BREE Resources and Energy Major Projects Report - October 2012

7/30/2019 BREE Resources and Energy Major Projects Report - October 2012

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bree .gov.au

Resources and EnergyMajor ProjectsOctober 2012


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Resources

and Energy

Major ProjetsOctober 2012

John Barber, Tom Shael, Nina Hitchins, Adam Bialowas


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ii Resources and Energy Major Projects October 2012

Commonwealth o Australia 2012

This work is copyright, the copyright being owned by the Commonwealth o Australia . The Commonwealth o Australia has,however, decided that, consistent with the need or ree and open re-use and adaptation, public sector inormation shouldbe licensed by agencies under the Creative Commons BY standard as the deault position. The material in this publication isavailable or use according to the Creative Commons BY licensing protocol whereby when a work is copied or redistributed,the Commonwealth o Australia (and any other nominated parties) must be credited and the source linked to by the user. It isrecommended that users wishing to make copies rom BREE publications contact the Chie Economist, Bureau o Resourcesand Energy Economics (BREE). This is especially important where a publication contains material in respect o which thecopyright is held by a party other than the Commonwealth o Australia as the Creative Commons licence may not beacceptable to those copyright owners.

The Australian Government acting through BREE has exercised due care and skill in the preparation and compilation othe inormation and data set out in this publication. Notwithstanding, BREE, its employees and advisers disclaim all liability,including liability or negligence, or any loss, damage, injury, expense or cost incurred by any person as a result o accessing,using or relying upon any o the inormation or data set out in this publication to the maximum extent permitted by law.

Barber, J., Shael, T., Hitchins, N., Bialowas, A., 2012. Resources and Energy Major Projects October 2012, Bureau o Resources andEnergy Economics, Canberra, November.

ISSN 978-1-921812-76-7 (Print)ISSN 978-1-921812-77-4 (Online)

Vol. 2, no. 1

Postal address:Bureau o Resources and Energy EconomicsGPO Box 1564Canberra ACT 2601

Phone: +61 2 6276 1000Fax: +61 2 6272 2001

Email: [email protected]: www.bree.gov.au


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Resources and Energy Major Projects October 2012 iii

ForewordThis biannual BREE publication, previously known as Mining Industry Major Projects, provides a

regular update o the key economic variables o the resources and energy sector in Australia: the

investment pipeline rom exploration through to completed projects. A separate publication,

Electricity Generation Major Projects, records the planned and committed capital expenditures in

electricity generation.

Resources and Energy Major Projects covers the period ending October 2012 and eatures several

improvements and provides more detailed inormation on the investment pipeline than in the past.

Previously projects were reported in only two categories (advanced and less advanced), but are

now grouped into our stages: (1) Publicly Announced; (2) Feasibility Stage; (3) Committed and

(4) Completed. The additional categories help to track where a project is at rom rst announcement

through planning and approvals to nal investment decision and eventual completion.

In the current issue BREE nds that there are 87 projects in the committed category worth some$268 billion. O this amount $195 billion are LNG, gas and petroleum projects. To put this in

perspective, and to show the scale o the pipeline in Australia, the total committed expenditure on

Australias oil and gas projects is comparable to the total cost o the Apollo Moon Program in 2012

prices.

While the number o projects at the Committed Stage o the investment pipeline has declined by

11 since the April 2012 release because o completions, the nominal value o committed projects

has increased by around $8 billion. The most notable addition to the Committed Stage is the second

train at the APLNG acility at Gladstone that is estimated to cost about $9 billion.

The combination o the Publicly Announced and Feasibility stages are equivalent to the LessAdvanced category in previous listings. Nevertheless, a direct comparison between previous reports

and the current release is not recommended because the current listing includes an indicative cost

or each o these projects whether or not costs have been announced by project proponents. By

contrast, in previous listings, BREE only provided a cost or a project i it were available rom the

project proponents.

In summary, BREEs latest project listing indicates the Committed Stage o the investment pipeline,

directly comparable to BREEs previous listing as advanced projects, is at a historic high in terms

o nominal dollars with a very large proportion o this value in oil and gas developments and

what might be described at mega projects. Looking orward, any substantial net increase to the

dollar value o projects at the Committed Stage o the investment program will require either costincreases o larger, existing projects and/or a new nal investment decision on a large project within

the near uture.

Quentin Grafton

Executive Director/Chie EconomistBureau o Resources and Energy Economics


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iv Resources and Energy Major Projects October 2012

ContentsForeword iii

Executive Summary 1

Background to the Resources and Energy Major Projects Report 3

Exploration 7

Projects at the Publicly Announced Stage 10

Projects at the Feasibility Stage 12

Projects at the Committed Stage 16

Projects at the Completed Stage 25

Capital expenditure 29

Analysis of projects by region 30


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Resources and Energy Major Projects October 2012 1

Executive SummaryThis release o the Resources and Energy Major Projects report covers the six month period

rom April 2012 to October 2012. The report provides a comprehensive list o projects, butuses our dierent categories to classiy projects where previously only two categories were

used. The new categories, based on the stages o the investment pipeline, include the PubliclyAnnounced stage, Feasibility Stage, Committed Stage and Completed Stage. Unlike past

reports, BREE now provides an indicative cost estimate or all projects included on its list.

BREE identies 106 projects at the Publicly Announced Stage with a potential value oover$91 billion, 171 projects at the Feasibility Stage that have a combined value o $292 billion,

87 projects at the Committed Stage worth $268 billion and 24 projects at the CompletedStage worth $12 billion.

Although the number o projects at the Committed Stage has decreased since April 2012,

the capital value has increased. The increase is primarily a result o the approval o a secondtrain or the Australia Pacic LNG project and cost increases to projects that were already

committed.

Details o the projects in each category by commodity are listed in Table 1. Projects at thePublicly Announced and Feasibility stages are potential capital investments, all o which will

not progress to the Committed Stage depending on market conditions and cost pressures.

Table 1: Summary of projects in the investment pipeline

Publicly Announced Feasibility Stage Committed Completed

No.

Range*

$m No.

Value

$m No.

Value

$m No.

Value

$m

Aluminium, Bauxite,

Alumina

4 1 0002 250 3 3780 0 0 2 3185

Coal 14 12 25015 900+ 63 75 766 17 14 360 6 1 670

Copper 8 7 8558 605+ 6 2 034 3 643 2 979

Gold 19 2 2703 520 6 482 9 3 548 4 241Inrastructure 8 13 50021 250+ 25 44 720 18 24 617 2 1 150

Iron ore 14 21 25035 250+ 25 44 944 12 26 204 4 2 822

Lead, Zinc, Silver 5 651 065 3 1 586 3 728 1 303

LNG, Gas, Petroleum 13 26 75035 250+ 11 104 535 18 194 912 1 490

Nickel 5 2 5005 000 6 3 835 0 0 0 0

Uranium 3 2 8456 845 5 2 100 1 98 0 0

Other Commodities 13 7501 500 18 8 109 6 3268 2 1 032

Total 106 91 010133 185 171 291 891 87 268 378 24 11 872

* Value o Publicly Announced projects given in cost range with projects over $5 billion having no upper bound.


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2 Resources and Energy Major Projects October 2012

Australias current surge in mining and energy industry investment has been uelled by megaprojects that cost more than $5 billion. There are 11 mega projects at the Committed Stage

that account or 75 per cent ($201 billion) o the committed total ($268 billion) and most othese are LNG projects. To illustrate the size, complexity and importance o the investment

in LNG projects, i just one o the large LNG projects currently at the Feasibility Stage were toreceive a positive FID in the next twelve months, there would be more invested in LNG, gas

and petroleum projects in Australia than the total amount spent by the US Government onthe Apollo Moon Program (in 2012 prices).

While there is a substantial pipeline o investment in Australias resources and energy sector,

it is not evenly distributed between states. Western Australia and Queensland have been themain locations or investment in the past ew years. The large proportion o the projects at the

Publicly Announced and Feasibility stages located in these two states indicates this trend islikely to continue.


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The substantive change is in terms o what was previously the less advanced list. This stageo the investment pipeline has been separated into projects at the Publicly Announced Stage

and projects that have progressed to the Feasibility Stage. In addition, BREE has created anadditional category, dened as the Completed stage, or projects that have nished, or where

initial production could commence. Collectively, the our stages o development (PubliclyAnnounced, Feasibility, Committed, and Completed) represent the complete investment

pipeline (see Figure 1).

Figure 1: The stages of the investment pipeline

PUBLICLY

ANNOUNCEDEXPLORATION PRODUCTIONFEASIBILITY COMMITTED COMPLETED

Denitions and explanations o the our stages o the pipeline include:

1. Publicly Announced Stage. Projects at this stage are either at a very early stage o

planning or have stalled or paused in their easibility studies and may have an uncleardevelopment path. The ormer are projects that have completed a substantial portion o

their exploration and resource deinition activities and are undertaking some orm o initialeasibility study to assess engineering requirements and the commercial viability o the

proposed mine. To include a project on the major projects list at this stage, preliminaryinormation on project schedule, planned output or cost must be publicly available. These

types o projects are, typically, at a very early stage o planning. As a result, not all projectswill progress rom the Publicly Announced Stage to become operational acilities.

2. Feasibility Stage. This stage o the project development cycle is where the initial

easibility studies have been completed and the results support urther development.This stage is characterised by urther studies being undertaken to inalise project scope,

complete engineering designs, assess environmental impacts and develop commercialplans. In some cases, projects at the Feasibility Stage will have pre-development work

at a proposed site prior to FID. BREE classiies such work as part o the Feasibility Stage

until an FID is made. Typically, BREE is able to gather inormation on at least two o theprojects cost, schedule and planned output as these have been deined in the completedpre-easibility study. Projects at the Feasibility Stage are less uncertain than those at the

Publicly Announced Stage, but are still not guaranteed to progress urther as evaluationso commercial prospects and approvals have not yet been inalised.

3. Committed Stage. Projects at this stage o the development cycle have received a

positive FID rom the owner and are either under construction or preparing to commenceconstruction. Typically, projects at the Committed Stage have cost estimates, schedules

and mine output that are well deined and oten publicly released. Nevertheless, plans aresubject to change due to schedule delays, scope changes and cost overruns even ater

construction has commenced.


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4. Completed Stage. Previously, when construction was substantially inished to the pointwhere initial production could commence a project was removed rom the major projects

list. From this point onwards these projects will remain on the BREE list and will beincluded at the Completed Stage or a period o up to three years ater construction so as

to provide an on-going record o the investment pipeline.

The new project classication system is broadly comparable to the previous classications

system. The previous less advanced projects would have included projects at the PubliclyAnnounced Stage and Feasibility Stage although previously projects were only included with a

cost i this had been provided by the project proponent. Under the new classication system,BREE has provided an indicative cost in the case where the proponents have not provided

such costs. The denition and inclusion in the previous advanced project listing remainsunchanged and is equivalent to the revised category, Committed Stage.

There are earlier stages in developing mining and energy projects, such as exploration

activities, that are not included in the investment pipeline. While exploration and otherpre-development activities remain important, they are beyond the scope o this report to

include on a project basis. Instead, a summary and analysis o total exploration expenditure isprovided.

Project estimatesIn previous releases o the Resources and Energy Major Projects report, BREE provided project

inormation sourced rom the owners as either company reports or their responses to emailsurveys. Project inormation that was considered highly uncertain or that could not be directly

sourced rom a company was not included. As a result o this uncertainty, some projects in theprevious less advanced category did not have detailed cost associated with them.

To provide additional and more complete inormation on the investment pipeline, theResources and Energy Major Projects report October 2012 includes an estimate or the

cost, schedule and capacity o each project. Where possible, inormation rom reports andcompanies is still used, but or some projects in earlier stages o development, and where thisinormation is not provided by project proponents, BREE has estimated the cost, schedule

or capacity using parameters based on similar projects and industry averages. These Rough-Order-o-Magnitude estimates have been developed to provide a more comprehensive

picture o the total potential investment.


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All cost data in the major projects list should be viewed as indicative rather than denitiveas project plans, schedules and costs vary even ater a FID has been made. Typically, projects

at earlier stages o their development cycle have a higher degree o uncertainty in theirplans and cost. To reect this uncertainty, estimates o the cost o a project at the Publicly

Announced Stage are calculated as a range rather than a single point estimate. This isintended to provide an indication only o the size o the investment in the project. For projects

where point costs estimates are available rom project proponents, these are provided ratherthan give an indicative cost range. The cost ranges used by BREE in the early stages o the

investment pipeline are:

1. 0 $249m

2. $250m $499m

3. $500m $999m

4. $1 000m $1 499m

5. $1 500m $2 499m

6. $2 500m $4 999m

7. $5 000m+

In some cases BREE has also estimated the cost o projects at the Feasibility Stage wherereliable public data were unavailable. As there is generally more inormation available on theseprojects to inorm a parametric cost estimate, a point estimate o indicative costs is provided.

Structure of the major projects listThe major projects list that accompanies this report has been re-structured to coincidewith the new ramework o the investment pipeline. It is still provided as a Microsot Excel

workbook, but projects are now shown on separate worksheets based on their commodity.Inrastructure projects are shown separately in an inrastructure group.

There is a table o contents that links to each commodity at the ront o the workbook to assist

with nding individual projects. Given that there are our categories used to classiy projects,the workbook is no longer colour coded. It should be noted that, because most projects at

the Publicly Announced Stage only have a cost range, the indicative cost estimates cannot be

directly summed to give a point estimate or the value o total investment at this stage o theinvestment pipeline.


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ExplorationCommodity exploration expenditure

Minerals exploration plays an important role as a precursor to the projects that make up the

mining investment pipeline. Exploration identies the location and estimates the quantity othe mineral resources that may eventually result in uture mining investment. Thus, the level o

exploration is a useul indicator o possible mining activity in years to come.

The value o minerals exploration, including petroleum, has increased 252 per cent in the pastten years, rom around $2 billion in 200102 (in 201213 prices) to $7.4 billion in 201112 (see

Figure 2).

Figure 2: Australian exploration expenditure 198081 to 201112 (201213 prices)

1

2

3

4

5

6

7

8

1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

2012-13$b

petroleum iron ore coal base metals gold other

Source: ABS.

Petroleum (including oil and gas products) exploration has historically represented a

substantial portion o the total minerals exploration expenditure in Australia. This peaked at63 per cent in 200809 ater several years o robust growth and has since declined to around

45 per cent in 201112. Petroleum exploration expenditure in 201112 decreased 6 per centin real terms rom the previous year to total $3.3 billion. While it remains at high levels, it has

decreased 23 per cent rom the record high level o $4.2 billion in 200809.


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As a result o petroleum exploration expenditure decreasing steadily over the last threeyears, the growth in total exploration expenditure has been generated by robust growth in

expenditure on mineral commodity exploration, including iron ore, coal, gold and base metals.Expenditure on exploration activities or these commodities has increased by 60 per cent over

the last three years and 360 per cent in the past decade.

In 201112, expenditure on mineral commodity exploration totalled $4.1 billion, an increaseo 32 per cent rom 201011. Growth in iron ore and coal exploration expenditures have been

the main drivers o this growth. Iron ore exploration expenditure increased 69 per cent to total$1.2 billion and coal exploration expenditure increased 57 per cent to reach $858 million.

Expenditure on gold and base metal exploration both grew or a third consecutive year, albeitat a more moderate rate than iron ore and coal. Gold and base metal exploration expenditure

increased 15 per cent and 16 per cent to total $790 million and $819 million, respectively.

Greeneld and browneld minerals exploration

Greeneld sites are locations that are not currently being mined and are places where

exploration activities and new potential mineral deposits are sought. Browneld sites alreadyhave operating mines in the region with supporting inrastructure established and exploration

seeks to identiy additional resources in the area.

Although expenditure on mineral commodity exploration activities has been increasing in

recent years, it has not been equally distributed between Greeneld and Browneld sites. Inthe past two years, most o the growth in exploration expenditure has been at Browneld sites

(see Figure 3). Browneld exploration expenditure in 201112 totalled $2.8 billion, an increaseo 38 per cent rom 201011 (in 201213 prices). Over the same period, Greeneld exploration

expenditure increased 17 per cent to $1.3 billion.

Figure 3: Exploration expenditure on greeneld and browneld sites

500

1000

1500

2000

2500

3000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

$m

greenfield brownfield

Source: ABS.


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The rapid rise in exploration expenditure coincides with the growth in physical explorationactivity. In 201112, the number o metres drilled at Greeneld sites increased by 8 per cent rom

the previous year to total 3.7 million metres. By comparison, Browneld metres drilled increased23 per cent to 7.7 million metres in the same period. The growth rates in the number o metres

drilled at each type o location have been substantially dierent over the past eight years. From200304 to 201112 the metres drilled at Greeneld sites increased 38 per cent while over the

same period metres drilled at Browneld sites increased 157 per cent (see Figure 4).

Figure 4: Exploration - metres drilled

1000

2000

3000

4000

5000

6000

7000

8000

9000

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

'000 m

greenfield brownfield

Source: ABS.

The average cost per metre drilled at Greeneld and Browneld sites have converged over thelast eight years and are now at similar levels (see Table 2). This is primarily due to the cost o

Greeneld exploration rising more rapidly than the cost o Browneld exploration. While thecost per metre drilled or the two types o exploration have been broadly consistent over the

last three years Browneld exploration, in terms o both metres drilled and expenditure, hasbeen growing at a substantially higher rate. The dierent growth rates in exploration metres

drilled, particularly since the Global Financial Crisis in 200809, indicate the tendency o miningand exploration companies to ocus on Browneld sites. In part, this is because Browneld sites

typically have a lower development cost compared to Greeneld developments.

Table 2: Cost per metre drilled, 200304 to 201112 (201213 Australian dollars)

2003

04

2004

05

2005

06

2006

07

2007

08

2008

09

2009

10

2010

11

2011

12

Average

Annual

Growth

Greenield site 151 184 215 225 298 345 305 317 345 11%Brownield site 206 198 228 253 286 300 287 321 361 7%


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Projects at the Publicly

Announced StageOverviewThe Publicly Announced Stage o project development is the rst stage in the investment

pipeline ater exploration activities. It includes projects that have completed a substantialportion o their exploration activities, but have not yet completed an initial orm o easibility

study to ully assess the commercial viability o the proposed mine. Projects at this stage acemany challenges beore they progress to FID. In some cases this progression through to the

Feasibility Stage and to the Committed Stage can take several years. During this developmentand planning phase projects costs and market conditions may prevent the project rom going

ahead or change the initial publicly announced project proposal.

Analysis of projects at the Publicly Announced Stage

BREE has identied 106 projects at the Publicly Announced Stage with total investment valueestimated to be worth between $91 billion and $133 billion (see Table 3). A number o the

project costs contributing to this total cost range have been estimated using parametric costestimation based on publicly available inormation and should be treated as indicative rather

than denitive estimates. The ull list o projects at the Publicly Announced Stage is available inthe major projects list which accompanies this report.

Table 3: Publicly Announced Stage project summary

Number of projects Indicative cost range $m

Aluminium, Bauxite, Alumina 4 1 0002 250

Coal 14 12 25015 900+

Copper 8 7 8558 605+

Gold 19 2 2703 520

Inrastructure 8 13 50021 250+Iron ore 14 21 25035 250+

Lead, Zinc, Silver 5 651 065

LNG, Gas, Petroleum 13 26 75032 000+

Nickel 5 2 5005 000

Other Commodities 13 2 8456 845

Uranium 3 7501 500

Total 106 91 010133 185+


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Gold projects are the most numerous at the Publicly Announced Stage with 19 projectsidentied. As gold mines tend to be smaller operations that require less capital investment

to start up, the total value o Publicly Announced gold mines is low compared to othercommodities, while the value or gold mines estimated to range rom $2.3 billion to $3.5

billion. Vista Golds proposed Mt Todd mine in the Northern Territory and Bullabulling GoldsBullabulling project in Western Australia are the two largest Publicly Announced gold projects

by investment size. Current cost estimates value the development o Mt Todd at $676 millionand Bullabulling at $333 million with potential output capacities o 260 000 and 200 000

ounces per year, respectively.

Iron ore projects are the largest by value in the Publicly Announced Stage with 14 projectsworth between $21.3 billion and over $35.2 billion. BHP Billitons Jinidi mine in Western

Australia is included in this stage rather than in the Feasibility Stage as its developmentplans are currently unclear. Fortescue Metals Groups Solomon Hub Stage 2 development,

Australasian Resources Balmoral South Stage 2 magnetite project and Atlas Irons RidleyMagnetite are other signicant iron ore projects at the Publicly Announced Stage.

There are 13 LNG, gas and petroleum projects at the Publicly Announced Stage with an

estimated combined value o between $26.8 billion and over$32 billion. Floating LNG projectssuch as the Bonaparte and Cash Maple Development projects, along with expansions to

Woodside Petroleums Pluto acility are among the highest value projects at this stage. Each isestimated to cost more than $5 billion.

Most coal projects identied in the investment pipeline have already progressed to theFeasibility Stage. There are 14 projects at the Publicly Announced Stage worth between $12.3billion and over$15.9 billion. MacMines Austasias Project China Stone in Queensland has the

highest potential cost o these, estimated at over $5 billion. Anglo Coal Australias MoranbahSouth project In Queensland has the second highest cost o coal projects at the Publicly

Announced Stage, estimated at between $1.5 billion and $2.5 billion.


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Table 4: Summary of projects at the Feasibility Stage

NSW

Qld

WA

NT

SA

Vic

Tas

Other

Total

Value

Value

Value

V

alue

Value

Value

Value

Value

Value

No.

$m

No.

$m

No.

$m

No.

$m

No.

$m

No.

$m

No.

$m

No.

$m

No.

$m

Alum

inium

,

2

17

80

1

2000

3

37

80

Baux

ite

,Alum

ina

Coa

l

18

897

9

4

4

665

87

1

200

63

757

66

Copper

1

420

3

893

1

274

1

447

6

2034

Go

ld

2

306

4

17

6

6

482

Infrastructure

5

9690

1

3

25

67

0

5

871

0

2

65

0

25

447

20

Ironore

1

2900

1

25

00

20

35

637

1

267

2

35

90

25

44

944

Lea

d,

Zinc

,Silver

1

100

1

125

0

1

236

3

15

86

LNG

,Gas,

2

1335

3

26600

3

60000

2

4

600

1

12000

11

1045

35

Petro

leum

Nicke

l

1

15

4

375

0

1

70

6

3835

Other

2

1145

4

214

8

5

24

93

3

1

008

2

532

1

133

1

191

2

18

81

09

Commo

dities

Uran

ium

4

1830

1

27

0

5

21

00

Total

30

24569

7

5

128094

47

113475

8

6

419

5

4687

2

532

2

203

2

13912

1712

91891


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LNG, Gas and Petroleum projects have the highest investment value o projects at theFeasibility Stage with an estimated value o around $104.5 billion. Browse LNG in Western

Australia and Arrow LNG in Queensland are the largest contributors to this investment totalwith indicative cost estimates o $36 billion and $24 billion, respectively.

As detailed in BREEs report Australian Bulk Commodity Exports and Infrastructure Outlookto 2025, inrastructure has an important role to play in supporting the uture growth oAustralias resource commodity exports. Australia is expected to become increasingly reliant

on inrastructure projects that are at the Feasibility Stage o which there are 25 worth $44.7billion. This includes projects that will provide port, rail and gas transmission capacity.

Proposed coal inrastructure in Queensland and New South Wales, particularly DudgeonPoint, Kooragang Island Terminal 4 and the expansion o the Hunter Valley rail network, are

the largest contributors to the value o inrastructure projects at the Feasibility Stage. Inthe Pilbara, the Anketell Point Port and the Cape Lambert port expansion are also notableinrastructure projects at the Feasibility Stage that could support increasing export volumes

o iron ore. Previously included projects that would have been part o the Feasibility Stageare BHP Billitons Outer Harbour and Abbot Point Terminals 49 projects. These two projects,

however, have been deleted rom the investment pipeline as they are not expected to reachan FID within the next ve years. The delayed Oakajee Port development and BHP Billitons

Abbot Point Terminal 2 have been moved rom the Feasibility Stage to the Public AnnouncedStage because these projects may proceed to FID within the next ve years.

There are notably ew aluminium, alumina and bauxite projects at the Feasibility Stage.While Australia is a substantial exporter o these commodities, market conditions have notsupported urther expansions in recent years.

There are 18 projects at the Feasibility Stage worth $8.1 billion relating to other commodities,which includes mineral sands, rare earth minerals and phosphates. While these are, typically,

not on the same scale as mega coal or iron ore projects they are expected to play anincreasingly important role in mining investment into the uture. Araura Resources Nolans

Project (rare earths, $1.9 billion) in the Northern Territory, Paradise Phosphate in Queensland($1.8 billion) and Alkane Resources Dubbo Zirconia Project ($1.1 billion) are notable examples

o high value projects in this category.

Due to previous restrictions on exploration and production, there have been ew uraniumprojects that have progressed to, or rom, the Feasibility Stage in recent years. Recent

regulatory changes in Western Australia, New South Wales and Queensland have improved theprospects o uranium projects progressing along the investment pipeline. In particular, Toro

Energys Wiluna project in Western Australia received state government approval in October2012 and could become the rst uranium project in Western Australia to progress to the

Committed Stage.


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In the last version o the Major Projects report, released in May 2012, it was reported that therewere 295 less advanced (see Figure 5). The equivalent combination o projects at the Publicly

Announced and Feasibility stages is 277 in the current release. The decrease in the numbero projects is attributable to the removal o projects that have not progressed as scheduled

and because inormation could not be sourced that conrmed a clear intention to progress todevelopment. As already noted, not all o the projects at the two stages o development will

move to FID, or be implemented as scheduled and the dollar value in these two categories isnot directly comparable to the value o projects at the Committed Stage.

Figure 5: Number of uncommitted projects

50

100

150

200

250

300

350

Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12

number

less advanced publicly announced feasibility stage

of projects


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Projects at the Committed StageOverview

Projects at the Committed Stage o development have received an FID and have either

started, or are about to start, construction. While these projects are more certain than projectsat the Publicly Announced and Feasibility Stages, they are not immune to cost increases and

schedule variations. Recent examples o committed projects that have experienced costincreases include BG groups Queensland Curtis LNG project ($4 billion increase), CITIC Pacic

Minings Sino Iron Project ($2 billion increase) and Santos Gladstone LNG project ($2 billionincrease). Project scope changes can also occur that include the cancellation o a project

or a halt to urther construction as occurred in August 2012 when BHP Billiton cancelled itspreviously committed Peak Downs coal expansion project.

There are currently 87 projects identied at the Committed Stage, a reduction rom 98 in the

April 2012 Major Projects report (see Table 5 and Figure 6). These committed projects have anestimated total investment value o $268.4 billion which is a slight increase rom the previous

listing in April 2012.


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Table 5: Summary of projects at the Committed Stage

NSW

Qld

WA

NT

SA

Vic

Tas

Other

Total

No.

Value

$m

No.

Value

$m

No.

Value

$m

No.

V

alue

$m

No.

Value

$m

No.

Value

$m

No.

Value

$m

No.

Value

$m

No.

Value

$m

Alum

inium

,

Baux

ite

,Alum

ina

Coa

l

7

41

90

1

0

1017

0

17

14

360

Copper

1

93

2

55

0

3

64

3

Go

ld

2

194

2

1

180

5

97

6

1

45

0

9

354

8

Infrastructure

5

325

2

5

6390

7

14774

1

200

18

24

617

Ironore

12

26204

12

26204

Lea

d,

Zinc

,Silver

1

58

1

31

0

1

360

3

728

LNG

,Gas

,

Petro

leum

3

60800

11

961

32

1

33

000

2

4300

1

680

181

94

91

2

Nicke

l

Other

Commo

dities

5

2998

1

27

0

6

3268

Uran

ium

1

98

1

98

Tota

l

16

95

35

2

2

784

00

40

141

084

4

34

080

2

298

2

4300

1

680

87

2

6837

8


23/39


Figure 6: Number and nominal value of projects at the Committed Stage

50

100

150

200

250

300

20

40

60

80

100

120

1995

1997

1999

2001

Dec-20

02

Oct-20

03

Oct-20

04

Oct-20

05

Oct-20

06

Oct-20

07

Oct-20

08

Oct-20

09

Oct-20

10

Oct-20

11

Oct-20

12

$bof projects

number (left axis) value (right axis)

number

The investment boom in Australias mining and energy sector is primarily driven by investment

in mega projects which each have an investment value o over $5 billion. The 11 megaprojects at the Committed Stage account or 76 per cent, or $201 billion o the total value o

committed projects ($268 billion) (see Figure 7). Most o these mega projects are investmentsin LNG acilities such as the Gorgon, Ichthys and Wheatstone projects, but also include iron ore

mining and inrastructure projects such as CITIC Pacic Minings Sino Iron Project, BHP BillitonsJimblebar and Rio Tintos Cape Lambert Port and Rail (see Figure 8).

Figure 7: Project value

projects $5b+$201b

(76%)

projects $2.5b$5b$8b

(3%)

projects $1b$2.5b

$41b(15%)

projects


24/39


Figure 8: Mega projects at the Committed Stage

10

20

30

40

50

NWSN

orthRa

nkinB

Cape

Lamb

ertExpansion

Jimble

bar

SinoIron

Proje

ct

Prelud

eFLNG

Gladsto

neLNG

Queenslan

dCurtis

LNG

AustraliaP

acic

LNG

Wheatst

oneLNG

IchthysLN

G

Gorgo

nLNG

$b

Projects progressing to the Committed Stage

Both the number and value o projects progressing to the Committed Stage have decreasedin the last 6 month period. There have been 10 projects, worth $13.2 billion, that have received

a positive FID in the six months since April 2012 and progressed to the Committed Stage odevelopment (see Table 6). By comparison, in the six months rom November 2011 to April

2012, 21 projects were committed to with a combined value o $45 billion that included theIchthys LNG project in the Northern Territory which alone accounted or $33 billion o this

total in the April 2012 l isting.


25/39


Table 6: Projects progressed to the Committed Stage since April 2012

Project Company State Value ($m)

APLNG Train 2 Origin / ConocoPhillips / Sinopec Qld 9 000

Yandicoogina Rio Tinto/Hammersley WA 1 700

Appin Area 9 coal mine BHP Billiton NSW 840

Burrup Ammonium Nitrate Plant Orica / Yarra / Apache WA 775

McArthur River (Phase 3) zinc/lead

mine

Xstrata Qld 360

Cloncurry copper project Xstrata Qld 300

Woodlawn Retreatment Project TriAusMin NSW 93

Four Mile uranium mine Quasar Resources / Alliance Resources SA 90

Andy Well gold mine Doray Minerals WA 55

Meekatharra Gold Project Reed Resources WA 36

Total 13 249

The main contributor to the additions since April 2012 is the approval o the second train at

the Australia Pacic LNG plant at Gladstone, Queensland. This will add an additional 4.5 Mt oLNG production at a cost o around $9 billion.

The prices o gold, copper and lead have provided more avourable investment conditions to

support projects or these metals than other commodities. In the past six months, two copperprojects, Xstratas Cloncurry project in Queensland and TriAusMins Woodlawn Retreatment

Project in New South Wales, progressed to the Committed Stage. Xstrata also committed toits McArthur River Phase 3 project in the Northern Territory that will expand its lead and zinc

production rom the mine. Two gold projects also progressed to the Committed Stage. Theseare Doray Minerals Andy Well project and Reed Resources Meekatharra Gold Project. Both are

located in Western Australia.

The Burrup Ammonium Nitrate Plant located at the Burrup Peninsula in Western Australiaprogressed to the Committed Stage ollowing a positive FID by its joint venture partners

(Orica, Yara and Apache). The plant is estimated to cost around $775 million and will provideup to 330 kt o industrial grade ammonium nitrate.

Despite a declining uranium spot price over the past six months, the Quasar Resources-Alliance Resources joint venture gave a positive FID to the Four Mile uranium project located

in South Australia. This is the second approved uranium project since changes to FederalGovernment regulations allowed more than three operating uranium mines in Australia. It will

supply up to 2 300 tonnes o uranium oxide when ully complete and has an initial investmento $98 million.


26/39


Lower spot iron ore and coal prices relative to the rst quarter 2012 have not encouragedurther expansions to iron ore and coal operations. This is evident in the low rate o progress o

projects to the Committed Stage with only Rio Tintos Yandicoogina iron ore mine expansionin Western Australia and BHP Billitons Appin Area 9 coal mine in New South Wales receiving a

positive FID over the past 6 months.

Analysis of projects at the Committed Stage

LNG, gas and petroleum projects account or over 70 per cent o the value o projects at theCommitted Stage (see Figure 9). There are 18 o these projects with a total investment value

o $195 billion. To illustrate the size, complexity and importance o these investments, i justone o the large LNG projects currently at the Feasibility Stage were to receive a positive FID in

the next twelve months, there would be more planned investment in LNG, gas and petroleumprojects in Australia than the total amount spent by the US Government on the Apollo Moon

Program, which in 2012 Australian dollar prices is about $200 billion1

.

Figure 9: Projects at Committed Stage, by commodity

50

100

150

200

250

LNG, gas, petroleum infrastructure iron ore coal other

$b

There have been numerous reports o cost increases or LNG projects at both the Feasibility

and Committed Stages in the past six months. Controlling cost pressures and also marketconditions will be crucial determinants to urther expansion o the Australian LNG sector.Australias LNG industry is not alone in experiencing these pressures, but as a high cost

country Australia is particularly vulnerable to urther cost increases in terms o its impact onuture investment.

1 Calculated by BREE based onA Budgetary Analysis of NASAs New Vision for Space, Congressional Budget Ofce,September 2004.


27/39


Box 1. LNG project cost pressures

A substantial portion o Australias investment pipeline is comprised o LNG projects at both the

Feasibility and Committed Stages. There are six LNG acilities already under construction worth $166billion with the potential or over $100 billion to be invested on new developments and expansions

to add additional trains at existing acilities. This next wave o investment is ar rom guaranteed and

uture investments will be reliant on the ability o project managers to control construction costs.

As a result o cost pressures, prospective LNG projects may require project proponents to consider

lower cost development alternatives i they are to progress to a FID and construction.

Two o Australias six LNG projects have announced project cost increases since the start o 2012

and another is expected to announce the results o cost review by years end. Factors driving these

cost increases, such as skilled labour shortages, a high Australian dollar and transport to remote

locations, as well as changes in scope, are common to all current and prospective projects. Thus, it

is not unreasonable to expect that LNG projects currently at the Feasibility Stage may be subject

to additional costs in the uture. Five o the six LNG projects currently under construction, and also

the recently completed Pluto LNG project in Western Australia, have had substantial cost increases

since they were at the equivalent o the Publicly Announced Stage in previous releases o the Major

Projects list (see Figure 10).

Figure 10: Australian LNG projects Publicly Announced vs current costs

5

10

15

20

25

30

35

40

45

50

Pluto Gorgon QCLNG Ichthys Gladstone Wheatstone

2012-13$b

publicly announced stage (various dates) committed / completed stage (Oct 2012)

Oct-06

Oct-06

Apr-08 Oct-06Apr-08

Oct-10

Source: ABARES, BREE.

Notes:

1. Publicly Announced Stage data based on projects in the less advanced category in previous ABARES reports.

2. Some cost changes can be attributed to scope/planning changes such as additional capacity and LNG trains.


28/39


As a result o a rapid expansion o the iron ore sector in recent years, there are 12 iron ore

projects with a combined value o $26.2 billion at the Committed Stage. Together, these

projects could produce an additional 239 Mt o iron ore exports per year. This would representa 50 per cent increase on iron ore exports rom 201112. Fortescue Metals Groups SolomonHub (60 Mt) and Chichester Hub (40 Mt) expansions are the two largest projects by output

capacity, ollowed by BHP Billitons Jimblebar mine (35 Mt) and CITIC Pacic Minings Sino IronProject (28 Mt). The Sino Project will be one o the Pilbara regions largest magnetite producers.

The importance o inrastructure projects to support increased export volumes is shown by

the number and value o port, rail network and gas pipeline projects at the Committed Stage.There are 18 projects worth $24.6 billion that are currently under construction across Australia

that will support growth in iron ore, coal and gas production and exports. Rio Tinto and Robe

Rivers Cape Lambert Port expansion in Western Australia is the largest o these by value at$5.1 billion dollars, ollowed by the BHP Billiton-Mitsubishi Alliances (BMA) Hay Point Coal

Terminal (Phase 3) and Stage 1 o the Wiggins Island Coal Export Terminal both o which arevalued at $2.4 billion.

There are 17 coal projects at the Committed Stage, valued at $14.4 billion (both coking and

thermal coal). Rio Tinto-Mitsuis Kestrel and BMAs Caval Ridge projects are coal projectswith the highest value at around $1.9 billion each. Caval Ridge was previously combined

with an expansion to the Peak Downs mine in Queensland. However, in part due to due todeteriorating spot prices, the previously committed Peak Downs expansion project has been

cancelled by BMA and reclassied as part o the Feasibility Stage o the investment pipeline.

Lower commodity prices and increasing costs o production, especially energy costs inrelation to aluminium production, have reduced the likelihood o urther expansions o such

projects unless there is a shit to cheaper energy sources. There are no nickel or aluminium,alumina and bauxite projects at the Committed Stage ollowing the completion o Rio Tinto

Alcans Yarwun Aluminium Renery Expansion and Boyne Island Smelter Sustainment projectsin Queensland.

Australia is not alone in experiencing rising LNG project construction costs. Indeed, many LNG

and large gas/oil projects around the world are acing substantial cost pressures. For instance, the

ExxonMobil led joint venture or the PNG LNG project announced a $3.4 billion cost increase to

the project (rom US$15.7 billion to US$19 billion) in November 2012. This has been attributed tooreign exchange impacts as well as schedule delays due to land access issues and the weather. The

recently completed Angola LNG project had its cost increase rom around $4 billion at the time it

received a FID to $10 billion at completion. Phase 1 o the Kashagan oil project in Kazakhstan, the

largest energy project under construction in the world, has also had a 20 per cent increase in cost, in

part due to a series o schedule delays.


29/39


Figure 11: Locations of projects at the Committed Stage

LEG

END

gaspipeline

capitalcity

$099m

$100499m

$500999m

$1000m+

projectcommittedvalue

railline

Ad

elaide

Ad

elaide

Perth

Hobart

Hobart

Brisb

ane

Canberra

Darwin

Melbourne

Sydney

Woodlawn

Retreatment

copper

IchthysLNG

GEMCO

Phase2expansion

manganese

NWSN

orthRankinBoil&g

as

CapeLambe

rt

ironoreinfrastructure

GorgonLNG

Spargas

SinoIronProjectironore

Nammuldiexpansionironore

Jimblebarironore

Macedongas

GreaterWes

ternFlankoil&g

as

Fle

tcher-Finucanoil

Montara

/Skuaoil

PreludefloatingLN

G

WheatstoneLNG

Balnavesoil

M

illenniumexpansioncoal

Grosv

enorundergroundcoal

Kipper(sta

ge1)gas

CadiaEastgold

Turrumg

as

BlackwaterSystemPowerUpgrade

coalinfrastructure

RocklandstoKabrarailduplication

coalinfrastructure

Enshamundergroundcoal

Dauniacoal

Broadmeadowcoal

UlanWestcoal

Newcastleexportterminalcoalinfrastr

ucture

KooragangIslandcoalterminalexpan

sion

Metropolitanlongwallcoal

NRENo.1Collierycoal

NCIGexportterminalStages

2&3coalterminal

RavensworthNorthcoal

Austarunderground(Stage3)coal

GladstoneLNG

WigginsIslandcoalterminal

HunterValleyCorridorCapacityStrategy(Con

tracted)

co

alinfrastructure

WigginsIslandrailproject

QueenslandCurtisIslandProjectLNG

AustraliaPacificLNG

HayPointPhase3coalinfrastructure

Kestrelcoal

LakeVermontcoal

Rail55155Mtpa

ironoreinfrastructure

Port55155Mtpaironoreinfrastructure

WAIOinnerharbour

ironor

einfrastructure

Chichesterhub95ironore

Horizon1(PhaseA)ironore

Ammoniumn

itrate

emulsionplant

SolomonHubironore

Rocklandscopper

HopeD

owns4ironore

Marandooironore

Ore

body24ironore

MoombatoSydney

gas

pipeline

GSE140coalinfrastructure

Argylediamonds

Tanamigold

HBJ

gold

WesternTurnerSynclineironore

Goldfield

spipelineexpansiongaspipeline

Brockman4ironore

TropicanaJoint

VentureProjectgold

MtMarionlithium

CSBPe

xpansionammoniumn

itrate

Damp

ierPortExpansion

irono

reinfrastructure

Conistonoil

GeorgeFisher

lead,zinc&silver

CavalRidge/

PeakDowns

expansioncoal

EagleDownscoal

Boggabriopencutcoal

Potosi

lead,zinc

&silver

AppinArea9coal

Burrupammoniumn

itrate

McArthurRive

r(phase3)

lead,zinc&s

ilver

Cloncurrycopper

FourMileuranium

AndyW

ell

gold

Meekatharra

gold

Yand

icooginaironore


30/39


Projects at the Completed StageOverview

Projects that have completed construction so as to be able to commence production within

the last six months are included at the Completed Stage o the investment pipeline. In thesix months to October 2012, 24 projects were completed with a combined value o $11.9

billion (see Table 7). The value o completed projects is about hal o what it was in April 2012.The decline is attributable to the completion o Woodside Petroleums Pluto LNG plant that

commenced production in April 2012 and was valued at $14.9 billion. Although less than theApril 2012 value, the value o Committed Projects in this release is above the ten-year average

o $8.1 billion (see Figure 12).

Table 7: Projects at the completed stage

Project Company State

New

Capacity

Capacity

Unit Resource Cost $m

Bass Gas (Yolla Mid Lie

Enhancement)

Origin /AWE /

Calenergy Gas

TAS n/a Gas 490

Bengalla expansion

(stage 1)

Wesarmers / Rio Tinto NSW 1.5 Mt Thermal Coal 141

Boyne Island Smelters

Major Sustaining

Projects

Rio Tinto Alcan Qld n/a Aluminium 685

Burton Peabody Energy Qld 2.5 Mt Coking Coal 300*

Cosmo Deeps Crocodile Gold NT 100 000 oz Gold 30

Curragh Mine Wesarmers Qld 1.5 Mt Coking Coal 286

DeGrussa Sandire Resources WA 77, 36 000 kt, oz Copper, Gold 390

Duketon (Garden Well) Regis Resources WA 200 000 oz Gold 109

Ernest Henry

underground

Xstrata Qld 50, 70 000 kt, oz Copper, Gold 589

Goonyella to Abbot Pt

(rail) (X50)

QR National Qld 50 000 ktpa Black coal 1 100

Hunter ValleyOperations Expansion

Rio Tinto / Mitsubishi NSW 6 Mt Thermal andCoking Coal

255

Karara Project Gindalbie Metals/

Ansteel

WA 10 000 kt Magnetite 2 390

Koolyanobbing Clis Natural Resources WA 2 500 kt Hematite 320

Lady Loretta Xstrata Qld 126, 40 kt Zinc, Lead 303

Moranbah Ammonium

Nitrate Project

Incitec Pivot Qld 330 kt Ammonium

Nitrate

935

Mount Arthur (RX1) BHP Billiton NSW 4 Mt Thermal Coal 388

Murchison Kentor Gold WA 24 000 oz Gold 15


31/39


Project Company State

New

Capacity

Capacity

Unit Resource Cost $m

Narrabri Coal Project

(stage 2)

Whitehaven Qld 4.5 Mt Thermal Coal 300

Nullagine Gold project Millennium Minerals WA 82 000 oz Gold 87

Roma to Brisbane

pipeline

Australian Pipeline

Group

Qld 10 PJ pa Gas 50

Southern Iron Arrium SA 4 000 kt Hematite 86

Wilcherry Hill (stage 1) Ironclad Mining/

Traord Resources

SA 2 000 kt Magnetite 26

Woornack, Rownack

and Pirro Project

Iluka Resources Vic 170, 110,

80

kt Rutile, Zircon,

Ilmenite

97

Yarwun Alumina

Reinery Expansion

Rio Tinto Alcan Qld 2 000 kt Alumina 2 500

Total 11 872

*Estimated due to unavailable data.

Figure 12: Value of completed projects

5

10

15

20

25

Oct-2003 Oct-2004 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011 Oct-2012

2012-13

$b


32/39


Analysis of projects progressing to the Completed Stage

Rio Tinto Alcans Yarwun Alumina Renery expansion project was the largest projectcompleted, by value, in the six months to October 2012. It will increase the existing capacity

o the renery by an additional 2 Mt a year to a total o 3.4 Mt per year. Rio Tinto Alcan alsocompleted the Boyne Island Smelters Major Sustaining Projects, valued at $685 million overthe past 6 months.

Six coal projects were completed in the period, the most o any commodity, with a combinedvalue o $1.7 billion. This category included projects such as BHP Billitons Mount Arthur (RX1)

project ($388 million), stage 2 o Whitehaven Coals Narrabri Coal Project ($300 million) andWesarmers Curragh Mine project ($286 million). These completed projects will provide up to

20 Mt o metallurgical and thermal coal or export.

Gindalbie Metals Karara Project in the Mid-West region o Western Australia was the secondlargest project completed in the past six months, by value. The $2.4 billion iron ore project

ofcially opened on 18 September 2012 and shipped its rst load o Direct Shipping Ore (DSO)in October 2012. Its rst production o magnetite concentrate occurred on 15 November

2012. Other iron ore projects completed in the period include Clis Natural ResourcesKoolyanobbing project in Western Australia ($320 million), Arriums Southern Iron project

($86 million) and stage 1 o Ironclad Mining and Traord Resources Wilcherry Hill project ($26million).

A number o other metals projects have been completed since April 2012. Four gold mines

with a combined value o $241 million were completed, along with two copper mines worth$979 million (Sandre Resources Degrussa mine and Xstratas Ernest Henry underground

project) and one zinc-lead mine valued at $303 million (Xstratas Lady Loretta mine). Projectsthat relate to other commodities that have been completed in the last six months include

Incitec Pivots Moranbah Ammonium Nitrate Plant in Queensland ($935 million) and IlukaResources Woornack, Rownack and Pirro mineral sands project in Victoria ($97 million).


33/39


Figure 13: Pipeline of investment in Australias resources and energy sector, selected projects

EXPLORATION

PRODUCTION

PUBLICLY ANNOUNCED

FEASIBILITY STAGE

COMMITTED

COMPLETED

Bonaparte Floating LNG

Cash Maple LNG

Pluto (trains 2 & 3) LNG

Jinidi Iron ore

Solomon Hub (stage II) Iron ore

Moranbah South Coal

Norwood Coal

Olympic Dam Copper & Gold

Oakajee Port & Rail

Pilbara Independent Rail

Alpha Coal

China First Coal

Carmichael Coal

Dudgeon Point Port

Kooragang Island T4 Port

Hope Downs 4 Iron ore

Kestrel Coal

Caval Ridge Coal

Cape Lambert Expansion PortHay Point Terminal Port

Earnest Henry Copper & Gold

Lady Loretta Zinc & Lead

Mount Arthur Coal

Narrabri Coal

Burton Coal

Browse LNG

Arrow LNG

Roy Hill Iron ore

West Pilbara Iron ore

Jack Hills (stage II) Iron ore

Gorgon LNG

Ichthys LNG

Wheatstone LNG

Sino Iron Project Iron oreJimblebar Iron ore

Yarwun Renery Alumina

Karara Iron ore

Moranbah Plant Ammonium Nitrate

Goonyella to Abbot Point Rail

Bass Gas

$91$133+ billion

$292 billion

$268 billion

$12 billion


34/39


Capital expenditureCapital expenditure in mining and energy industries represents the cash ow requirements o

companies or purchasing equipment, plant and assets that are directly used in the extractiono raw materials and concentrating o ores. This is dierent to the cost o projects that BREE

reports as the value o Australian mining investment, which measures the total committedvalue o projects that will, typically, be spent over several years. Capital expenditure represents

the portion o total committed value that is spent in a given period, usually in one year.

The growth in commodity prices over the past decade has generated a substantial increase inboth total committed value o mining projects and their annual capital expenditure. Annual

mining capital expenditure increased at an average annual rate o around 23 per cent rom200102 to 201112. This has been supported by substantial increases in both the number

and average value o mining and energy projects at the Committed Stage in Australia. In201112, mining capital expenditure reached a record level o $82.1 billion, an increase o 68

per cent rom the previous year (see Figure 14).

Figure 14: Australia mining capital expenditure

20

40

60

80

100

120

1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

2012-13$b

Source: ABS

Based on ABS survey data released in August 2012, mining capital expenditure is expected to

grow substantially again in 201213. Expenditure is orecast to grow by around 45 per cent toa total $119 billion in 201213.


35/39


Analysis of projects by region

OverviewTable 8 shows that the pipeline o investment in Australias mining and energy industries, itis not evenly distributed across the jurisdictions with the bulk o the planned expenditure in

Western Australia and Queensland.

Table 8: Regional investment pipeline

Publicly Announced Feasibility Stage Committed Completed

No.

Value

A$m No.

Value

A$m No.

Value

A$m No.

Value

A$mNSW 14 2 1805 430 30 24 569 16 9 535 3 784

Qld 28 23 20431 629+ 75 128 094 22 78 400 10 7 048

WA 43 42 47666 726+ 47 113 475 40 141 084 6 3 311

NT 5 1 8012 301 8 6 419 4 34 080 1 30

SA 7 7 6649 414+ 5 4 687 2 298 2 112

Vic 4 1 1852 185 2 532 2 4 300 1 97

Tas 2 0500 2 203 0 0 1 490

Other* 3 12 50015 000+ 3 16 412 1 680 0 0

Total 106 91 010133 185+ 171 291 891 87 268 378 24 11 872

*Oshore projects not allocated to a state.

Western Australia

Western Australia has both the largest number and highest value o projects at the CommittedStage with 40 projects valued at a total o $141.1 billion. Five o the eleven mega projects at

the Committed Stage are located in Western Australia including the largest, Chevrons GorgonLNG project at Barrow Island. At $43 billion, the Gorgon LNG is the biggest resources or energy

ever initiated in Australia and will cost around 5 times more than the Snowy Hydro Scheme(in 2012 prices). Western Australia also has a number o gas and LNG projects at earlier stages

o development that will continue to support investment in the state i they receive a positiveFID. For instance, Browse LNG and the prospect o additional trains at Gorgon and Woodsides

recently commissioned Pluto LNG plant could collectively generate more than $50 billion ourther investment or the state.

Investment in iron ore projects represents a substantial portion o the investment pipeline inWestern Australia. There are already 12 iron ore projects at the Committed Stage worth $26.2billion and there are projects at the Feasibility Stage that have the potential to result in the

investment o up to$45.1 billion. Many o the iron ore projects yet to receive a FID are locatedin regions outside o the Pilbara and include the Mid-West and Esperance-Goldelds regions.


36/39


There are currently $14.8 billion invested in inrastructure projects at the Committed Stageand over $8.7 billion at the Feasibility Stage. Additional expansion o the iron ore sector will

be the main driver o any additional investment in inrastructure in Western Australia. Recentpostponements such as BHP Billitons Outer Harbour project at Port Hedland and the Oakajee

Port in Geraldton suggest that these inrastructure developments may proceed at a slowerpace into the uture.

Western Australia has a range o metals and other minerals projects in its investment pipeline.

There are 23 o Australias 38 gold projects in the investment pipeline located in WesternAustralia, with a value o over $2.4 billion. Although gold projects tend to be smaller in value,

in aggregate they remain a valuable source o investment or the state. Similarly, uraniumprojects are, typically, smaller in value than large iron ore projects. Five o the nine uranium

projects identied in the investment pipeline are located in Western Australia with a potentialvalue o over $1.8 billion.

Queensland

Queensland has the second highest number o projects at the Committed Stage with 22

projects that have a total value o $78.4 billion. Like Western Australia, this is primarily aresult o mega LNG projects which account or 78 per cent, or $60.8 billion, o this total.

Queenslands three committed LNG projects will use the states large resources o coal seamgas as LNG eedstock to establish a new export industry, with most o the LNG to be exported

to Asia-Pacic markets. Queensland still has additional LNG projects under development at theFeasibility Stage including Shell-Petro Chinas Arrow LNG project and the smaller Fishermans

Landing LNG project.

There are an 10 coal projects at the Committed Stage in Queensland. These have a total valueo $10.2 billion and are a mix o thermal and coking coal mines. The uture o investment in

Queenslands coal sector is ocused more on thermal coal mines with 26 o the states 39 coalprojects at the Feasibility Stage, along with 7 o the 12 coal projects at the Publicly Announced

Stage, related to thermal coal. Most notable among these are the mega projects located in theGalilee Basin such as GVK-Hancock Coals Alpha coal mine, Adanis Carmichael Coal Project and

Waratah Coals China First Coal Project. Together, these projects have a planned capacity o 130Mt. I all o these projects progress to the Committed Stage it would establish the Galilee Basin

as a thermal coal producing region comparable in output to the Hunter region in New SouthWales. Such an expansion will be reliant on continuing growth in world demand or thermal

coal in electricity generation, particularly in emerging economies such as India.

Inrastructure investment in Queensland is primarily ocused on supporting the growth in coaland gas projects. There are currently ve inrastructure projects at the Committed Stage worth

$6.4 billion and 13 projects at the Feasibility Stage with a combined value o $25.7 billion.


37/39


Although smaller in value than the large coal and LNG projects, there are numerous metals

and other minerals mines progressing through the investment pipeline in Queensland.The Mt Isa region has projects with a potential value o over $5 billion at various stages

o development, including seven copper projects, two lead-zinc-silver mine projects, one

phosphate mine and one uranium mine.

Development o additional uranium projects in the region is possible ollowing the recent

revision o state Government regulations. Rio Tinto Alcans $1.4 billion South o Embley andCape Aluminas $380 million Pisolite Hills projects are both at the Feasibility Stage and could

increase bauxite production by up to 20 Mt per year in the Weipa region i they receive apositive FID.

The Northern Territory

The Northern Territory has the third highest value o projects at the Committed Stage worth$34.1 billion. Much o this planned capital expenditure is due to the large value o theIchthys LNG project which, at $33 billion, represents 97 per cent o the territorys committed

investment in resources and energy projects. Gas projects are the main contributor to thevalue o the Northern Territorys potential investment pipeline, with around $4.6 billion o

projects at the Feasibility Stage.

Metal projects represent the remainder o the Northern Territory mining investment pipeline.Newmonts Tanami gold project is currently at the Committed Stage and is valued at $450

million. There are also an additional three gold projects at the Publicly Announced Stagewith a combined value o over $750 million. Stage 3 o the McArthur River lead-zinc mine

progressed to the Committed Stage in September ollowing a positive FID rom Xstrata. Theproject is valued at $360 million and will increase the mines zinc and lead production by 207

kt and 51 kt respectively. The Bigrlyi uranium project remains at the Feasibility Stage while theRanger 3 Deeps uranium project by ERA is still an exploration activity.

New South Wales

There are 16 projects at the Committed Stage in New South Wales worth $9.5 billion. The coal

sector is the states main source o mining investment with 11 o the 16 committed projects

either coal mine projects or inrastructure projects planned to support coal transportation.Together, these projects account or $7.4 billion, or 77 per cent, o the states mininginvestment at the Committed Stage. Newcrests $1.9 billion Cadia East gold project accounts

or the majority o the remaining committed investment.


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New South Wales has 30 projects at the Feasibility Stage and 14 at the Publicly AnnouncedStage in its investment pipeline. Coal is the main sector or this investment with 19 projects at

the Feasibility Stage which have a combined value o $8.8 billion. Unlike Queensland, there areno mega coal projects currently planned in New South Wales. Among the largest projects, by

value, in the state are Rio Tinto-Mitsubishis Mount Pleasant Project ($1.3 billion) the CobboraHolding Companys Cobbora mine ($1.3 billion) and Whitehavens Maules Creek Project. These

projects could provide up to 33 Mt o additional thermal coal capacity to the Hunter region.

South Australia

South Australia has only two projects at the Committed Stage with a combined value o $298million. These are Arriums Whyalla Port expansion ($200 million) and the Quasar Resources-

Alliance Resources joint venture Four Mile uranium project.

South Australia has several projects under development in the earlier stages o the investmentpipeline. These include the recently postponed expansion to BHP Billitons Olympic Dam.

The November 2012 announcement o an extension to the indenture agreement betweenBHP Billiton and the South Australian Government to develop the project, along with a

commitment rom BHP Billiton to spend $650 million over the next our years on projectplanning and development, indicates it will remain part o the investment pipeline or the

oreseeable uture.

Victoria

Victoria has two projects at the Committed Stage worth $4.3 billion, these are both gas

projects located in Bass Strait. There are also two projects in Victoria at the Feasibility Stage.These are both mineral sands projects which have a combined value o $532 million. The

major projects investment pipeline o Victoria includes only a ew projects because many othe states mining projects are below the $50 million threshold.

Tasmania

Like Victoria, Tasmania has ew mining projects that cost over $50 million. At the Feasibility

Stage there are two projects with a combined total value o $203 million in Tasmania. Theseare Proto Resources and Investments Barnes Hill nickel-cobalt project and King Island

Scheelites Dolphin Tungsten Project. At the Publicly Announced stage, Tasmania has two tinprojects that have a combined value o less than $500 million which include Venture Minerals

Mount Lindsay and Metals Xs Renison expansion projects.


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Documents

BREE Resources and Energy Major Projects Report - October 2012