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24 www.miningoilgas.com.au MAY 2014 THE AUSTLIAN MINING REVIEW SPECIAL PROFILE Roy Hill Iron Ore ON March 20, the crucial US$7.2 billion funding package for the Roy Hill project was signed in Singapore. It was the world’s largest ever finance deal for the development of a land-based mining project, and officially completed the $10 billion needed to get Roy Hill to production. With enough equity already sunk into the project to progress construction past the 30 per cent development level, Hancock Prospecting (70 per cent) and its fellow shareholders Marubeni (15 per cent), POSCO (12.5 per cent), and China Steel Corporation (2.5 per cent), now expect to begin shipping 55 million tonnes per annum of iron ore in September 2015. The complex billion-dollar deal comprises loans and guarantees from five export credit agencies (ECAs) and a consortium of 19 commercial banks from Australia, Japan, Europe, China, Korea and Singapore. Underpinning the finance was substantial support from Japan Bank for International Cooperation, Korea Eximbank, Korea Trade Insurance Corporation, Nippon Export and Investment Insurance and Export-Import Bank of the United States. In a statement marking the milestone, Roy Hill chairman Georgina Hope Rinehart called the project “a crucible of opportunity during a period of global uncertainty”. “Today we already have 2500 people working on the construction of the project; this will peak at 3600 later this year before we employ 2000 permanent staff through operations,” she said. “I am immensely proud that Hancock, a wholly-owned West Australian company, is taking the lead on such a significant project. “It is a strong vote of confidence in Hancock and Roy Hill that this financing has attracted such substantial international investment and support. “We look forward to becoming a major iron ore producer on an international scale, and thank our partners for their steadfast support for this major Australian project.” WA Premier and State Development minister Colin Barnett welcomed the financing milestone for “one of the most significant projects to be proposed in recent years”. He said the mine was expected to generate up to $400 million per annum in state royalties once fully operational. “The Western Australian Government has worked closely with the project proponents to progress the Roy Hill project to this point, including the negotiation and implementation of a State Agreement, and all primary approvals are now in place,” he said. “This project is an example of the technical excellence required in the modern mining industry, with a state-of-the-art remote operations centre in the process of completion.” With almost $3 billion already spent or committed on local content to date, the Roy Hill project is expected to make a substantial contribution to the WA economy. “This is great news for workers in mining and construction and shows there are still opportunities out there despite recent reports of a slowing of growth,” Mr Barnett said. Head engineering, procurement and construction (EPC) contractor Samsung C&T has continued to hand out lucrative construction contacts for the pit to port project. The recently completed accommodation village is now home to more than 1000 staff, as work continues to ramp up on a variety of mine-related assets and services. BGC Contracting extended its involvement in February when Australia’s largest privately held mining and civil contracting firm won a third significant contract to supply railway ballast. In September last year BGC was awarded a $420 million contract to complete the civil earthworks, concrete works and general infrastructure for the port component, which was preceded by a $120 million contract to build the aerodrome and mine site internal roads, awarded in April 2012. Brookfield Multiplex has works well underway on a $73 million non processing infrastructure (NPI) facility at the Roy Hill mine, which started on completion of the $200 million, 2000-person accommodation village late last year. The NPI contract includes the design and construction of a heavy and light vehicle workshop, wash down facilities, a boilermaker workshop, tyre change area, lube farm, services including power, water and wastewater treatment and associated infrastructure and distribution, administration buildings including go-line facilities and a gatehouse. The facility will service a fleet of up to approximately 142 equipment vehicles and house about 250 staff. Brookfield Multiplex WA regional managing director Chris Palandri said the NPI precinct would be the ‘engine room’ of the mine, providing essential facilities and services for a smooth operation. “The NPI is a critical component of the Roy Hill project,” Mr Palandri said. “Because the mine is situated in such a remote region – about 100km from the nearest town – it’s imperative that provisions for the maintenance of vehicles and the administration and care of staff are readily available on site.” Outlook The Bureau of Resources and Energy Economics (BREE) reported that rising exports would be the key driver of significant increases to Australia’s resources and energy commodity export earnings forecast to swell at an average rate of 8 per cent a year from 2013 to 2014, to total $284 billion in 2018 to 2019. Historic funding secures path to production WA Premier Colin Barnett said the Roy Hill project was expected to generate up to $400 million per annum in state royalties Roy Hill’s $200 million, 2000-person accomodation village was completed last year REUBEN ADAMS (continued on page 30)

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Page 1: MAY SPECIAL PROFILE Roy Hill Iron Ore Historic funding ...miningoilgas.com.au/pdf/Roy_Hill_Feature2.pdf · Europe, China, Korea and Singapore. ... “The Western Australian Government

24 www.miningoilgas.com.auMAY 2014THE AUST�LIAN MINING REVIEW

SPECIAL PROFILE Roy Hill Iron Ore

ON March 20, the crucial US$7.2 billion funding package for the Roy Hill project was signed in Singapore. It was the world’s largest ever finance deal for the development of a land-based mining project, and officially completed the $10 billion needed to get Roy Hill to production. With enough equity already sunk into the project to progress construction past the 30 per cent development level, Hancock Prospecting (70 per cent) and its fellow shareholders Marubeni (15 per cent), POSCO (12.5 per cent), and China Steel Corporation (2.5 per cent), now expect to begin shipping 55 million tonnes per annum of iron ore in September 2015.

The complex billion-dollar deal comprises loans and guarantees from five export credit agencies (ECAs) and a consortium of 19 commercial banks from Australia, Japan, Europe, China, Korea and Singapore. Underpinning the finance was substantial support from Japan Bank for International Cooperation, Korea Eximbank, Korea Trade Insurance Corporation, Nippon Export and Investment Insurance and Export-Import Bank of the United States.

In a statement marking the milestone, Roy Hill chairman Georgina Hope Rinehart called the project “a crucible of opportunity during a period of global uncertainty”.

“Today we already have 2500 people working on the construction of the project; this will peak at 3600 later this year before we employ 2000 permanent staff through operations,” she said.

“I am immensely proud that Hancock, a wholly-owned West Australian company, is taking the lead on such a significant project.

“It is a strong vote of confidence in Hancock and Roy Hill that this financing has attracted such substantial international investment and support.

“We look forward to becoming a major iron ore producer on an international scale, and thank our partners for their steadfast support for this major Australian project.”

WA Premier and State Development minister Colin Barnett welcomed the financing milestone for “one of the most significant projects to be proposed in recent years”.

He said the mine was expected to generate up to $400 million per annum in state royalties once fully operational.

“The Western Australian Government has worked closely with the project proponents to progress the Roy Hill project to this point, including the negotiation and implementation of a State Agreement, and all primary approvals are now in place,” he said.

“This project is an example of the technical excellence required in the modern mining industry, with a state-of-the-art remote operations centre in the process of completion.”

With almost $3 billion already spent or committed on local content to date, the Roy Hill project is expected to make a substantial contribution to the WA economy.

“This is great news for workers in mining and construction and shows there are still opportunities out there despite recent reports of a slowing of growth,” Mr Barnett said.

Head engineering, procurement and construction (EPC) contractor Samsung C&T has continued to hand out lucrative construction contacts for the pit to port project. The recently completed

accommodation village is now home to more than 1000 staff, as work continues to ramp up on a variety of mine-related assets and services.

BGC Contracting extended its involvement in February when Australia’s largest privately held mining and civil contracting firm won a third significant contract to supply railway ballast. In September last year BGC was awarded a $420 million contract to complete the civil earthworks, concrete works and general infrastructure for the port component, which was preceded by a $120 million contract to build the aerodrome and mine site internal roads, awarded in April 2012.

Brookfield Multiplex has works well underway on a $73 million non processing infrastructure (NPI) facility at the Roy Hill mine, which started on completion of the $200 million, 2000-person accommodation village late last year. The NPI contract includes the design and construction of a heavy and light vehicle workshop, wash down facilities, a boilermaker workshop, tyre change area, lube farm, services including power, water and wastewater treatment and associated infrastructure and distribution, administration buildings

including go-line facilities and a gatehouse.The facility will service a fleet of up to

approximately 142 equipment vehicles and house about 250 staff. Brookfield Multiplex WA regional managing director Chris Palandri said the NPI precinct would be the ‘engine room’ of the mine, providing essential facilities and services for a smooth operation.

“The NPI is a critical component of the Roy Hill project,” Mr Palandri said.

“Because the mine is situated in such a remote region – about 100km from the nearest town – it’s imperative that provisions for the maintenance of vehicles and the administration and care of staff are readily available on site.”

OutlookThe Bureau of Resources and Energy Economics (BREE) reported that rising exports would be the key driver of significant increases to Australia’s resources and energy commodity export earnings – forecast to swell at an average rate of 8 per cent a year from 2013 to 2014, to total $284 billion in 2018 to 2019.

Historic funding secures path to production

WA Premier Colin Barnett said the Roy Hill project was expected to generate up to $400 million per annum in state royalties

Roy Hill’s $200 million, 2000-person accomodation village was completed last year

REUBEN ADAMS

(continued on page 30)

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26 www.miningoilgas.com.auMAY 2014THE AUST�LIAN MINING REVIEW

SPECIAL PROFILE Roy Hill Iron Ore

Industry leader producing high quality work and safety wearLEADING Australian clothing brand Lee Brothers International Trade is dedicated to providing premium quality workwear products and services. The company’s trademark range Tuffwear offers total work, corporate and safety wear products, tailored to withstand Australia’s tough work and corporate environments.

An Australian owned company with operations in Sydney, Melbourne, Brisbane and Perth, Lee Brothers’ ISO-accredited Tuffwear collections are manufactured in the company’s own production warehouses in Shanghai, China, to strict quality standards.

All Tuffwear materials are quality-approved, and surpass the relevant Australian standards for colourfastness to washing and light exposure, washing shrinkage, weight, durability and tear resistance. Seams are double-stitched and hems securely finished with reinforcement and binding, to ensure all garments retain their colour and shape, wash after wash.

For the harsh working conditions of Australian mining and industrial sites, Tuffwear maintains several specialist workwear collections including

protective footwear, and high-vis and waterproof apparel, as well as general workwear and accessories for both men and women. Tuffwear’s garments are approved by the Australian Radiation Protection and Nuclear Safety Agency, and specialist protective gear maintains an ultraviolet protection factor rating of 50+ (AS/NZS 4399:1996).

Lee Brothers prides itself on the premium standard of its products and customer services. All Tuffwear garments maintain a 12 month guarantee and are available through the company’s integrated ordering system online.

Transformer internationally renowned for quality and efficiencyTHE exclusive Australian agent for Charoenchai Transformer, Timestar Holdings is committed to continual improvement in the quality of all operations, from sales enquiries through to final dispatch and invoicing.

Timestar supplies innovative transformer, switchgear and cable products and solutions that meet the requirements of today’s energy market and anticipate future market requirements.

The Charoenchai Transformer is internationally recognised for its quality and efficiency. Designed to provide optimum utilisation, with low energy losses and at a reasonable price, the product is backed by a 24-hour after sales service and continual maintenance.

The transformer is made from carefully selected materials and is equipped with high quality manufacturing technologies and processes. A strong quality control procedure ensures the transformer complies with international standards. The design provides the ability to withstand high voltage surges caused by lightning strikes and switching operations, and the mechanical and thermal effects of short circuits. It includes technology for the elimination or reduction of stray losses, hot spots and electrical gradients.

Group capability reducing contractor management and costA large company with complementary specialist divisions, SKILLED Group offers clients comprehensive solutions for workforce, maintenance and marine services. Across a national network of more than 80 branches, SKILLED supplies more than 50,000 workers per year to major projects across the construction, operations and maintenance phases.

Working with SKILLED’s multiple group businesses – including SKILLED,

ATIVO and Broadsword – clients benefit from the company’s broad experience and specialist divisions, while enjoying reduced contractor administration. Across each subsidiary division, SKILLED maintains uniform systems for occupational health and safety, invoicing, and reporting, all within a ‘one-team culture’.

SKILLED provides clients with trades, operators, technical and professional

employees, while its specialist division ATIVO provides mechanical and electrical maintenance, shutdowns, planning and scheduling, and end-to-end project management. Broadsword Marine Contractors conversely provides specialised inshore and offshore ‘shallow water’ construction services, servicing the Northern Territory, Queensland and WA.

SKILLED, ATIVO and Broadsword

project managers, supervisors and tradespeople maintain industry-wide experience, to plan and execute complex or unique projects safely, on time and on budget.

With its holistic industry expertise, SKILLED Group is the primary choice to cultivate a dedicated and knowledgeable workforce, for increased asset utilisation and zero harm to people, plant and environment.

Lee Brothers’ Tuffwear clothing range surpasses all relevant

Australian standards for colour fastness, shrinkage, weight

durability and tear resistance

Charoenchai transformers are designed and manufactured under consideration of high quality materials properly chosen to meet required standards and customer needs

Page 5: MAY SPECIAL PROFILE Roy Hill Iron Ore Historic funding ...miningoilgas.com.au/pdf/Roy_Hill_Feature2.pdf · Europe, China, Korea and Singapore. ... “The Western Australian Government

Samsung C&T has recently embarked on its 33-month mission as the EPC services provider, in charge of developing Roy Hill’s iron-ore mining, rail and port infrastructural project in the Pilbara region of Western Australia. The company worked on assembling an A-team made up of Australia’s leading engineering and construction firms, and has been managing all critical processes and accelerating project execution. At the mining plant, one of the subcontractors brought on board did enter into legal administration, but Samsung C&T responded quickly, and work on the plant continues to progress as scheduled. For Samsung C&T, the Roy Hill project represents an opportunity of writing history, and the South Korean EPC firm is fully committed to utilizing its impressive global expertise, experience, and capacity to flawlessly execute the project.

Global Expertise and Capacity for Optimal ResultsIn the Pilbara, Samsung C&T will simultaneously build a 55-mtpa mine processing plant, a 344-km-long railway, capable of transporting processed iron-ore from the Roy Hill

mine to Port Hedland, and a port and stockyard capable of handling 12,700 tons of iron-ore per hour.

The Roy Hill project may symbolize Samsung C&T’s first entry into the Australian market, but the company already has a solid and global reputation as a leader in plant, port, and railway EPC, and has garnered the trust of clients and markets after successfully executing a number of challenging and demanding projects in various parts around the world.

The South Korean EPC firm boasts an impressive track record when it comes to building power plants, and has been responsible for 18 thermal power plants around the world, with a cumulative output capacity of 17,602MW. It is currently overseeing the construction of 12 additional power plants with a combined capacity of 23,383MW. In addition to these, Samsung C&T is also building a number of nuclear power plants, mining plants, energy-storage facilities, solar plants, and wind-energy farms in the Middle East, Africa, South East Asia and North America.

Samsung C&T is also known for its multiple railway and high-speed railway projects. In addition to the railway work on the Roy Hill project, the company is currently building a 233km railway connecting the Tavan Tolgoi mine in Mongolia to the country’s border with China, and is working on a railway relocation project in Turkey. Altogether the company has built or is currently in the process of building over 1,000km worldwide, many of which were extremely technical and challenging projects including high-speed railway in Taiwan and South Korea. Through these and many other railway projects, Samsung C&T has proven itself as a well-rounded, industry-leading EPC firm capable of handling all facets of railway construction from civil works to systems, signals, and M&E.

Samsung C&T also holds an impressive portfolio of port projects, beginning with its Koramsha port project in Iran in 1975, and adding numerous other projects throughout the Middle East, Africa, and Asia. When the company finished the massive construction of the Busan New Port-one of the biggest ports in the

world-the company propelled itself into the top ranks of world-leading port EPC services. It is little surprise that the company, having multiple mega projects under its belt, gives itself full confidence in its ability to ensure the success of the Roy Hill project.

Samsung C&T to deliver highest quality performance and realize F.O.O.S. by September 2015 as promised

Page 6: MAY SPECIAL PROFILE Roy Hill Iron Ore Historic funding ...miningoilgas.com.au/pdf/Roy_Hill_Feature2.pdf · Europe, China, Korea and Singapore. ... “The Western Australian Government

All in all, Samsung C&T has been one of the major EPC players in the Middle East, after successfully completing a number of incredible projects including the completion of the Burj Khalifa, the world’s tallest manmade structure. Some of the ongoing projects Samsung C&T are currently working on include the USD $7.8b project to build three metro lines, with a total length of 72.3km in Saudi Arabia’s capital, Riyadh, and a USD $1.4b project to build two major transfer stations along Doha’s metro network in Qatar.

Samsung C&T plans to utilize its advanced order-placement system and integrated management techniques, to ensure the on-time completion of the massive Roy Hill

project. The company has already set up a war room in its Perth Headquarters, and is managing the project’s progress in real-time, through the use of its advanced, IT-based management system.

Commitment to the Local CommunitiesSamsung C&T began its research into Australia’s construction and mining industries, long before it was awarded the Roy Hill project, and has been actively developing a network of leading vendors, suppliers, and partners around the country. In 2013, Samsung C&T attended four briefings in Perth and Pilbara for its Australian suppliers and contractors, and invited the best companies in the industry to join the company in its historical undertaking.

As a result, Samsung C&T is working on the Roy Hill project’s four main packages in partnership with some of Australia’s leading engineering and construction firms such as John Holland, NRW, BGC, and McConnell Dowell. A sign of Samsung C&T’s long-standing commitment to establishing and developing its strong partnerships in the region was illustrated in the swift way the company took over Forge’s scope after it entered into legal administration.

The individual men and women Samsung C&T chose to lead the project also need mentioning. The project’s team is made up of some of the EPC firm’s foremost experts and includes individuals who have extensive experience working

on engineering and construction projects throughout Australia. The team also includes Australian nationals who will be in charge of a wide range of core responsibilities that range from QA/QC to QS, HS, Environment and Heritage, construction and engineering, and project controls.

Samsung C&T fully expects to contribute to the local communities and economies through its involvement in the Roy Hill project, especially in the form of job creation via its partners, suppliers, and vendors in the area, and plans to rely on as much local resources as possible over the course of the project.

Samsung C&T Corporation Australia Suite 302, 145 Eagle Street, Brisbane, QLD 4000, Australia

www.secc.co.kr

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30 www.miningoilgas.com.auMAY 2014THE AUST�LIAN MINING REVIEW

SPECIAL PROFILE Roy Hill Iron Ore

Historic funding secures path to production “Higher export earnings will be driven

by the substantial growth in volumes of a number of commodities despite near term softness in prices,” BREE executive director Bruce Wilson said.

“Lower prices for most commodities over the past year have put greater pressure on the profitability and competitiveness of some Australian producers.

“However, the Australian industry is expected to remain fairly resilient over the medium term.

“In the short term, higher volumes of iron ore and coal will be the principal drivers of export growth.”

Mr Wilson said iron ore would be the second largest contributor to higher export revenue across the medium term.

“Exports are projected to grow at an average rate of 8.2 per cent a year to total 847 million tonnes in 2018 [to 20]19, more than 300 million tonnes higher than in 2012 [to 20]13,” he said.

Yet analysts have cautioned that the estimated oversupply of seaborne iron ore, rigorous environmental rules affecting Chinese steelmakers, and concerns about large construction project financing could lead to further weakening of the iron ore price.

Iron ore prices fell from around US$130 per tonne at the start of 2014 to trade at US$110/t, but a number of analysts believe the price will fall to around US$80 or US$90/t between 2016 and 2018.

While Roy Hill has not released projected operating costs or debt servicing plans, company chief executive

Barry Fitzgerald said he was comfortable with long-run iron ore forecasts. He said it was the structure and quality of the project that allowed Roy Hill to secure an

internationally competitive cost-effective funding structure, specifically designed to endure future market fluctuations.

“Our project continues to be embraced

by the vision and drive of our Australian chairman Mrs Rinehart, supported by committed equity partners and quality counterparties,” he said.

Unique designs and client focus a winning formula IN 44 years of business, Peter Hunt Architect has established a highly respected and enviable track record in many facets of the built environment.

Peter Hunt Architect is a national architectural practice with offices in Perth and Sydney and associated offices in Brisbane and Melbourne. The practice comprises executive chairman Peter Hunt, joint managing directors Ron Edenburg and Con Lampropoulos, and directors Graham Hunt and Paul van Niekerk.

Peter Hunt Architect has designed award-winning buildings and facilities for state and local governments and organisations ranging from aged care and health, sport and recreation, convention and exhibition and residential and commercial developments to mining, LNG, institutional, police,

correctional, educational, and religious. The practice’s success is based on a

client-oriented philosophy coupled with a proven record of completing challenging projects within tight time frames and costs constraints. Every project the firm undertakes is treated as a unique design exercise specific to the client’s needs and aspirations, technically implemented to ensure a successful outcome. Client participation is fundamental in achieving this primary objective.

Although design innovation and flair are fundamental to its approach, Peter Hunt Architect’s multi-disciplinary team has a depth of expertise and experience that enables the practice to also provide professional services in research, feasibility studies, design and masterplanning, interior design, project documentation and contract administration.

Roy Hill is expected to begin shipping 55 million tonnes per annum of iron ore in September 2015

The Peter Hunt Architect team is highly respected

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