electors they had five votes each and urged them to tell their neighbours about the poll.

“We had 4700 people participating and they told us where the money should go. Having five votes forced people to

look around and not just vote for their own projects. My electors achieved equitable distribution of $300,000 of public money.

“For me it was a perfect exercise in transparency and collaboration.’’

An on-line article by-lined “Paul McLeay and Cassandra Wilkinson” ‘way back in September last year elaborated on the Heathcote experiment: “We decided to try something different ... Local community groups will pitch their projects to their fellow citizens and the crowd will decide who gets the money.

“A lot of people have wondered if this alternative approach is a good idea because they’re worried people will pick the wrong things. We are excited to see what will happen when everyone gets a say.

“Voting is all up front: How much each project wants; how many votes the various projects have received. Voting is audited and each citizen gets five votes (with a maximum of three votes for any one project).

“Let’s see what the crowd comes up with!”

Well, now we know. The predicted success came good for Paul and his loveable electorate. Let’s wish him the same success with our luvvies – the members of the shipping industry.

“I recognise the importance of the shipping industry as the gateway to our prosperity”

First impression of the new minister

for ports and waterways in nsW is that he’s big, his PR henchman is big too and his strangely under-furnished offices are big!

So it’s almost a relief to pass an average-sized lady in a headscarf and a dazzling smile as we wend our way to the ministerial conference room through an office suite slightly reminiscent of a newly-wed’s home in that it has space for more furniture, possibly when there’s a bit more moolah in the kitty.

Not that Paul McLeay doesn’t have a dazzling smile too. He has, just made for kissing shopping centre babies as indeed it should be because this is a cheery big bloke who was literally born and raised to be an ALP politician.

His grandfather was a Labor man and his father is Leaping Leo McLeay, the former party organiser who became Speaker of the House of Representatives during the Keating years.

Paul went to school at St Patrick’s, Strathfield, (fees $5447-a-year + extras for Year 12), one of Sydney’s leading Catholic schools albeit short of the silvertail Great Public Schools group ($20,000-a-year fees and rising). St Pat’s is almost a nursery for Labor MPs with former old boys including Martin, Andrew and Laurie Ferguson, Tony Burke, Craig Emerson, and Paul Lynch; prominent football players are too many to name. Former Liberal leader John Brogden is also an old-boy.

So our new minister comes from a privileged background tightly linked to merit and achievement so it’s unlikely he was spoiled; certainly not by vast family wealth (although Leaping Leo may yet be able to change that in his new career as a lobbyist).

Even Mrs McLeay - better known in radio and literary circles as Cass Wilkinson – has a substantial ALP pedigree. The couple met through their involvement with Young Labor and Cass became a senior member of Michael Costa’s staff during his reign as NSW Treasurer. She and Paul are currently collaborating on writing a Citizens Handbook.

“I come,” Paul says, “from the moderate side of Labor politics.”

And in his maiden speech to Parliament in 2003 he said: “I would not be standing here but for the tireless support, patience and guidance of my fellow members of the broad family that is the Labor Party. I remember with great pride, the years I spent working as an official with the Public Service Association fighting to ensure that workers were not being victimised, that workers were being treated equally, that they had protection from bullies in the workplace, and that they were getting — slowly — more flexible work practices to help balance work and family needs. These are noble pursuits.”

And six years later, in his second term, when he was promoted to the Front Bench last September he said: “I will do the best I can to serve the people of NSW and the party while continuing to represent my own lovable electorate of Heathcote.’’

So after a career that includes the ANU (he left without a degree), the Housing Department and election at 24 as assistant-secretary of the Public Service Association, NSW’s biggest union, Paul McLeay has spent all his 37 years in public life or intimately close to it.

The fact that he knew nothing about shipping until he got this job, may yet turn out to be the best thing for our industry, because he is untrammelled by preconceptions and so-called accepted wisdom.

He’s got plenty to keep him busy: Newcastle’s Hunter Coal Export Framework got up and running with its first ship loaded on January 1; the new Yennora-to-Port Botany rail line opened three weeks later with hopes of replacing 136 truck trips a day; and he’s told the Port Botany stevedores to agree to the new access regulations or else.

When it’s suggested to him that governments seem to have little respect for the shipping industry in general and for SAL in particular, he is outraged. But he’s outraged in a friendly sense and

Paul edward McLeay I MP

Paul McLeay

Paul McLeay gets out on the water

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so much hinges on solving the east-of-Bridge facilities problem...

Australia’s cruising industry has experienced remarkable growth in the past five years expanding

18 per cent a year, on average, making it the fastest growing area of the tourism sector.

Such strong growth is evidence of a dynamic and energetic industry tapping into the growing passion for cruising in Australia combined with our global cruise brands identifying Australia as a ‘must see’ destination for passengers on international cruise itineraries.

Carnival Australia alone represents six international brands and operates five cruise ships full time from Australia under the P&O Cruises and Princess brands with a sixth to be delivered later this year (for the P&O Cruises’ fleet). According to our forecasts, by 2020, industry-wide passenger numbers will

have more than doubled to at least one million a year.

An outstanding feature of the Australian cruise market and central to its success is that cruising opportunities are available across such a wide demographic. In our own case, P&O Cruises appeals to the families segment while Princess is favoured by older, more experienced cruise passengers seeking longer cruises.

In spite of this remarkable growth, I still feel sometimes that there are those who believe this is a ‘cruise bubble’ that is going to burst, that we will wake up one day to find it was all a passing fancy. Doubters should immediately cast aside such a pessimistic scenario – it is simply not going to happen as long as the industry is allowed to grow and flourish.

Cruising is a fully-fledged industry on a steep growth trajectory. Much of the expansion has happened through the worst of the global financial crisis during which cruising has grown at a faster rate than the national economy. If cruising can grow rapidly during these tough economic times, imagine what it could achieve in robust economic conditions.

This success story is no commercial aberration – cruising is deeply embedded in the economic life of the nation and poised to make an even bigger contribution. Data from the International Cruise Council of Australasia shows the extent to which Australians have embraced cruising. It shows that:

The 26 per cent increase in the number of Australians taking a cruise holiday anywhere in the world in 2008 (the most recent figures available) was more than five times the growth recorded in the US market in the previous year and double that of the UK.

At 1.3 per cent, market penetration in Australia is significantly lower than the two-three per cent of more mature international markets, highlighting scope

for further growth here.

In the current season, cruising will become the biggest overseas holiday ‘destination’ for Australians, eclipsing traditional destinations such as the US and UK.

All the portents for sustained growth are positive. In our case, we are adding more tonnage to P&O Cruises Australia; Pacific Jewel in December 2009 and Pacific Pearl to arrive in December this year; and constantly improving the quality of the onboard product to attract more repeat travellers and newcomers to cruising.

At an industry level, cruising’s contribution to the national economy has been quantified in analysis by Access Economics commissioned by Carnival Australia. The report revealed cruising contributed more than $1.2 billion to the national economy in 2007-2008, an increase of 54 per cent on the previous year.

On this basis, we believe that by 2020 – at the end of what we describe as the ‘decade of cruising’ – around $3 billion annually will be contributed to the national economy. If anything, this is a conservative forecast. On current trends, this goal may be reached well before the end of the decade.

There is still a lot of growing to be done here and, as each cruise liner arrives, it serves as a reminder of the need for appropriate infrastructure planning and investment in port facilities.

Regrettably, much of the public discourse on this topic is in the context of long-term needs rather than the here-and-now or even the not-so-far-away. While investment in port facilities is crucial for the long-term viability of the cruising industry, action is needed within a much shorter time frame if Australia is to benefit most from this growing industry.

At the time of publication, Cunard’s flagship megaliner, Queen Mary 2, was due in Sydney on her third visit,

Cruising By Ann sherry Ao I chief executive officer, Carnival Australia

berthing as usual at Garden Island, the only location able to accommodate a ship of her size.

Queen Mary 2 arrives with a message – or a wake up call – that within 15 years, some 85 per cent of new generation cruise liners worldwide will be unable to sail under the Harbour Bridge. It is interesting to note that Diamond Princess, which already operates in Australian waters for lengthy periods of the year, is among the vessels that have to stay east of the bridge.

Inevitably, any discussion of port facilities becomes ‘Sydney-centric’ because of its position as the international gateway to Australia and the region. To be brutally frank, if visiting international ships don’t – or can’t – come to Sydney, they won’t come to this region. If Sydney’s port facilities aren’t right, the rest of the country has a problem.

It would be a tragedy if that were to happen. One of the most exciting things about the growth of cruising is the spin-off benefits that it has delivered virtually to all parts of the country. It is exciting to know that more Australian ports are being added to cruise itineraries.

In recent years, we have expanded our own operations calling at smaller regional ports to open up cruising markets in a range of locations such as Albany, Geraldton, Broome and Cooktown, to name just a few. On her current world voyage, Queen Mary 2 will be making maiden visits to Adelaide and Fremantle, with obvious economic benefit for local economies.

With more ships, we can home port vessels in more locations. Pacific Dawn, for example, now offers year round cruising from Brisbane and Pacific Sun has had a busy 2009-2010 cruise schedule from Fremantle and will return for more in 2011. We will be home porting Pacific Sun in Newcastle for five cruises from September and when Pacific Pearl is delivered to the P&O Cruises’ fleet, she will be the first cruise ship ever to have her naming ceremony in Auckland.

In considering all of the above, our recent experience in making the first cruise liner visit to Christmas Island, where the Federal Government upgraded port facilities, is emblematic of what happens when all the parties involved act together to achieve a positive result with mutual benefits.

Pacific Sun arrived at Christmas Island in December to be welcomed with open arms by local businesses and tour operators who, for years now,

have been accustomed to their amazing island being known for anything but its unique natural attractions. The visit was a microcosm of the cruising economic benefit equation – upgraded facilities attracting cruise ship visits equals support for local jobs and businesses.

Our industry is not just about Australian tourism – our ships might leave from Australian ports but at least 60 per cent touch at least one of the South Pacific countries. In truth, there would not be a cruising industry in this country if it were not for the pristine beaches of the South Pacific.

Such extensive operations in the South Pacific and our recent Christmas Island experience are a reminder that to stunt the growth of cruising due to an infrastructure problem in Sydney, would be a tragedy on a regional scale, not just a lost opportunity for Sydney.

All things considered, it is not hard to see why so much hinges on achieving an east-of-the-Harbour Bridge solution. Shared use of Garden Island with the Royal Australian Navy remains the obvious solution and we remain in close contact with the Federal and State Governments to emphasise the merit of this proposal.

Both Governments appear to recognise the importance of the cruising industry and understand its potential for further expansion. Also understood is the success of recent years is no flash in the pan and that something must be done about infrastructure support.

The surge in international cruise ships visiting Sydney in recent years is no accident. It has happened for a reason. The energy surrounding cruising in this region has been a magnet for our global brands and we have actively encouraged our colleagues at

Cunard and the Yachts of Seabourn, for example, to bring their ships, and thousands of tourists, to Australia.

However, I can only emphasise that if Sydney’s cruise facilities are insufficient to accommodate cruise traffic growth and, in particular, the new generation of megaliners, the ships won’t come to Australia.

So, if there is a threat to cruising reaching its full potential, it keeps coming back to the infrastructure dilemma. In all of our discussions with government at every level, we sense goodwill and a desire to support cruising’s expansion for the good of the nation.

Just weeks ago, the NSW Minister for Ports, Paul McLeay, the Minister for Tourism, Jodi McKay and Carnival Australia combined in a joint statement to draw attention to the economic value of cruising, noting that 19 cruise ships with more than 40,000 passengers contributing an estimated $30 million to the local economy would visit Sydney in February alone.

Resolving the infrastructure issue depends on leadership and energy at the highest levels of government and, in this regard, there is a powerful message in the nature of the industry as an exciting, even glamorous, business activity.

Behind the energy and the passion for cruising lies meticulous planning and preparation to support the operation of a growing number of cruise ships in Australian waters. It is now clear that similar meticulous planning and action are essential if port facilities are to keep pace with the growth of a maturing industry so it can become even more deeply embedded in the fabric of the national economy.

Autumn 2010

Cruising

NSW Minister for Tourism Jodi McKay, Ann Sherry and NSW Minister for Ports Paul McLeay

Pacific Jewel - a newcomer to the Australian scene

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13Autumn 2010Autumn 2010

Gas, gas everywhere so what will happen to its price in gubinges?

Retrospectby Archie Bayvel

Everyone was making money for themselves and the nation in truckloads, our banks were stable and so were our governments. In retrospect we were correct and anyone who thinks we did have a financial crisis should take a closer look at what happened and is still happening in Europe and the United States.

If there’s not a lot of shipping business to be won on the WA coast in the next few years it would not be surprising ... it would be astonishing! News over the past year includes the new port at Okajee, the development of Port Hedland and Karratha into significant cities, doubling of the Ord River project, Darwin’s new gas hub, whatever may eventuate at Point James Price and Vic Justice’s port of Broome, development of Galaxy Resources’ lithium mine at Ravensthorpe where BHP’s defunct $3.6 billion nickel mine has a new lease of life under Canadian miner First Quantum who have agreed to pay $US340 million for the mothballed mine.

One of the three losing bidders was Andrew Forrest’s Poseidon Nickel which offered $US400 million. Just why an under-bidder won the deal remains to be revealed.

Last year was the Year Of Gas. It was gas, gas, everywhere ... Latest reports say Europe is sitting on enough untapped gas to blow the Pearly Gates off their hinges and the Great Wall of China – allegedly visible from the Moon - is built astride enough gas to puff it right up there. Who is going to buy all this gas and what will happen to its price? Darwin’s dreams depend on gas, Dampier is already the land hub for a handful of gas producers, while uncertainty still rules despite government denials over exactly what will happen with the Browse Basin sub-ocean gas discoveries.

The WA Government says it will come ashore at a place called Point James Price – a picnic-drive north of Broome. Woodside, one of the main partners in the $30 billion project, wants that to happen too but Chevron, one of its partners and America’s second-biggest gas company, has been saying: “Bring it ashore at Dampier where all facilities are already in place.”

At least that was what it said until a few weeks ago when it was suddenly announced that Chevron had come around to Woodside’s way of thinking. That’s nice, of course, but the real deciding factor will be whether or not the traditional landowners want it at Broome. The WA Government says they do, a couple of TV documentaries have shown people from the Jabbirr Jabbirr tribe talking mildly over sub-titles saying they’re saying they want it. But when you talk to other indigenous people in Broome they aren’t so sure and Wayne Bergman, CEO of the Kimberley Land Council is suddenly shy of the limelight, passing calls to staff unable or unwilling to answer the simplest questions.

Only a few people have actually been to Point James Price, far up a dusty red track north of Broome. If one is going to

despoil a large tract of virgin foreshore with a gas plant, it is a very suitable place for it. Immediately to the south is Broome’s fabulous Ninety-Mile Beach and immediately to the north are the equally amazing beaches and azure seas that border the old Madman’s Track of the pioneering sandlewood cutters. But Point James Price is a large unattractive rocky outcrop that divides these stretches of paradise precisely in two. A coupla gas trains atop it would be neither here nor there in the context of the surrounding vastness. The beaches here are backed by towering red cliffs. Really red, like new blood. And the silence is that of the dreamtime; you listen to it, hear nothing , fall asleep, dream. The shore vista, alas, is less traditional because ghastly and massive “No Gas” signs and supportive messages have been erected on the clifftops at the point.

Read all that as a strong hint that the landowners aren’t really sure they want the gas hub. The preferred site is slap in the middle of their wild and vitamin C-rich gubinge berry country for a start. Gubinge or gas? Gas or gubinge? While they’re having a yarn-up about it, PetroChina has dumped its $45 billion option to buy the gas and even the Federal Government, suddenly admired by the traditional owners, has told them all to get on with it.

Similar dithering by the landowners and the WA Government cost them the $50 billion Icthys land hub, snatched from under its nose by Darwin when Inpex and Total lost patience with the sandgropers and signed a deal with the Northern Territory.

While all that’s going on, what’s up at Gladstone where two years ago there was a land rush of forty-niner proportions to sign up leases and to strike deals now worth close on $6 billion to exploit methane coal seam gas? We haven’t heard much from them recently; certainly not a whiff of gas has been produced. Projects totalling almost $60 billion are awaiting funding decisions by companies such as British Gas, Arrow Energy, Santos, Petronas, Origin Energy and Conoco-Phillips’ joint Australia Pacific venture, and Shell.

the gas is proving harder and more expensive to process than expected and the huge quantities of water produced have turned out too saline for

irrigation. there’s no mention of how CsG will

fare amid the world flood of gas.

Then there’s the future of oil. US$200+ if you believe some analysts. But then a lot of analysts have written rubbish in 2009. Not the least some of those writing about the hitherto little-known mineral that looks like ending our dependence on oil for powering our cars ... Lithium, Lightest metal in the universe, third element in the periodic table, able as a medicine to calm over-excited minds and above all able to store ever greater charges of electricity for ever longer periods. Some analysts say it’s in short supply and will soon rocket in price; calmer minds say there’s a load of the stuff all over the world and its price will remain stable for years. Which is not to say that fortunes won’t be made from it as the car industry aims to be 50 per cent electric by the mid teens and new producers – two of which are in Australia – come into their own.

Hagen stehr, formerly of the French Foreign

Legion, is one of the more interesting people to

appear in our pages over the past few years.

He’s the man who tamed the wildfish – Southern Bluefin tuna – and discovered how to breed them on land. Considering the present world quota of southern bluefin is 9949 tpa and a single rare and exceptional fish can sell for hundreds of thousands of dollars in

Japan, Hagen’s discoveries have long been expected to produce a fortune for him and the shareholders in his Clean Seas company.

Right now, however, is his season of truth as his second captive breeding cycle begins. Out of last year’s 50 million fertilised eggs, thousands of fingerlings hatched but only seven fish are believed to have survived. Latest figures reveal even more disastrous news that wiped 50 per cent off the company’s share value within a few hours. After announcing an unexpected $14 million loss the company is left with only some $17 million in cash. Its auditors warn that if additional funds are not forthcoming it may cease to be a going concern. Hold your breath and wish Hagen well because the fact he’s done it at all is fish-history stuff.

Growers in the Murrumbidgee Irrigation Area have had a reprieve from drought following the recent rains and all owners of high-security water rights are getting 95 per cent of their water allocation and those on general security rights are getting 23 per cent of their allocation.

While 23 per cent may not be crash hot, it’s much better than the 10 per cent they were allowed a couple of years back – an amount that made growing so difficult that many farmers sold their allocation. But 23 per cent is enough to see rice return to the MIA for the first time in several years. Nothing like what it used to be when Australia was a significant world rice producer - Ricegrowers has bulldozed its Griffith mill, for example - but enough to keep a few farmers happy with rice selling at $500-plus a tonne.

Our most important story for

2009 was probably our prediction that there would be no financial collapse in Australia. It was a sole song amid a chant of doom but the opinion was based on what we’d seen everywhere around Australia.

Point James Price from landward: The environmentalists’ first statement in head-high signs one could read at sea.

Point James Price from seaward. A rocky outcrop with a paradise to the north and another to the south.

14AUstRALIA

Autumn 2010

While 2010 grape prices are at rock bottom, MIA winegrowers have stayed ahead of the game with big growers such as Casellas, of Yellowtail fame, and De Borteli doing well and the other wineries doing oK albeit on slim margins. Hobby growers and those with managed investment schemes have disappeared, however, because they are unable to sell their grapes into a market 20 per cent over-supplied.

On the uranium front, Energy Resources of Australia’s Ranger uranium mine at Jabiru has announced good 2009 results with net profit after tax of $272.6 million, up 23 per cent on last year despite a 2 per cent reduction in uranium ore production. One reason for such a good result is a 56 per cent rise in the price the company has managed to get for its ore; another could be the expiry of long-term low-rate contracts being replaced by contemporary pricing.

Long-term price indicators remain strong with a raft of uranium prospectors wandering the outback and governments taking renewed interest in nuclear power given the constrained carbon economy.

Forty per cent of the world’s known uranium resources are in Australia and the price of yellowcake (which is actually olive green) is predicted to rise 22 per cent over the next 12 months

Something never previously reflected on is who made our most interesting Profile story. The 2009 candidates were Grant Gilfillan, CEO Sydney Ports; Stephen Bradford, CEO Port of Melbourne; Rodger Fletcher, of Dubbo, multi-millionaire and biggest sheep dealer in the nation; and Ganesh Raj, managing director of DP World in Australia.

Hard to decide the most interesting,

eh? What with the gas, gubinges,

grapes, Grant and Ganesh it’s

easy in retrospect to become

over-excited. Time for a snifter of

glithium!

Retrospect Australian HydrographicService - the reliable choicefor your navigation needs.

Highlights of what they had to say for themselves include:

Grant Gilfillan:

“We’ll have the rest of the world coming to see Port Botany when we’re finished. I’m a man on a mission.”

stephen Bradford:

“A young man approached my grandfather, a blacksmith, wanting to lease some land to open a confectionary business. ‘Forget about that, it’ll never take off’ was Grandpa’s advice. ‘Join me at the forge. The future’s in horseshoes.’ The kid, whose name was Ted Street, went on to found the Streets Ice Cream empire.”

Rodger Fletcher:

“When I was young I told my father I wanted to become the biggest sheep dealer in the country. He told me that would be impossible ... but I guess it wasn’t all that impossible!”

Ganesh Raj:

“The first time I made a presentation to our chairman, Sultan Ahmed bin Sulayem, I was alarmed to see that after about two of my slides he appeared to have lost interest. When I’d finished he asked only one question: ‘What’s the risk of not doing what you propose?’ I told him, he nodded and got up to leave so I asked him: What am I to do? – ‘Go ahead,’ he said. – With everything? – ‘Yes, with everything.’ I’ve never used more than two slides in a presentation since!”

AUstRALIA AUstRALIA16 Autumn 2010

the Lithium enigma

In a minerals boom dominated by iron, coal, aluminium and even gold, the lightest metal in the world – lithium – is

not the first of our resources that springs to mind.

Yet on the world technology scene, lithium is being hailed as about to end our reliance on oil as a source of energy. Soon!

And two small Australian companies look like being the first cabs off the rank, albeit mini-cabs, in helping to meet what looks like becoming an exponential world demand for lithium, an enigmatic element too volatile to touch barehanded yet a calming medicine for mental disorders, a metal some say is about to soar in price or stay low depending on the secret agendas of those talking about it.

So widespread is the general ignorance about lithium that when you have read this story you will know more about it than 99 per cent of the population.

It’s a story worth knowing because it’s likely that within five years you’ll be driving a lithium-powered car or a hybrid of one.

Barring a sensational new discovery, and one is nowhere on the horizon, lithium is the key to a new electric age because of its ability to make increasingly compact batteries store increasingly large amounts of electric power for an increasingly long time.

Lithium batteries are doing all that already in a small way for millions of mobile phones, laptop computers and toys.

But it’s the electric car market that is predicted to change everything and transform a niche mineral into the world’s

new oil, and countries which have enough of it into new Saudi Arabias. Australia is not going to become one of these despite one of its two lithium miners currently being among the world’s largest lithium producers, but that doesn’t matter because a successful lithium business of any size will be like a little gold mine to its owners.

More of that later - in the meantime a review of the current state of the world’s lithium industry shows it to be in similar chaos to what the early wheel market must have been like ie. rumour, lies, speculation and universal boasting liberally sprinkled with square rocks that will never roll.

technologically the lithium-powered car

industry is already much farther advanced than

one would expect. Hybrid petrol:battery powered

cars such as toyota’s Prius are already commonplace and that is the first giant

step for mankind that many predict will see the end of internal combustion car engines within 15 years.

If you have $110,000 to spend you can already buy a Tesla Roadster, the world’s first all-electric sports car with near Porsche-style performance and looks. Its power-plant is said to be a package of 20,000 AA batteries. Whatever, it will go at up to 260 kph and travel up to 320 kilometres before needing to be plugged into the mains for a recharge.

But doesn’t the need for recharge

take us back to oil or coal-fired power stations? Short-term the answer is “Yes”. Long-term the answer is “No”, with the increasing likelihood of nuclear energy becoming a reality in Australia and an increase in solar, wave and wind electricity. Green power will create another vast market for lithium because giant lithium-ion batteries can be used to store its electricity for release during the night, on cloudy or windless days when the generators cannot perform. The essence of the lithium revolution is that its batteries are re-chargeable and can be recycled.

With an estimated 6 million electric cars expected on the roads by 2020 car battery sales could jump from $100 million a year today to $103 billion in the next 20 years, according to Nissan Motor’s chief executive Carlos Ghosn.

In the United States today all-electric and hybrid vehicles are being developed hand-over-fist. Likewise in China. A Deutsche Bank report predicts 75 new hybrid car models on the market by next year and a JD Power estimate is that 50 per cent of cars in Europe will be hybrid or all-electric by 2015.

Nissan has a factory in Tennessee to produce 150,000 pure electric cars called The Leaf; Ford will launch a pure electric van this year called the Transit Connect; BMW has a Mini-E test fleet already in the USA. Star of the new era vehicles will be General Motors’ new electric hybrid, the Chevy Volt. It cruises on electricity until its batteries get low when a conventional engine cuts in to drive the car and recharge the battery before cutting out again for a return to electric drive. It is planned to deliver 100km/litre even in the city. It’s a lotta

An energy revolution is taking place right before our eyes but few people are seeing it. Yet!

driving on not much gas!!

President Obama has already handed out $8 billion and earmarked another $17 billion for America’s Advanced Technology Vehicles Manufacturing programme but the eventual funds involved in developing lithium-reliant vehicles will make these sums look like chickenfeed.

That thought has driven the world’s secretive greed market –self-styled investment advisers, share-pushers and so-called mining entrepreneurs into a froth of exaggeration and hyperbole. High-net-worth individuals in Australia are already being aggressively lobbied to invest in lithium. Some simply promise, for a few hundred dollars, the names of minnow miners predicted to become world-lithium czars, others are speculators seeking investment in lithium deposits which are invariably described as “biggest of their type in the world” or “reputedly among the biggest in the world” or even “biggest in the world outside of Australia, Bolivia and Chile.” The word “biggest” is invariably qualified.

Many will disappear as will their investors’ funds because lithium at this stage is a largely unknown product to the man-in-the-street. The reason

you are now close to being a lithium expert is not because of the excellence of this article but because so many people wouldn’t know lithium from lapis lazuli. A few who think they have inside information believe shares in a lithium operation, any lithium operation are about to take off any day.

Some may do that but the fact is more lithium is being mined right now than even the present rising demand can handle. So much in fact that its price has declined by at least 12- 20 per cent in the past two years and, according to international experts, Canada’s TRU Group of industrial consultants, global over-supply will persist through 2013.

The world’s biggest producer of it, Sociedad Quimica y Minera de Chile SA (SQM) actually slashed its price recently by 20 per cent. TRU Group’s president Edward Anderson described it as a necessary reduction and warned: “Prevailing lithium carbonate transaction prices are much lower than stated by most new project promoters and several misinformed analysts.”

Despite that SQM’s shares have climbed steadily and in the first six months of 2008 it reported a profit of US$ 191 million, 103 per cent up on

the previous year. SQM, also known as Soquimach, produces and markets nearly a third of the global supply of lithium carbonate, the actual chemical that makes electric batteries work.

Right on our doorstep the long-established West Australian company Talison Resources launched a 35-million share IPO in December priced at $4.50 to $5.50 but didn’t get enough takers and the float was abandoned. The issue was aimed at institutional investors who tend to be infinitely more clued up than the man in the street. Talison Lithium itself is well established at Greenbushes, near Perth, with a record of major worldwide lithium sales and Macquarie Capital Advisers as its Australian lead manager to the offer and Rothschild as its advisor.

General opinion in unrelated financial circles is that they aimed too high and that the shares would have walked out the door at around $2.50. David Robinson, chairman of Talison Lithium, says that may or may not be true but the company’s current owners – a US private equity group– insist their valuation is correct and have no intention of lowering their sights.

Which may or may not be a good idea but the fact is that, in the tradition of

the Lithium enigmaBy Archie Bayvel

Mr Iggy Tan, chairman of Galaxy Resources Limited

Tesla Roadster: The world’s first all electric sports car will go at up to 260 kph and travel up to 320 kilimetres before needing a recharge

AUstRALIA AUstRALIA19Autumn 2010

the Lithium enigmareality TV, The Tribe has spoken and they did so with their feet!!

In sharp contrast, another West Australian company, Galaxy Resources Limited, achieved ASX listing a while back and its shares are trading briskly despite the company having only just begun digging its mine at Ravensthorpe, a self-important hamlet slightly closer to Esperance than to nowhere. Galaxy shares have soared as high as $2.40 and been as low as 0.265c in the past year and at time of writing sit comfortably at $1.40. All without having produced a skerrick of lithium which it bought originally from Talison whose Greenbushes ore body is considerably richer.

What’s lithium?

It’s the world’s lightest metal and floats on water. But not for long because it reacts vigorously with the water, fizzing furiously and eventually exploding. Silvery grey in colour,t can be cut with a knife but reacts quickly in the air and loses its sheen as you watch, so it has to be stored covered by oil. Fortunately,it forms stable compounds such as lithium oxide, lithium chloride and lithium carbonate which is the product used in rechargeable batteries.

Until the arrival of the electric car ordinary people’s awareness of lithium is likely to have been limited to torch and phone batteries and perhaps as a mood-controlling medicine. In minute doses it calms the manic stages of those suffering bi-polar and other excitable conditions. Japan’s Oita

University reported in the British Journal of Psychiatry last year that communities whose water contained large amounts of lithium had significantly fewer suicides.

But lithium has long had a wide range of industrial uses in ceramics and glass-making (it makes glass melt at much lower temperatures thus making it easier to mould and shape) which takes up 18 per cent of world production, lubricating greases 12 per cent; pharmaceuticals and polymers 7 per cent; air conditioning 6 per cent; primary aluminum production 4 per cent; continuous casting, 3 per cent; and chemical processing 3 per cent. Other uses consume 22 per cent. For these roles Talison has long been the world’s biggest supplier. Current demand for electric batteries is only 25 per cent of world production.

If you’d like to know still more, The Metal Bulletin has just published a report – The Lithium Industry: Market Projections and Company Strategies Out to 2013 for £3995 (repeat £3995) inc VAT.

Where will all this lithium come from?

Today’s lithium powerhouse is Chile. Most of its 7.5 million tonnes of lithium sit beneath a vast salt desert called Salar de Atacama high in the Andes cordillera. Neighbouring Argentina has reserves of 6 million tonnes under its slightly smaller salar. Both countries have sophisticated mining and marketing into the USA through New

York listed companies such as SQM, Rockwood and FMC. Bolivia, South America’s poorest nation after Guyana, has no mine, no marketing but it has the salar to beat all salars under which lie half the world’s lithium reserves.

Hysterics among the world lithium urgers would have us believe that a shift to battery-powered cars will transform Bolivia into the next OPEC and Saudi Arabia all rolled into one. More conservative opinion expressed by one Brian Jaskula, a lithium specialist at the US Geological Survey, says: “There is so much capacity from established producers that we may not even need Bolivia for a long time.”

And Mr Iggy Tan, chairman of Galaxy Resources at Ravensthorpe (Pop 300) points out without even a hint of schadenfreude that Bolivian lithium carbonate is heavily contaminated with costly-to-remove manganese salts.

In Australia, lithium occurs naturally as part of a white underground rock called spodumene which has been successfully mined and marketed by Talison for many years and is the target product for Galaxy when its Greenfield mine begins later this month.

Talison will continue to send its spodumene overseas for conversion to lithium carbonate while Galaxy is building a processing plant in China expected to produce 8220 tpa of lithium carbonate equivalent.

SQM is the world’s leading producer with 32,600 tpa of lithium carbonate extracted last year from brine solution pumped up from under the Chilean salars. Using solar energy to dry out the dissolved salts, SQM has an estimated production cost of $1260 a ton and with Rockwood Holdings, of Princeton, New Jersey, produces about 70 per cent of the world’s low-cost lithium.

A newer source is hectorite clay, the only active developer of which is the Western Lithium Corporation in the United States. Projected capacity at 27,700 tpa is on a par with Talison’s. Projected production and cost is $0.89 per lb ($1993.60 a ton) compared to the current trading price of $2.30 to $2.40 per lb.

Overall production figures for American lithium are clouded by their being wrapped up with confused estimates of production from Argentina’s mines which is marketed by America’s Chemetail company, a subsidiary of Rockwood Holdings (NYSE: ROC)

Bolivia has the potential to dwarf all projections with, according to the US

Geological Survey, a reserve base of 5.4 million tonnes under its Salar de Uyuni high on the western slopes of the Andes. Presiding over this zillion-dollar wasteland is an elderly Indian orphan turned peasant leader called Francisco Quisbert and known throughout his god-forsaken locale as Comrade Lithium. He knows from the surveys and a spate of international suitors that he is sitting on enough lithium to power 4.8 billion cars.

Plastic tubs of the emerald-colored brine dot the salar as engineers try to estimate how quickly the stuff evaporates. Francisco is considering his options as is Bolivia’s President Evo Morales and, according to the January 2010 issue of Bloomberg Markets, French billionaire Vincent Bollere, South Korea’s LG Corp, Japan’s Mitsubishi Corp, Sumitomo plus every man and his dog who can rack up the $800 million needed to construct a mine and processing plant in South America’s second-poorest country, where average annual income is $1716 according to the International Monetary Fund. What with corruption and alleged magnesium contaminants of the brine, they will have their work cut.

Then there is Tibet! It has its own vast salar, Chabyer Caka, 4400 metres up in the Himalyas. Chabyer is also known as Zabuye in Tibetan and the mineral its brine produces is known as zabuyelite – almost pure lithium carbonate. Some observers believe the resource is big enough to turn China into a major lithium producer. A report by Ole Nielsen, a prominent geologist, says the lake’s mining company – Tibet Mining Co Ltd - had reached production of 7500 tpa as long ago as 2005 which signalled a slowdown in China’s lithium imports as it became more self-sufficient. In the first three quarters of 2009 China exported 1417.5 tons of carbonate, down 31 per cent on the previous year, reflecting the weaker world demand.

Other world lithium producers or would-be producers include Canada, Portugal, Brazil and the Democratic Republic of Congo which is a politically unstable nation whose gougers nonetheless produce enough lithium to run noticeable interference in some of Talison’s industrial-use markets.

All are part of an enigmatic sub-economy that seems certain to change the global automotive industry within a few years and

hence our lives forever.

Lithium in Australia

The impact of lithium on the Australian economy will be through its effect on the global oil and gas industry and the roll-on consequences of that right through to the retail level. What, for example, is your electricity bill going to look like if it’s running the family cars? And what will become of petrol stations?

And what role will Australia, the global king of minerals, play in the great lithium bonanza ?

One answer appears to be that we can all be pretty certain of driving electric cars in the very near future with excellent results for the environment. Another answer is that Australia certainly seems well on its way to having a new and important industry but not one likely to be on the global scale of some of our other mineral products such as iron ore, coal or alumina.

Which is not to say that a few investors, mine owners and processors will not make a lot of money out of the battery boom and the shipping industry will get some new bulk to carry. But the real action where fortunes will be made and lost will be in the Americas.

Australia currently has two lithium mines. Talison Lithium is running along nicely providing the lion’s share of the non-battery requirements for lithium. Talison’s majority shareholder is Resource Capital Fund IV, an Amemrican private equity consortium that is unfazed by the failure of its recent IPO here and in Canada, and remains confident of its own value-assessment of between

$4.5 and $5.5 a share. Time alone will tellOur other mine, Galaxy, is being dug right now at Ravensthorpe and its managing director, Mr Iggy Tan, is confident of its future prosperity and that of its processing plant which is under construction in China. The Chinese are old hands at processing the various lithium salts into carbonates. The Ravensthorpe mine’s first shipments of ore will be later this year.

An interesting comparison between the two unrelated businesses is that Galaxy bought its mine whose ore contains about 1.2 per cent of lithium from Talison whose ore contains between 3.5 and 4.5 per cent. Both mines dig spodumene which contains lithium oxide that needs to be converted into carbonate for battery use. While Galaxy owns its own conversion plant in China, Talison has no plans to do the same because, its chairman Peter Robinson says, they don’t want to compete with customers who do that.

Other lithium companies in Australia include Reed Resources and Orocobre Limited. At present both are little more than a gleam in their owners’ eyes. Reed would like to mine lithium and open a processing plant on the Goldfields around Kalgoorlie; Orocobre is talking about tapping a salar or two in Argentina.

While we’re waiting for all that to happen those who want to prepare for their first electric car should consider putting in some practice hours on a golf buggy while they contemplate the future of oil shares.

WA’s Premier, Colin Barnett, and Galaxy’s Iggy Tan with a chunk of spodumene, lithium ore, at the launch of the new mine at Ravensthorpe

Construction begins at the Ravensthorpe lithium mine

21Autumn 2010

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23

have normal residential housing for their families raising an almost immediate population of another 60,000 spouses, children and relatives.

The blueprint has already been endorsed by the Federal Government and promised large-scale support by BHP which is about to remove its giant ore crusher from Port Hedland’s CBD, thus freeing up a massive area for real city development. And Rio Tinto has agreed to relinquish substantial land that will become a civic development at Dampier, Karratha’s massive bulk port and site of the North-West Shelf, Pluto and Gorgon LNG installations.

Exactly what cash Woodside, Chevron and the other gas moguls plan to contribute is unclear as yet but in view of the national government’s enthusiasm, they would be naive to think anything less than a few billion dollars each side of generous.

It’s an exercise in nation-building Australia hasn’t seen for 100 years when the Murrumbidgee Irrigation Area in the NSW Riverina was the world’s biggest civil engineering project and attracted workers and settlers from every corner of the world to turn a wind-swept wilderness into the nation’s richest farmland.

To pull off this massive ambition, WA will need to import huge expertise - something the locals have yet to grasp - and massive capital investment - of which the locals have an acute understanding thanks to years of enjoying multi-million-a-day royalties from iron ore, gas, diamonds, you-name-its. All of which will be dwarfed by the already exponential growth of iron ore miners BHP, Rio Tinto, Fortescue and at least three new gas fields by Woodside and Chevron with Inpex still hovering.

So WA will be looking in North America and Europe as well as at home for visionaries able to see what nobody has seen before and for materialists able to deliver. The world search for innovative and commercially focussed risk-takers eager to develop opportunities begins immediately.

All that plus a credible delivery schedule.

Investors will be able to ride participant companies into the market but the real short-term killing will be made by entrepreneurial developers with the intellect and financial capital to seize the day.

Locals have been quick to say they don’t want another Dubai and to segue

down to their own douce vision-level where the nation’s two highest-earning towns are still dust-caked fly-in:fly-out:fly-specked lunar colonies despite having earned hundreds of billions of mineral dollars!

But the WA Government says that’s all over and has made history with large releases of state-owned land to house and hopefully retain the hordes of new and support workers and their families that the next 20 years will bring.

How much will the new-world Pilbara cost? – Billions and billions! Plus brilliant leadership. Karratha has already formed some 25 local committees which it thinks will look after that side of things!

The dollars are no problem because, as one writer to the The West Australian newspaper said: “If this is seriously what the government wants, they have to spend BILLIONS on infrastructure and do it right the first time. Learning, town planning, conservation and water, renewable energy, solar, the lot should be thrown at this project ONCE. Do it

now, spend whatever it takes but do it properly. “

It’s a view widely shared by everyone who knows that the Pilbara has already produced an iron and gas bonanza but we ain’t seen nuthin’ yet. The arrival of Gorgon gas is just over the horizon for the Woodside-Chevron partnership at Karratha and BHP and Rio Tinto have signed that $91 billion iron ore partnership to work together in Hedland and Karratha.

BHP’s recent Rapid Growth Project 6 aims to export 248 million tons of iron ore from Port Hedland this year and 470 million in 2015 and Fortescue Minerals Group has 120 mtpa in its sights for 2012. At Karratha, Rio Tinto would be looking to rival BHP and Woodside is entering the Stage 2 extension of its existing $12 billion gas hub. Its port at Dampier will host 10,000 construction jobs and 3500 permanent jobs as supply base for the Gorgon field. All regulatory hurdles have been removed and Gorgon is ready to roll.

A multi-billion-dollar project to transform The Pilbara – our richest mineral field – from a goldrush-

style backlot into a region of modern cities and towns has been launched by the West Australian government.

Heading the queue for a touch of the magic wand stands Port Hedland, a ramshackle trio of settlements on the red earth 1700 kilometres north of Perth, and Karratha which is little more than a large workers’ camp with pretensions of civilisation i.e. being a 20-minute drive from Dampier and its port, the dormitory settlement is not drenched in ore dust.

Whatever aspect of the world financial crisis others may be suffering, rest assured that it has had barely token impact on the Pilbara whose iron ore and LNG production is increasing

exponentially as you read this.

Even since the Pilbara Cities Project was announced just before Christmas, Chevron Corp, the second-largest US energy producer, has made a new offshore gas strike at its Satyr-1 well to feed its under-construction $43 billion Gorgon LNG development. The first release of suburb-size building sites of around 250 hectares to house thousands of new workers was scheduled for the beginning of this year.

The WA Government’s plan to turn these remote townships into modern cities involves release of huge building and development lots, design and construction of high-rise dwellings, and establishment of tourism in an often mysterious red-dirt world of tropical islands in azure seas against an interminable mountain backdrop. The Never-Never, Far Faraway, The Wasteland and Nowhere all rolled into one. If you haven’t seen it yourself, it must be hard to believe.

Just short of $1 billion is already in the system as seed money to plan what needs to be done to transform the biggest source of Australian wealth from frontier-style existence into desirable civilisation.

The economic impact will reverberate throughout Australia with planning and construction tenders already out around the world. When WA’s recently elected Premier, Colin Barnett, flew to Karratha and Port Hedland to launch his vision he took a charter jetload of 60 developers, construction czars, and industrialists with him.

“So they can see the opportunities for themselves,” he said. “There will be 30,000 new jobs created here over the next six years.”

As things stand, that would be it: Another 30,000 fly-in:fly-outers accommodated in mining camps and hitting the airways every weekend taking bulging pay packets with them. But with the first manifestations of these future cities, these 30,000 workers will

Billion-dollar make-overs for two dots on the map of nowhere

Pilbara RevolutionPilbara Revolutionby Archie Bayvel

Port Hedland CBD. The fly-in: fly-out heart of our economic powerhouse.

Warning: this story contains frequent

graphic words that some readers may find disturbing;

namely “billion” and “billions”. A person earning $100,000 a year every year of their life would need to live 10,000 years to earn one billion dollars! think

about that.

Perth CBD: No expense spared policies have transformed a dream colonial outpost into an Australian icon of success

24 Autumn 2010AUstRALIA

And then there is Wheatstone, a Chevron-led project and little-discussed gas venture around which a figure of $91 billion has been wafted. It should raise even the blasé eyebrows of other Pilbara and Darwin gas czars who have previously had to limit their projects to mere $50 billion predictions. It burst on the scene only three weeks before Christmas and is centred on Onslow (population 400-ish and 200 miles south of Dampier) which is blown away every year by cyclones.

While Port Hedland and Karratha are the key big-city targets, the government also plans to turn places like Onslow and remote mining camps like Mt Newman, Tom Price, Paraburdoo and others with even stranger names into normal rural villages with first-world facilities.

Chevron and Tokyo Electric Power Company (TEPCO) have signed to deliver 4.1 million tonnes per annum of liquefied natural gas for up to 20 years from Wheatstone.

TEPCO intends to acquire 15 per cent of Chevron’s equity share in the licenses over the Wheatstone field and an 11.25 per cent interest in the 8.6 mtpa on-shore gas hub to be built on a site called Ashburton North, near Onslow.

Chevron’s other partners in Wheatstone are a subsidiary of the Apache Corporation, 16.25 per cent, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., 8.75 per cent.

But the brilliant leadership, people with the Nelson touch ... What of them? Local yokels amid the red dust point triumphantly to their committees and say: “No worries.” Therein lies a danger. Their intellectual level may be indicated by the first $45 million call being for tenders to construct an “Iconic Park

and Multi-Purpose Recreation centre.” Sketches indicate a purple building remiscent of a snake’s head and the plan is to locate it at South Hedland, a remote suburb whose beautification or further downgrading is as relevant to Port Hedland’s citification as a bat cave at Monee Ponds would be to Melbourne’s. It is significant that the national media has almost completely ignored this massive national project simply because it has heard it all before and seen no results.

Fifty years ago Populate The North was all the go but when one actually travelled the North-West what one saw, as distinct from what one read, ensured that few sensible men took their families to spend their lives in such an environment.

Not much has changed! That’s why the workers fly in ... then fly out as soon as they can. And therein lies the problem: Until families can see a generational future in the north – not just a few years but lifetimes, retirement, grandchildren - communities have not thought it worth building high-rise offices, great churches, cultural centres etc. And what if the ore runs out? Stroll through Zeehan, in Tasmania, with its grand buildings and opera house where Nellie Melba said she’d sing but didn’t front; to see what happens when the lode of whatever is mined out.

So the real trick in city-building lies in creating diversity of work, a civilisation that cross-fertilises and pays for itself from its own multiple economy and not just from a single industry be it iron, coal, pearls or fish.

This time around, there’s evidence that state and national governments understand all that and appear to be thinking on the colossal scale required. There’s no doubt the civic leaders in both Hedland and Karratha

know the facts. Whether they have the sophistication, firepower and experience to help conquer the complacency of 50 years remains to be seen well within the terms of their present office.

This will mean searching the world for people who really can make the big show rock’n roll then paying them a kings’ ransoms to do it. Hedland’s and Dampier’s huge mining and gas companies are all run by top-level technical and financial experts recruited from all over the world. A civic enterprise of the size needed will require more of the same. Lots of them. It’s hard not to regret that Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s Renaissance-man ruler, isn’t available. Certainly the Pilbara project will offer job opportunities on a grand scale for planners, directors, technocrats, and land developers and an army of artisans to materialise their plans.

The new blood’s task will be to boost Australia’s own not inconsiderable high-level workforce and the army of international experts already there. Their schedule of tasks includes ...

• Create a Growth Authority to develop and direct the component projects.

• Design and build homes that will attract the fly-in:fly-outers to throw away their stash of air tickets and move their families to the Pilbara.

• Build new schools, hospitals and medical centres, leisure and entertainment facilities, shopping and retail precincts.

• Create non-mining employment including indigenous enterprises.

• Manage and develop the large-scale land releases that have already begun so they include affordable living initiatives and luxury homes at prices comparable with similar dwellings elsewhere in Australia.

• Provide energy, water and waste management services.

• Create a lifestyle tradition unique to the Pilbara.

Both Port Hedland’s and Karratha’s local councils are headed by aggressively vibrant young women and Nicole Lockwood, 30 and council president of Roebourne Shire which includes Dampier and Karratha, has been the first person to express a ground-breaking vision.

She wants planning money spent on creating a distinctive architecture for

Pilbara RevolutionPilbara Revolution

Nicole Lockwood, above, is the recently-elected president of the Shire of Roebourne. A lawyer,

she came from Perth four years ago with two children and her husband, an engineer with Woodside.

“We’re typical of the population here,” President Lockwood says, “but my 20-year vision for Karratha is a balanced demographic of 50,000 to 100,000 people who call Karratha home rather than a place to work then leave.

“We need retirees, people here for life. We also need economic diversification, whole new business activities to complement mining.

“Hedland and Karratha can’t both have everything of everything for a while yet. Right now Hedland is getting a much-needed new hospital; perhaps we will go for a specialist medical centre and a faster transport link than the present half-day high-speed drive or 3500 kilometre air trip via Perth.

“A big task is where to put new people because of seasonal storm water surges on one side of town and mangrove swamp on the other. We’ll need a lot of infill and 10-storey high-rise.

“Karratha is likely to extend along

the flat coastal plain to join up with Dampier, 15 minutes drive away.

“We’ve got two years to overcome the inertia of decades and set the ball rolling. It’s a global project and will cost billions. We’re talking nation-building here with federal and state backing.

“Water will be an issue despite the flood plains and cyclonic rain. Currently the mines struggle to dispose of millions of litres of underground water and there’s talk of piping this to the coast instead of wasting it. A desalination plant seems inevitable because we’ll run out of water within another 10,000 people.

“Before we can get these 10,000 we need affordable housing. In the past no land was available but that has changed although land release is a delicate electoral issue because existing home owners renting out their homes – sometimes they own several – for $2000 a week aren’t happy about opening the market to better homes for $350 a week. So owner greed is an issue.

Kelly Howlett, 32, is mayor of Port Hedland Shire. An environmental scientist from Melbourne she came to Port Hedland 10 years ago. Her bailiwick includes the actual Port Hedland township, its industrial suburb

of Wedgefield, and South Hedland whose convoluted streets form a suburb 18 kilometres farther inland.

Mayor Howlett sees her cluster of empire aiming for 50,000 people in the next 20 years. She says: “A land rationalisation audit has been completed of what land is suitable for development and who currently owns it – the crown, the state, the town, native title, or private companies and individuals. We have plenty of land for development and new homes are already being rolled out on it.

“To become a destination of choice we need infrastructure and all levels of housing – small houses, luxury homes, apartments, unit blocks and so-on. Other business opportunities already exist here apart from mining; substantial CBD sites will soon become available for new and more appropriate development when BHP removes its ore crusher to Mt Newman and our planners have completed relocation of the town’s waterworks.

“Success or failure of the Twin Cities plan will depend long, medium, and short term on how many partners the WA govt can entice to share its vision. Once again we’re looking at a multi-billion project over years.”

the Pilbara’s grande dames ponder their future electorates

The main street, Roebourne. A half-hour drive from Dampier’s $billion industry but you’d never guess

Kelly Howlett

Australia’s North-West that will sweep away the present incongruous and highly derivative, early last-century Californian bungalow style. President Lockwood wants houses, shops and public buildings that look as if they could be nowhere but in the Pilbara, that will define themselves as home where people settle and grow old.

Where will the money come from?

The WA Government’s Royalties Fund receives 25 per cent of the state’s mineral royalties specifically to enhance amenities and has already produced

$300 million to set the ball rolling, a pittance compared to what has been spent to turn Perth into a glittering city. Australia’s central government is expected to deliver $470 million. Existing industrialists such as BHP Billiton, Rio Tinto, Woodside, Chevron, and others will also contribute.

There should be no doubt that over the decades private investors and entrepreneurs ranging from big developers to family businesses will provide most of the funding grunt one way or another. The look-see list on Colin Barnett’s plane was a Who’s Who of WA business.

The gates have been thrown open for private sector involvement; a massive innovation in itself because there had been very little of it previously.

Now it’s all about implementation – making it a reality, attracting overseas participants, establishing a generous land supply that strikes a balance with demand.

Australia has integrated millions of people descended from convicts with other arrivals bearing death camp tattoos, fleeing poverty and newer horrors. A fresh challenge like making the Pilbara work should be what a whole generation has been waiting for.

25Autumn 2010AUstRALIA

26AUstRALIA

Autumn 2010

Book Review By Archie Bayvel

Voices from the shipsAuthor: Diane Kirby Publisher: University of nsW Press

Inevitably a book like this, written

to order and commissioned by the Seamen’s Union of Australia, will have its

independence open to criticism and fears that it will be a mere work of propaganda.

But it’s a long way from that.

While certainly recording the union’s views of recent historical events, which is its purpose, it also details the acts and opinions of the union’s critics. Because of that and the industrial issues it covers, Voices From the Ships is a landmark text for unionists, social organisers and the businesses and organisations that deal with them. It’s not just a book for old industry codgers with long memories, it’s also a guide and mentor to generations today and to come on how to achieve social justice without gunfire, without bloodshed, and with results that in cool retrospect are hard to imagine not always having been in place.

Just a few landmark industry events covered include:

The historic SS Booneroo incident when the SUA refused to provide crews for the bulk carrier’s war materials voyage to Vietnam; the union’s switch from racism, particularly in respect to Chinese crews, to being a backbone of the fight against apartheid in South Africa; the acceptance of women at sea in the 1960s both as crew and as wives and girlfriends; the 1969 Work Value Inquiry that achieved a breakthrough wage award and led to the historic Seafarers’ Retirement Fund that enabled men and women home from the sea to end their working lives with dignity; the 1970s allegations of union corruption and misuse of power, and the epic battles with Utah Consolidated Developments and the Columbus Line .

Many readers will recall the Booneroo affair and the Waterside Workers Federation, the ACTU and six other seagoing unions refusing to support the

SUA’s ban on crewing the ship. The ACTU’s grounds were that it could not prejudice the carriage of supplies to Australian troops.

Eventually, the SUA had to back down in the face of the Arbitration Court. But when the Booneroo eventually sailed out of Sydney Harbour it was with a crew banner on its side declaring their opposition to the Vietnam war. The same day that she sailed the front page of The Australian newspaper carried a photograph of the first Australian conscript to be killed in Vietnam.

As South Africa became increasingly isolated from the world under its apartheid regime, seamen’s stories of the outrageous injustices and humiliations they had seen in South African ports provided eye-witness fuel for the union’s dramatic about-face from its traditional pre-World War II racist support of White Australia policies.

The SUA actively opposed apartheid with bans and boycotts of South African goods and ships from about 1949 through to 1990 when Nelson Mandela was released from prison.

The chapter headed It’s not just a job – it’s a way of life details the union’s little-known role in reforming on-board behaviour of seamen. A role not all that dissimilar to the NRL’s current efforts to tame its bogan elements, except that while the NRL is still struggling the SUA outlawed bad behaviour and enforced its rules. Knifings were outlawed, homosexual baiting was no longer accepted, bullying was stopped ... it was the end of the Captain Queeg and boys-in-the-barrel era and the beginning of a truly democratic and safe society at sea where a manic captain or officer could no longer terrorise an entire crew. In 1958 the union decided that any seaman who drew a knife would have his union membership book torn up!

In terms of prolonged successful effort and energy expended, the SUA’s battle with the giant US Utah Development Corporation is probably the union’s landmark achievement. It began in 1976, the year after Utah built the new coal wharf at Hays Point, in far north Queensland.

The media reported that in its first year of operation Utah had exported 15 million tonnes of coal to Japan for a gross profit of $150 million without a single Australian seaman or ship being used.

That fact simmered and rankled until May the following year when the Utah-owned coal carried, the Berryesa arrived at Hay Point under a Liberian flag and with a non-union Spanish crew. The tug crews refused to berth her and a union official claimed “It will stay there until its bottom rusts out.” He’d reckoned without the Berryesa’s master however who after a month of paying costs of thousands of dollars a day took his ship alongside without tugs or linesmen, loaded his coal and went on his way. A month later an even bigger ship, the Lake Almanar, did the same and the dispute escalated dramatically.

The ensuing picketing, banning, suing and PR war lasted four years and 74 days. Catalyst for its end was the entry of ANL Australian-owned vessels into Utah’s coal trade. In September 1981 Utah and the SUA made their peace and Australian seamen manned the coal ships.

And that should have been that but the SUA began a similar campaign in 1983 against the Columbus Line and that lasted for seven years. But that’s another one of the many more stories you will need to get this book if you want to read them.

Voices From the Ships was commissioned by the Seamen’s Union of Australia as a sequel to Brian Fitzpatrick’s and Rowan Cahill’s The History of the Seamen’s Union of Australia 1872 – 1972. It is written by Diane Kirby, professor of history at La Trobe University, in Melbourne. She’s done a good and fearless job and cannot be fairly criticised. Let’s hope, however, that her work will inspire a creative writer to select some of her highlights as the basis for a more human, as distinct from social and political story.

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AUstRALIA AUstRALIAMarch 2009

Feature

If our coastal shipping was competitive, reliable and flexible - it would be here

28 March 2009 29

line and yet shipping carries only 3 per cent of the inter-capital non-bulk freight and much of that is opportunistic in terms of available space on international voyages.

If we look at shipping’s share of the freight task, shipping’s 3 per cent of mass becomes some 31 per cent of the task – which by the way is well above the UK (24 per cent) and USA (16 per cent) but less than Japan (45 per cent).

Now everyone realises the task number is distorted somewhat by bulk cargo. Of course coastal shipping is the best way to move bauxite, cement, oil, clinker, coal, alumina, sugar, gypsum, steel, iron ore, plasterboard, ammonia and acids around the country to name a few. And because it is the best way it has almost all the market. How could road and rail compete?

And it seems churlish to exclude these cargoes from the analysis simply because they are suited to shipping.

It is my view that coastal shipping – as it exists – is actually in rude, good health.

There aren’t the 171 steamer, tenders and launches around the coast as there were in 1886. Even the network that existed up until the 1970s is no more. As one of the submissions to last year’s inquiry noted, in relation to the thriving coastal shipping service of the early 70s:

“the cost of its operation and service issues made it uncompetitive against road

and rail”.But this obscures the health of coastal shipping in Australia in many markets. In addition to the bulk commodities mentioned earlier there are obvious geographical markets where shipping continues to prosper – WA, throughout the NT and outlying islands, through the north coast of QLD and its islands and of course Bass Strait. So let us not think that coastal shipping is near-dead but rather that it thrives in some markets, but not others.

So why aren’t more non-bulk goods carried by sea between FNQ, Brisbane, northern NSW, Sydney, southern NSW, Melbourne and Adelaide? And can it be changed?

Rail and road especially, have grown more than sufficiently to handle the requirement. Given that, shipping’s only chance of modal shift is to be more than price competitive.

This is not all it must do – it is a necessary but not sufficient condition. It is simply to make the point that

shipping can address every other issue on the table but if it is more expensive, I doubt it will see any increase in its market share.

And therein lies the rub.

Let us consider the non-price issues?The top four are:

• It needs long distances – at least 1500 km and preferably over 2000 km

• Reliability

• Availability/frequency

• Flexibility

• Total transit time

• Equipment availability and suitability

Combined with some statistical tools relating to elasticity that took into account the non-homogenous cargo mix with differing origins/destinations, the Meyrick report concluded that an additional 4.9 million tonnes across all corridors was potentially able to be shifted to sea. This was off a base of some 20 million tonnes. Of this, the major gain would be on the Melbourne/Perth leg with an increase of 3.4 million tonnes. Let us remember however, that the total non-bulk market on the Melbourne/Perth leg at the time of the study was around 1.6 billion tonnes. In other words, the abovementioned increase would see shipping’s share go from around 1 per cent to 1.2 per cent of the market.

to put this into context, a twice weekly container service using 500 teu high speed ships between the

east and west coasts would have the two way potential to carry around 200,000 teu per year or around 4 million

tonnes. And, it’s hardly a balanced two-way trade.

So what markets enable shipping to overcome these obstacles and compete successfully? The obvious one is the East/West corridor but I don’t see that market as full of potential as others might. Firstly, any dedicated coastal service on that run would be filled with cargo typically already on ships – albeit international permitted or licensed ships. I’m not going to canvas the arguments involved in the issue except to make three points:

• Any shift from one sort of shipping

to another does nothing to address issues like getting trucks off the road.

• Any cargo on the run that is currently on trains or trucks in unlikely to move to a dedicated coastal service. Slots on international ships are up to 40-50 per cent cheaper than road transport yet road still has a 25 per cent market share. The cargo is on trucks for reasons other than freight costs; and

• A dedicated service must be more expensive than international vessels offer given they are marginally costed, do not have to pay for the dead West/East leg and have a cost structure lower than a dedicated coastal service including bunkers, port dwell times, equipment turn-rates, capital and dry docking.

Any view that the East/West run offers coastal shipping an opportunity to grow its market share would need to explain how it would overcome these issues.

so where are the other markets?The top of WA to NT to FNQ is a possibility but Perkins already provides a pretty comprehensive network across the top.

Other markets that have been identified include:

• Hastings to Tasmania to Port Kembla and/or Newcastle

• Fremantle – Esperance – Adelaide – Melbourne – Sydney/Port Kembla/Newcastle – Brisbane and

• A two ship counter-rotating service around Australia

However these services would typically be built on bulk and break bulk cargoes though they would have the ability to carry containerised freight. They could also operate as feeder services from regional areas to capital city ports for international cargo.

When it comes to non-bulk domestic cargoes, the next most obvious market for shipping is the East Coast.

There are cargo flows in both directions, albeit some of the cargoes are very seasonal. So why haven’t our Australian shipping entrepreneurs jumped into the space? Even international ships are only carrying some 2 per cent of the non-bulk market on the East Coast.

To return to an earlier point, price is a big reason. A substantial part of a shipping operation’s costs are still land-

Coastal shipping

Autumn 201028

Coastal shippingFrom an address by CHRIs MAnGAn l Ceo QLD Multimodal Freight Council

Australian shipping has always had,

and most certainly still does have, people who were innovative risk-takers, eager to develop solutions and commercially focused. It also demonstrates that the competitive pressures that encourage these behaviours and attitudes have been there from the start.

So if the industry has such people today, why would we think any opportunity on the coast would not be jumped on, exploited and fought over?

The House of Representatives Inquiry last year received some 68 submissions and almost all of them used language in parts that was eerily similar –

“We are in favour of greater coastal shipping provided it offers a competitive,reliable, flexible service”

The Chamber of Commerce and Industry of Western Australia put it this way:

“CCI supports the use of coastal shipping where it represents the most economically viable and efficient transport mode.”

“Economically viable and efficient” for users of transport quite often means different things to them than it does to the providers.

The very first page of the report from the inquiry noted:

“The industry does face some challenges. Shipping must he able to compete with road and rail transport and will therefore need to offer available, reliable, timely service with competitive pricing.”

But that’s the whole point isn’t it? If coastal shipping, in any market, was competitive, reliable and flexible we wouldn’t need to be in favour of it - it would be there.

The Meyrick Report of 2007 listed some characteristics that drive customers’ modal choice, to which I’ve added a few more.

• Price

• Reliability

• Availability/frequency

• Flexibility

• Total transport time

• Suitability of mode for cargo regarding damage to goods

• Pick up/delivery times

• Packaging issues i.e. IS0 containers

• Berthing windows and

• Loading/unloading equipment

• Any service - maritime, road, rail or aviation - that ticks all those boxes for its customers will be a desired modal choice.

The 14 recommendations that flowed from the inquiry were in four main areas:

• Safety

• Training

• Legislative reform regarding permits, taxation, depreciation, Visas and compensation and

• National Port Plan

But the question is – will coastal shipping operate in additional markets if and when all that is done? It would be a travesty if an industry such as shipping – innovative, commercial and market-driven since the Phoenicians – was to adopt an attitude that it’s all up to government. It is up to the industry to identify opportunities and fill them.

Why can’t we get all this cargo off the road and onto ships? The advantages seem so obvious:

• Lower infrastructure costs

• More energy efficient

• Lower costs of externalities and

• Fewer people required for the same cargo task

We have some 60,000 km of coast

Autumn 2010

AUstRALIA30 Autumn 2010

Coastal shipping

based including pick up and delivery.

Road is so efficient and inexpensive that shipping’s inherent service drawbacks mean that the unit cost on ships must be sufficiently lower than road to overcome them. These drawbacks include increased inventory costs for the users, which in these post-Just-In-Time days is a large consideration.

To take one theoretical example – let’s say we have a high volume, heavy, low-value product (ideal for shipping) currently being trucked from Sydney to Far North Queensland (FNQ). A shipping service could, let’s say, do a weekly run instead of a thrice-weekly road service. This not only means there’s some product in the inventory pipeline but also that the consignee needs to hold greater stock levels. At the extreme, warehouse space might be required. For this and many other reasons, I suggest sea can’t just be competitive with road, it will need to offer a price incentive.

And then there’s the container pool and its management. My personal experience is that building, maintaining and positioning a dedicated two pallet wide container pool is a very expensive operation.

But lest we despair, the good news is that a coastal service from FNQ is about to start – Q Coast. And their development illustrates my earlier point. An opportunity has been identified and the plan to fill that need developed. May they prosper.

If we decide, as a community, that a service on the entire East Coast is a desirable goal, we could consider the model used on the West Coast. That is, government could issue a tender for the service with the winning bid receiving a subsidy. It is difficult for me to envisage multiple operators succeeding on the run. The need just to invest in a container pool seems to me to be a substantial barrier, let alone all the other requirements. Is this really a space that will enable multiple operators to succeed?

It’s not a pure commercial solution but, then again, it’s not addressing a purely commercial need. For every complex problem, there’s one simple, wrong solution.

And given the enormous subsidies enjoyed by road and rail and that shipping effectively underwrites all its infrastructure, this would be a very, very slight tilting of the scales back towards maritime.

the markets which shipping serves have changed dramatically

over the decades. And, it is clear, shipping has changed just as much,

if not more. Coastal shipping, in particular,

is an integral part of the transport and logistics

industry in Australia and, in those markets in which it operates, it continues to

innovate, adapt and prosper by solving the needs of its customers. Future growth will come from two areas

– the growth of its existing markets and any shift of cargo from land based

transport modes.To achieve the second will require reforms in the areas highlighted by last year’s report – training, taxation, safety and infrastructure. But if and when all those reforms are completed, shipping will still need to provide services that are more than competitive with road and rail. After identifying potential markets, it will need to deliver on the core service requirements:

• Reliability in excess of 90 per cent

• Improved total transit times

• Sufficient and suitable equipment and

• high frequency.

And it will need to do all that at a price that is more competitive than road and rail. Whilst market forces may deliver such an outcome, it would require a reversal of the trend of the last few decades. If the community, and its representatives, believe that there are benefits to the community over and above those of manufacturers and producers that would be delivered by such a modal shift, then support for the shift may need to be forthcoming. It will need financial support that recognises the benefits to the community should not be funded only by shipping and its customers.

If we are not prepared to do this, we should not be surprised if shipping continues to service those markets in which it does well and leaves road and rail to those markets in which they have advantages and benefits from institutional support for their infrastructure.

The Kooringa, the world’s first cellular container ship was purpose built to operate in the Australian coastal trade

Flinders Ports Forward Thinking Now

www.flindersports.com.au Tel +61 8 8447 0611 flindersports@flindersports.com.au

32 Autumn 2010AUstRALIA

Why are the three C’s so difficult for us to achieve?

By Peter Blanchard l chief executive officer

AUstRALIA

Over the past quarter of a century, there have been a myriad of reports on different aspects of

the international trade and transport industry. One of the underlying themes in just about all of those reports is the need for Co-operation, Co-ordination and Collaboration between supply chain participants. Talking about these “C” words is comparatively simple; actually using them has proved to be more difficult.

The most recent report, released by the Freight and Logistics Council of NSW (FALCON), Actions not Words: A Freight Agenda for New South Wales, Actions for NSW Freight and Logistics Efficiencies – the 21st Century Challenges (November 2009) identified collaboration across supply chains as its first recommendation.

Industry should be more open to providing and sharing information along supply chains, within the limitations of commercially sensitive material. This could include the wider adoption of information management systems that allow for freight to be electronically tracked from start to finish of the journey, and for the electronic transfer of information between operators,

reducing the administrative burden associated with the freight task.

Are collaboration and co-operation the strategic keys to unlock the potential of the international trade and transport industry to better utilise current infrastructure, reduce congestion and improve international competitiveness?

Why are collaboration, co-ordination and co-operation

so difficult to achieve in this industry? What

makes Australian industry so different to overseas markets? Why can such

collaboration be achieved in singapore, Busan, Rotterdam, Hamburg, Valencia, Valparaiso,

Felixstowe and a host of other large international

ports and not in Australia?There are a number of issues that provide an indication of areas for industry participants to investigate.

There are 41 agencies of government (Federal and State) involved in collecting 7649 data items from

importing/exporting businesses. This can be reduced to 3993 with the elimination of duplicated reporting across agencies. By harmonising reporting terms there is scope to harmonise these items to only 637!

22 agencies collect the name of an exporter, on 118 different forms, described in 61 different ways required in 16 different formats!!

Shipping lines are required to submit manifest or cargo reports to Customs for both imports and exports. There is a requirement to undertake similar reporting to port authorities. However, the two formats are totally different. Why?

Similarly, shipping lines are required to report actual vessel arrival information to Customs. Yet, each port authority is the “source of truth” for that information. Why can’t the port authorities forward that information to Customs directly?

The industry participants, private as well as public, have various contractual relationships but there are also a myriad of operational consequences impacting on third parties as a result of those contracts. This has caused much angst.

In 1989 and again in 1993 the

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international trade and transport industry rejected the co-operative single data base model of information sharing found in ports such as Hamburg, Felixstowe and Valencia. Instead the industry preferred the “message hub” model which required all participants to agree to a message exchange standard.

Unfortunately, history records that this model did not work because not every supply chain participant used the same standard. So today we have a myriad of standards, little cohesion and the cost to automate and be more efficient is close to prohibitive.

Compounding this was Customs’ decision to implement a reporting environment which required encryption – therefore data sharing and collaboration became more difficult.

Why focus on information sharing and collaboration? First, improved information should improve asset utilisation, including expensive infrastructure assets. In turn this will ameliorate the need for additional expenditure on this type of asset class. If we do not collaborate we will require greater and greater investment in infrastructure at a time when funds for such infrastructure are scarce. Historically, governments approve additional infrastructure only after there is a continuous pattern of congestion and delay. We cannot afford that delay.

Secondly, as an industry and a country, we will struggle to efficiently move the nation’s imports and exports if projected cargo increases over the next 15 years come to fruition. Already 50 per cent of Australia’s GDP by value is based on imports and exports. If current business operations remain unchanged there will be increasing blockages and congestion.

The importance of re-thinking business practices was recognised by DHL’s Supply Chain CEO, Graham Inglis in an address to the CILT Logistics Conference in London in October 2009. Inglis said:

“We need to start thinking the unthinkable. We really need to break down some of the barriers, whether that is co-operation or ‘co-opetition’ in the market or working with competitors.”

The implementation of the electronic Import Delivery Order (eIDO) by the container terminal operators (CTOs) is an excellent case study of how the benefits of collaboration and a single industry-wide data sharing network were dissipated.

CTOs required shipping lines to notify

commercial release of containers via an electronic message containing a PIN, container number and other information. All of this information was already contained on the Delivery Order. If an industry-wide information sharing system had been in place, the cost to implement the eIDO would have been negligible.

Collaboration and co-operation does not mean collusion in an anti-competitive sense. By sharing non-competitive information and making that information available in real time, or close to real time, individual companies will be able to make better informed commercial decisions. This should provide the optimal utilisation of resources and lead to improved efficiency. Theoretically, competition could well increase.

There has been some progress over the past 18 months towards greater co-operation. The work being undertaken co-operatively in Victoria between transport companies, container parks and shipping lines (see following story) is a good example of what can be done and how, by working together, the whole industry as well as individual companies can benefit.

Similarly, the support of shipping lines and container parks for PortBIS indicates a preparedness by the industry to explore new ways of working to open up opportunities for competitive advantage.

However, much remains to be done. It will take a concerted effort by all supply participants – private as well as public – to ensure that the international trade and transport industry is not hamstrung by the demands of the future and the baggage of the past.

Container park visibility - a case study in collaboration.

The final report of the Victorian Freight and Logistics Council’s Business Activity Harmonisation Study (BAHS) [December 2005] made a number of recommendations under the heading “Container Management”. Many of the recommendations involved the use of information technology and information exchange including:

• Container parks require a standard shipping line booking number/release number procedure

• Shipping Australia to establish one clear reference, educate exporters and incorporate into container visibility solutions

• Shipping lines to pre-advise container depots of all containers

33Autumn 2010

Bits and BytesA little bit about Tradegate:

On an average day we receive

less than 30 customer calls to

our helpdesk with the majority

being related to information about

PRAs.

Over the last three years we have

had just one outage during prime

time (07:00-22:00) which equates

to an uptime of 99.99 per cent

Tradegate membership covers

nearly all aspects of international

trade and transport.

• Shipping lines

• Stevedores

• Customs brokers

• Freight forwarders

• Retailers

• Importers

• Exporters

• Consolidators

• Depots

• Port authorities

• Technology suppliers

• Transport companies

• Container park operators

• Manufacturers

• Warehouse operators

Total membership stands at 376

companies

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AUstRALIA

PortBIs Case study

releases resulting in substantial administrative cost savings and errors;

• Advanced notification of when empties will be de-hired

• Advanced notification of when export containers will be picked up

For more information, contact Brett Maginness or Faulkner Macdonald on 1300552393.

PortBIs Update

PortBIS is Tradegate’s implementation of a port community information system. PortBIS is based on a number of key principles including:

• Obtain data from the entity that created the data e.g. empty return information from a container park

• Use existing data, wherever possible

• Adopt a national outlook, not an individual port outlook

• Avoid re-inventing the wheel

• Submit data once, but use it many times

The objective of PortBIS is to reduce maritime supply chain logistics costs through the provision of real time accurate information, enabling individual companies to make better informed commercial decisions.

Phase 1 Go live date - 1 March 2010

Includes arrival/departure information for Sydney, empty return information for 45 container parks across Australia and container alert information.

Phase 1 – shipping line/agent participants include Hamburg Sud,

Hapag Lloyd, APL, NYK Line, RCL, Maersk Line, Cosco, PAE, MISC, Marfret, STX Pan Ocean, Seaway,

Brisbane and Adelaide arrival/departure information will be incorporated by end 1st quarter 2010

Phase 2 – dangerous goods import reporting is live in Brisbane with final testing being completed in Fremantle and Sydney.

Testing is due to commence with Port of Melbourne Corporation shortly.

Dangerous goods export reporting is scheduled to be live by end March 2010.

Phase 3 – container park information service pilot will commence in March 2010.

Customers wishing to receive empty park return information from other shipping lines are encouraged to contact Tradegate 1300552393 with details.

Do you have a business continuity plan?

Over the past twenty years, and more particularly since Australian Customs rolled out CMR, the critical nature of communications within the industry has increased to the point that business simply stops if it loses its email or internet connection.

This has lead to the requirement for a business continuity plan, (BCP), being more critical than ever. At the simplest level, companies should ask themselves questions like;

• What would I do if my email server failed?

• What would I do if my internet connection was going to be

unavailable for up to a week or more?

In response to a number of requests from members, Tradegate has developed a product called “Managed Mail” that isolates a company’s business critical email and hosts it on Tradegate’s highly reliable CommercePlus messaging platform. This ensures that while a company may lose its general internet and email, a Managed Mail user can continue communicating to Customs, 1-Stop and other vital partners.

Managed Mail consists of two key elements:

• Dedicated email service for mission critical applications such as Australian Customs ICS and 1-Stop; and

• Access to a Broadband Wireless Internet service in the event of prolonged network outages

Recently, one of Tradegate’s customers called in a panic saying that their telephone and internet line had been cut down the street. Typically, this would lead to not having email, internet access and most importantly, access to Customs for a week. However within two hours of the initial call, Tradegate, in co-operation with the customer, had a wireless router on site and had migrated their internet traffic to Tradegate’s secure mail platform. Then using a combination of hosted email and Managed Mail their business was operational for all email, Customs and terminal EDI messaging. An additional benefit was the provision of internet access.

If this scenario had happened to your business, what would you have done?

by vessel and voyage to assist prompt de-hire

• Introduce time slot system to empty container parks

• Parks to introduce notification of delays on line to all parties, initially through email advice

• Carriers to adopt procedure for pre-advice of multiple container pick up/de-hire arrangements

• Shipping lines to use EDI to send releases to container parks

• Introduce an IT interface that could provide visibility of available stock to transport companies, exporters and relevant parties

• The BAHS Report concluded its discussion on Container Management summarising the requirements as “Container Park Solutions Require a Collaborative Approach”.

At the invitation of Shipping Australia, Tradegate participated in a round table discussion in mid-2008 with shipping lines and container parks to determine an acceptable way forward to attempt to avoid some of the bottlenecks that have surfaced periodically. Unfortunately, these bottlenecks have surfaced again in recent months in Melbourne, Sydney and Fremantle.

Following consultations with the Victorian Transport Association (VTA), Tradegate proposed a collaborative model for a container park information system (CPIS). This was endorsed by the VTA and Shipping Australia and a pilot will commence in March 2010.

Pilot objectives

• Reduce futile truck trips

• Provide early advice from shipping lines to container parks about empty returns

• Provide a mechanism for container parks to notify transport stakeholders about any delays or issues affecting park operating conditions

• Provide a mechanism for transport operators to notify parks of delivery de-hires and export pick ups

• Provide a mechanism for shipping lines to send export releases in EDI format

• Provide visibility of activity at each park thereby reducing truck queues

• Reduce non-value adding telephone calls

• Improve customer service for all three parties

• Reduce costs for all parties

A key feature of the CPIS pilot is the need for transport operators, shipping lines and container parks to co-operate for mutual benefit. All of the information required to address many of the issues outlined in the BAHS Report is within the power of the industry players themselves.

The CPIS will enable:

• Shipping lines to send export releases to container parks in EDI format

• Shipping companies to advise container parks of anticipated

empty returns

• Transport companies to check that export releases have been received by container parks and advise container parks of estimated pick up date/times

• Transport companies to advise container parks of estimated empty return date/times

• Container parks to advise the industry of any unexpected delays or disruptions to services.

As at mid-February 2010, there are 20 participants in the pilot:

• 6 shipping lines

• 7 container parks

• 7 transport companies

Significantly, only three of Melbourne’s container parks have as yet not confirmed their involvement in the pilot.

This participation should provide the project team with some meaningful results as most of the big participants are involved.

The pilot is scheduled to run for three months. At the end of that period a decision will be taken on whether to proceed to a full production environment.

See Figure 1 Below:

Benefits

Shipping lines are expected to benefit in two ways:

• Improved asset planning through early notification of when empty containers will be returned. This has a number of indirect benefits including improved cycle time, reduced stocks of containers, and therefore, less congestion.

• Decreases in non-value adding telephone calls and re-work.

Benefits to transport companies include:

• Greater visibility of activity at container parks with less idle time in truck queues

• Real time information on changes to activity parameters enabling optimum scheduling of transport tasks

• Greater certainty about export releases resulting in less telephone calls to check availability and less futile truck trips

Benefits to container parks include:

• Reduced manual data entry for import returns and export

A PortBIS user utilised PortBIS to track a container and avoid detention charges.

A container had been returned to the nominated container park and the details forwarded to the shipping line. Unfortunately, the container park sent the details to the incorrect shipping line. A container detention charge was raised on the freight forwarder by the correct shipping line.

The forwarder checked that the container had been returned

to the correct park via PortBIS and contacted Tradegate.

An investigation uncovered the error.

Tradegate advised the correct shipping line of what

happened and the detention charge was withdrawn.

The forwarder was able to avoid the detention charge as

well as save time and money investigating the cause of the

charge being raised in the first place.

Figure 1: Container Park Information Service Screen Shot

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AUstRALIA36 Autumn 2010

Grain safety

Container’s spillage:

summary of industry

packing standards

Containers are being used more

often to transport bulk grain but

inadequate blocking, bracing and

security is increasingly causing spills

that risk serious human injury and costly

equipment damage.

Packers and exporters are responsible

for ensuring containers are safely

packed and to indemnify shipping

companies.

Packers and exporters must also

ensure adequate precautions to prevent

containers bulging and spilling contents

through doors. Container distortion has

resulted in serious damage to ship cell

guides and delays to vessel operations.

Improper preparation has sometimes

resulted in Occupational Health & Safety

issues such as bulkheads failing to hold

cargo when doors are opened.

Heightened risks associated with

heavy grain containers cannot be over-

emphasised. There have been numerous

incidents of container floors and doors

failing. Before loading, a calculation of

the optimum height of a load of grain

should be carried out on the basis of

its density. Packers must ensure that

maximum gross weights indicated on the

container are not exceeded.

Standard density measure is hectolitres,

measured in kg per 100 litres. The

following are hectolitre weights of

various commodities:

• 80 kg/100 litres is heavy for wheat.

• 70 kg/100 litres is reasonably heavy

for barley.

• Oats, cottonseed and malt are

much lighter than barley and

chickpeas, and other pulses are

typically between barley and wheat,

while lentils can be heavier than the

above commodities.

A false bulkhead must be installed

when a container is used to pack grain.

It is recommended that the bulkhead

acts independently and should not be

supported by the doors. Half or one

door models provide no significant

weight-bearing benefit. Thickness of

the bulkhead should be adequate to

withstand rail accelerations exceeding

4g. It cannot be over- emphasised that

the left hand side door must be secured

properly to reduce movement and

leakage.

Labelling should note that the contents

are bulk and the kind of door bulkhead

used and a supplementary container

seal should be affixed to the closed LHS

door before loading to ensure the LHS

door is secured. This is in addition to the

existing requirement for a seal on the

RHS door.

there are three main

methods used for packing

grain containers ...

Method 1 (Horizontal Load)

Container preparation: LHS door is

closed and false bulkhead fitted inside,

being affixed to, but not supported

by, the door. It is also important to

place a label on the door if a half

bulkhead is fitted. Loading: Method for

packing involves having the container

in an upright position while feeding the

product into the unit by conveyor belt

or funnel chute. Overall process takes

between 10 - 25 minutes.

This method is highly recommended not

only for staff safety, but also to reduce

incidence of damage to containers and

there is little chance of leakage.

Method 2 (tilt Load)

Container preparation: As for Method 1.

Loading: Involves tilting the container to

a 45° angle with the grain loaded and

distributed through an overhead funnel.

On completion, container is returned to

an upright position. It is critical to ensure

no undue force on the front wall whose

load may exceed 0.4 x payload during

loading. Overall process takes between

7 – 10 minutes.

Method 3 (Vertical Load)

Container preparation: LHS door is

closed and false bulkhead fitted on RHS

door before loading. Loading: Involves

turning the container so that it is standing

on its end with the grain loaded and

distributed through an overhead funnel.

On completion, container is returned to

normal upright position. Overall process

7 – 10 minutes.

This method can strain the front wall

and is likely to cause damage unless

that wall is supported. Some shippers

have a secondary ram plate fitted to

the inverter that supports and lifts the

base of the container during and after

loading. It is strongly recommended that

a false bulkhead is used in this packing

process.

Vertical Loading of grain

Virtually half way between Sydney and Singapore, the Port of Darwin is

Australia’s nearest port to Asia, the terminus of the AustralAsian railway, and

the region’s growing multi-modal transport hub.

Capable of handling a wide range of cargoes, the port provides 754 metres

of continuous deepwater berths, dedicated container facilities and an

extensive bulk liquids terminal. There is also a bulk material handling facility

which includes a 2,000 tph shiploader and a 1,500 tph rail dump, both to be

supplemented by a new conveyor system.

The Port of Darwin is a recognised supply base for the Timor Sea oil and gas

industry and will soon become the site of a second LNG plant. The Port also

holds the world record for the largest single export shipment of live cattle.

With more than AU$150 million currently being spent on capital infrastructure

programs and the development of Masterplan 2030, the Port of Darwin is

gearing up to meet Australia’s future trade needs.

Phone: +61 8 8922 0660Fax: +61 8 8922 0666

darwinport@nt.gov.au

GPO Box 390, DARWIN NT 0801 Australia

www.darwinport.nt.gov.au

PORT of DARWIN

Australia’s northern gateway

DPC2850_MINERALS_210x297mm_vert:DPC new MINERALS A4 5/2/10 1:32 PM Page 1

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Feature100 GoLFeRs enjoY PLAYInG FoR sAL tRoPHIes

A strong group of players and supporters turned out at Roseville Golf Club, in Sydney, on the 3rd of March 2010 to compete for SAL’s 8th annual golf day trophies and prizes. Good weather, good humour, good golf, good prizes and plenty of good food and drinks made it a successful social and professional day. Only two ladies played, Emma Fensom, of the PB Towage team and Deborah King from SAL. We look forward to seeing many more ladies playing next year.

the scene the scene

Ashok Menon, of JPC Reefer, and JB Li, Frank Fu, Bin Lu. All of Five Star. the winners: Greg von Litzheim, Five star; Peter Wallace, seaway Agencies; Max smith, nYK; and Ian Hamilton, nYK.

the Port Kembla team - Runners-up in the competition: Ray smith and Andrew Dunne for Port Kembla Port Corporation with their guest tim Arkell, CeVA Logistics, in the middle.

Master of ceremonies Frank Needs, ANL, Bryan Sharkey, and Kushy Athureliya, of SAL, pile lucky door prizes on Stephen Shaw, of Five Star.

Front row: Phillip Holme, Brent Darcy, Steve Musket, Nick Robertson. All of K Line; Back row; Adam Marsh, of Transaction; Morgan Parker, Sell & Paricer; Steve Barrett, C-Air.

Emma Fensom, Alex Blott, Tony Cousins, David Dillon. All of PB Towage.

Frank needs, of AnL. Master of ceremonies.

Steve Moxey, of Showcase – publishers of Shipping Australia magazine.

Martyn Irish, Macquarie Telecom, Kevin Clarke, a director of SAL and managing director of MSC; Shayne Stead and Doug Deall, Macquarie Telecom; Llew Russell, ceo Shipping Australia.

The pre-tournament clinic: Ian Hamilton, NYK; Jeremy Tadman, Hapag Lloyd; Greg von Litzheim, Five Star; Norman Delaney, Feilba; Peter Wallace, Seaway Agencies; and Peter Hedland, the professional at Roseville Golf Club.

John Bradley, managing director of Hapag Lloyd, Perry Sutton of Torres Pilots, David Sobel and Jeremy Tadman both of Hapag Lloyd.

Michael Phillips, chairman of SAL and managing director of Hetherington Kingsbury.

We’d like to thank our sponsorsMacquarie Telecom

(main sponsor)

Mediterranean Shipping Company (MSC)

Patrick Stevedores

Newcastle Port Corporation

ANL Container Line

Wilhelmsen Ships Service

Svitzer Australia

Asiaworld

Sydney Ports Corporation

Tradegate

Coogans & Co.

PB Towage

Port Kembla Port Corporation

Evergreen Marine

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AUstRALIA4040

On 18 December 2009, SAL expressed support for the NSW Government’s decision to appoint Hutchinson Port Holdings (HPH) on the basis that there had been congestion at Port Botany container terminals especially at one terminal over the period August to December. Whilst HPH will not be operating until possibly early 2013, it will provide a much needed increase in capacity. For more read Shipping Australia’s press release at www.shippingaustralia.com.au, 18 December 2009.

sAL also supportive of the development of a Webb Dock container terminalSAL has been urging the Victorian Government to accelerate the development of a new container terminal Webb Dock, hopefully to be completed around 2013. SAL also noted it was important that the sea-land interface in Melbourne was up to the task of copying with the eventual resumption of growth in container throughput. For more information see www.shippingaustralia.com.au, 2 February 2010.

Government must do more to cope with the surging piracy crisis in the Indian oceanSAL has expressed its deepening frustration at the seeming impotance of the international community to address this crisis, with around 1500 seafarers having been taken hostage, so far, for ransom, in spite of the comprehensive measures that ship operators have taken to defend their crews. For more see www.shippingaustralia.com.au, 18 January 2010.

overweight and misdeclared container weights continue to be a cause of concernThere have been a number of incidents of this serious problem but the most recent has been the collapsing of a container stack onboard the 950 teu Husky Racer while being unloaded in Bremerhaven. Eighteen containers were lost overboard but the top containers, which were supposed to be empty, were found to have cargo inside weighing between 15 and 30 tonnes. This serious problem will be considered further in the June edition of this magazine.

AMsA selects oMC as the successful tenderer for an underkeel clearance management system in the torres straitOn 23 December, the Australian Maritime Safety Authority announced that OMC International Pty Ltd, a corporate associate member of SAL, was the preferred supplier of this system. SAL congratulates OMC on this appointment and it is expected the new system will be operational by late 2010.

strong support for Ausmarine 2010 exhibitionBaird Events have announced plans to hold this exhibition and conference at the Perth Convention and Exhibition Centre on 23-25 November 2010. SAL is proud, along with many other stakeholders, in supporting this event. As Baird Events has pointed out: it covers all types of shipping and follows the holding of very successful exhibitions and seminars in the past. For details please contact Kishore Nauavi on marinfo@baird.com.au.

Carnival Pacific jewel naming ceremonyCarrying up to 1950 passengers, the 70,000 tonne Pacific Jewel was named in Sydney on 12 December 2009 by the Governor General of Australia, Ms Quentin Bryce AC. Ann Sherry, CEO of Carnival Australia said the debut of Pacific Jewel represented a massive 50 per cent increase in the size of P&O Cruises’ fleet and had been driven by consumer demand.

Royal Caribbean plans Australian expansionSAL member RCCL plans to double the number of luxury cruise vessels based in Australia next year with the introduction of Radiance of the Seas. The 293 metre cruiseship will call Sydney home from October next year, joining little sister Rhapsody of the Seas which is now serving its third Australian season. RCCL MD, Gavin Smith said the new ship, which can accommodate 2100 passengers, would double the number of visitors it brings to Australia to more than 30,000.

West Atlas drilling rig written-offThree months and two weeks after the massive oil spill on the Montana platform in the Timor Sea, ASMA announced that they had not found any oil during its daily flights over the area which ended on 28 November. Unfortunately, the subsequent fire on the West Atlas drilling rig meant that it was a complete write-off.

ABB’s operations adopt the global brand name of ViterraIn November last year, VITERRA announced that ABB Grain had adopted that Viterra brand name. It was stated that the transition to a new name would take a couple of months.

At Un climate change conference, shipowners call for a global solution for shipping, led by IMoAt the conference, BIMCO and the International Chamber of Shipping hosted a side event that advocated the most effective means of reducing ships CO2 emissions would be for the Copenhagen conference to give IMO a mandate to finalise the comprehensive package of technical and economic measures which it had already developed. More information about the efforts by the shipping industry to reduce CO2 emissions can be found at www.shipingandco2.org.

new Zealand Burnt Pine Longicorn beetles try to re-enter AustraliaThe master of the Tatiana Schulte notified AQIS of unwanted passengers, namely the NZ burnt pine longicorn beetle and being a serious quarantine risk, the vessel was denied entry and promptly returned to New Zealand for cleaning. In 2004 AQIS turned away another cargo vessel arriving from New Zealand following a similar detection. The alert issued by the vessel’s master is an indication of the strong concern by the shipping industry to protect Australia’s biosecurity.

sAL welcomes new third container terminal operator at Port Botany

Ships and cargo need to be able to move in and out of the port of Geelong 24 hours per day, 365 days per year in all weathers.

VRCA has invested capital, expertise and effort to ensure that the port of Geelong meets the requirements of a modern marine logistics system.

The channels into Geelong boast state-of the-art channel markers; highly visible day and night; GPS controlled and arranged to give the best possible guidance to ships, ship masters and pilots.

A completely upgraded radio system allows the port control to offer uninterrupted guidance to ships in the channels

An Automatic Identification System gives the port control intelligence about the details of ships moving in the channels

New tide and wind sensors provide ships with real-time access to important parameters affecting their passage and manoeuvring alongside their berths

A SmartDock system enhances the ability of the biggest vessels visiting the port to berth safely in all weathers

An education campaign for the operators of small craft alerts them to the need to keep a good lookout for big ships and to keep clear of big ships when they are transiting the channel.

The experienced, professional staff of the VRCA works closely with all of the port users, including Port Phillip Sea Pilots and Svitzer Towage to make Geelong a safe and efficient port.

SAFETY IS OUR PRIORITY!

For informationPh: (03) 5225 3500 I Level 5, 65 Brougham St, Geelong, VIC 3220 I www.regionalchannels.vic.gov.au

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42 Autumn 2010

training

Accredited Courses:Accredited courses may be commenced at any time throughout

the year. Shipping Australia members receive a 5 per cent

discount on course prices.

Advanced Diploma of International Business Management

The Advanced Diploma of International Business Management

is designed to provide education and training in the field of

international business administration and management skills. The

course provides practical skills and knowledge of procedures

associated with international business.

Graduate Certificate in International Business ManagementThe Graduate Certificate of International Business Management is a four-subject nationally accredited postgraduate program. It provides comprehensive training in the first elements of international business practice and export practice.

Graduate Diploma of International Business ManagementThe Graduate Diploma of International Business Management is an additional four-subjects building on the professional skills already developed in the Graduate Certificate in International Business Management.

For more information phone 1300 361 526 or 02 8243 7460, email education@aiex.com.au or visit www.export.org.au.

Australian Institute of export course datesshort coursesShipping Australia members receive a 10 per cent discount on the AIEx short course prices listed below.

export Procedures course - 3 days $1,100Adelaide Brisbane Melbourne Perth Parramatta sydney townsville

11, 12 & 13 May 20, 21 & 22 April 16, 17 & 18 March

14, 15 & 16 September 20, 21 & 22 July 27, 28 & 29 July

export Procedures course - 2 days $750 18 & 19 March 16 & 17 March 22 & 23 June

20 & 21 May 14 & 15 September 16 & 17 November

9 & 10 September online export Procedures course $300

Available all yearimport Procedures course $750

22 & 23 June 17 & 18 June 4 & 5 May 19 & 20 May 28 & 29 April

30 Sept & 1 Oct 14 & 15 September 16 &17 November 12 & 13 October

understanding documentary credits course $45029 April 2010 28 January 2010 17 March 2010 4 March 2010 18 May 2010

29 April 2010 15 June 2010 22 June 2010 20 August 2010 26 August 2010 1 September 2010

international Trade law and iP $450 26 May 2010 20 April 2010 21 July 2010 23 July 2010 13 October 2010

introduction to exports course $450

25 June 2010 1 June 2010 22 September 2010 12 August 2010

Introduction to shipping – online course neWStart anytime of the year, to register go to www.

shippingaustralia.com.au or www.iwgq.com.au and click on

READ MORE in the Introduction to Shipping box.

Fee schedule (inclusive of Gst)SAL members $220, non member $330.

Special discounts apply to multiple registrations.

Introduction to the Maritime Industry - 2 day course

Melbourne 3/4 MarchAdelaide To be advisedCanberra 17/18 MarchFremantle 6/7 April

Reefer Cargo Handling and Introduction to Chartering

Course presented subject to demand.

Please contact SAL

Fee schedule (inclusive of Gst)Two day course One day course

SAL members $650 per person $400 per person

Non members $750 per person $500 per person

Discount available for individual members of Young Shipping Australia.

For details of the course content please visit our website www.shippingaustralia.com.au where the course registration form can be downloaded. Special discounted rates are available for group bookings. Please note that all courses are subject to sufficient registrations being received and that a 25 per cent cancellation fee will apply if a registration is cancelled in less than one week prior to the date the course is scheduled to commence.

SAL will be pleased to deliver any of these courses in-house and if required to adjust the content to more closely fit company requirements.

For registration and further information please contact Paul Alexander, phone 02 9266 9916 or email palexander@shippingaustralia.com.au, fax 02 9268 0230.

43Autumn 2010

training

AUstRALIA

sAL’s Introduction to shipping course by e-learning

Q&AProduct tankers are usually employed in carrying refined petroleum cargoes rather than crude oil.

tRUe or FALse

not sure, then register for sAL’s on-line e-learning course, Introduction to shipping and study in your own time, anywhere in Australia. All modules are available on-line, practical and interactive, suitable for government agencies and certificate on completion.

Register nowFollow the link at www.shippingaustralia.com.au or go to www.iwgq.com.au and click on ReAD MoRe in the Introduction to shipping box.

the answer is true. examples are motor spirit, aviation gasoline and kerosene.

Disclaimer:

Readers are advised that Shipping Australia Limited and the Publisher cannot be held responsible for the accuracy of statements made in advertising and editorial, nor the quality of the goods or services advertised. Opinions expressed throughout the publication are the contributors own and do not necessarily reflect the views or policy of Shipping Australia Limited or the Publisher. While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, the publisher takes no responsibility for those relying on the information The Publisher and Shipping Australia Limited disclaims all responsibility for any loss or damage suffered by readers or third parties in connection with the information contained in this publication.

Warranty and Indemnity: ADVERTISERS and/or advertising agencies upon and by lodging material with the Publisher Showcase Publications for publication or authorising or approving of the publication of any material indemnify Shipping Australia, the Publisher, its servants and agents, against all liability claims or proceedings whatsoever arising from the publication and without limiting the generality of the foregoing to indemnify each of them in relation to defamation, slander of title, breach of copyright, infringement of trademarks or names of publication titles, unfair competition or trade practices, royalties or violation of rights or privacy regulations and that its publication will not give rise to any rights against or liabilities in the Publisher, its servants or agents and in particular, that nothing therein is capable of being misleading or deception or otherwise in breach of Part V of the Trade Practices Act 1974.

Annual Report for 2009AUstRALIA LIMIteD

Minister’s introduction Three initiatives to modernise maritime policies 46

National Port Strategy 47

Chairman’s reportWe need a strong shipping body more than ever before 48

Ceo’s report Many challenges and issues will carry through to 2010 54

state committee reportsQueensland 58

New South Wales 61

Victoria 65

South Australia 68

Western Australia 71

International liner services 72Board of Directors for 2009 74Policy Council Members for 2009 75sAL Members 76sAL organisation 77Border agenciesPacific Adventurer and Montana incidents make it a busy year 82

Improved social conditions offer greatest potential for crew safety 86

Drive to increase biosecurity at ports will continue 88

Protecting Australia and preserving our way of life 90

Protection strategy needs long-term integrated policy 92

Immigration and the shipping industry 96

No room for complacency despite high level success with risk management 98

Ports Developing a national ports strategy – will it make a difference? 100

Albany – Some observations on public sentiment towards dredging 102

Brisbane – Trade figures now begin to show encouraging signs 104

Broome – Climate changes challenge ports and ship owners 106

Darwin – Growth goes ahead despite effects of global downturn 108

Flinders – Facilities continue to expand at seven SA ports 110

Fremantle – Harbour upgrade costs estimated at $250 million 112

Hastings – Pallas gives the green light to port green vision 114

Melbourne – Completion of the Channel Deepening Project 118

Newcastle – Efficient development of port enhances Hunter’s growth 120

North Queensland – New port authority has one of the largest tonnages 122

Port Hedland – Capacity building continues at the world’s largest bulk export port 124

Sydney – Milestone reached for Botany’s third terminal 126

Tasmania – Profits down by $5.6m as freight volumes decline 130

navigationRisk mitigation is increasing reason to install UKC 134

Brisbane Marine Pilots 21 years servicing the port 138

Maritime lawForce majeure clauses – are they effective in future-proofing business? 140

Bribery of foreign officials: Ignorance of the law is no defence and it’s about to get very expensive 142

Rotterdam Rules to replace other liability regimes 146

education and trainingNSW establishes transport and logistics workforce advisory group 150

Full speed ahead as college celebrates its 30th anniversary 152

International developmentsWhat did ICS think about the outcome at Copenhagen? 154

Excitement grows for next year’s Fonasba conference 156

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