BRISBANE • PERTH • MELBOURNE • SYDNEY • ADELAIDE
DIGGING&DRILLING Februrary 2013 • Issue 3
AUSTRALASIA
AustralaSIA’s QUARTERlY Oil, Gas & Mining Magazine
Rio Tinto anticipates over 2,000 jobs in WA Rio Tinto will expand its iron ore operations in the Pilbara with a $3 billion dollar investment set to create over 2000 jobs in the region
Woodside output up 30% in 2012 as Pluto outperforms The Perth-based producer has forecast that Pluto -- where production started early last year -- would account for 41 per cent of Woodside’s output this year
2窶ク DIGGING DRILLING JULY SA F R A N C I&S C O P A RMAGAZINE IS S H A| N G H2012 AI
SINGAPORE
J A K A R TA
SYDNEY
DELHI
OVER 60 MAJOR CITIES
Editor’s Letter There has been a lot of ‘doom and gloom’ reported in mainstream media recently, regarding the Australian energy and resource sector. I hold a very different view. The AU$152 billion injection for fifty five infrastructure projects in China will definitely stimulate stronger steel demand. Interestingly, around 2% of the China population currently drive cars and this figure is predicted to double in the next five years. China currently has seventy five coal fired power stations and China will require a lot of our iron ore for the steel to manufacture vehicles and for infrastructure construction and our coal for electricity. The recently reported Iron ore inventory stock piles in China are also depleting which I believe will push both coking coal and brown coal prices up. There are over 600 coal fired power stations in the US and even though America has experienced one of their worst recessions in seventy years and the Global Financial Crisis, the USA level of trade with Australia has not actually altered.
Len Fretwell Managing Editor and Co-Founder Digging & Drilling Australasia
India is also one of the world’s fastest growing economies and is our very close neighbour with a healthy and growing appetite for resources. India has recently built twenty four new coal fired power stations and there are plans to build another thirty five new plants this year. The demand for coal in the Asia region is enormous and rapidly growing. There have been a few Australian coal operations closed recently but there have also been some new coal operations launched in recent years. It seems that good news in the resource sector is often overlooked. Australia resides in Asia and we are the closest major source of resources in the Asia Pacific region. The world will need coking coal for steel, brown coal to fuel the fires for power stations and LNG for energy for many years to come and the volume of demand will dramatically increase. LNG now looks to become Australia’s third largest export, very shortly. Australia’s contracts for LNG throughout Asia and India are for enormous volumes and are locked in for twenty years. I simply cannot see much ‘doom and gloom’ in our energy and resource sector for at least, the next ten years. We are always looking for interesting energy and resource sector news and innovation content and I invite you to contact me direct with any news that may be of interest to our readers. I hope you enjoy reading our first edition of D&D Australasia for 2013 and I look forward to your feedback.
Best Regards
Len Fretwell Managing Editor and Co-Founder FEBRUARY 2013 DIGGING & DRILLING MAGAZINE 3
WHAT’S IN THIS 06» ISSUE
IN THIS ISSUE 03 EDITOR’s LETTER 06 MOMENTS IN PICS: Australia Oil and Gas Event – AOG – in February 08 News in Brief: MINING News highlights for the month 10 News in Brief: Oil & Gas News highlights for the month 12 Rio Tinto to generate over 2,000 jobs in Western Australia 18 Project PostCard: Madrid Spirit 20 Woodside output up 30% in 2012 as Pluto outperform 24 Karoon discovers Oil in the Kangaroo-1 exploration well in Brazil 28 IMF downgrades Australian growth outlook 30 Anglo American Platinum Digging & Drilling c/o The Afriqan Times, Level 28 AMP Tower Australasia 140 St Georges Terrace Perth WA 6000 P. O. Box 445, South Perth 6951 Tel: 1300 A TIMES (1300 2 84637) Feedback info@diggingdrilling.com News inquiries editor@diggingdrilling.com Advertising inquiries len.fretwell@diggingdrilling.com • Mobile: 0417 001 080 Editor Len Fretwell Writers Stephen Dawson, ANDREW BURRELL GUEST Writers Kinsley Hayford Graphics Elvin Wong Subscription www.diggingdrilling.com Publishing Digging & Drilling IS Australian owned and operated. Information ABN: 521 386 161 09 / ACN: 138 616 109 VISIT US AT www.diggingdrilling.com COVER The Madrid Spirit
Digging & Drilling Australasia welcomes comments and suggestions, as well as information about errors that call for corrections. We are committed to presenting information fairly and accurately. Disclaimer: Reasonable care is taken to ensure that Digging & Drilling magazine articles and other information are up-to-date and accurate as possible, as at the time of publication, but no responsibility can be taken for any errors or omissions contained herein. The opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. The publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.
4 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
Moments
MOMENTS IN PICs »
Event: AUSTRALASIAN OIL AND GAS
6 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
EXHIBITION AND CONFERENCE 20-22 feb 2013
FEBRUARY 2013 DIGGING & DRILLING MAGAZINE 7
NEWS IN BRIEF » Mining News highlights for the month
Oil Search puts PNG assets on sale, reports Q4 revenue gain
Chevron makes two natural-gas discoveries in Carnarvon Basin
The Australian oil and gas producer said it had opened a data room and begun the process of selling half of its interest in a permit located in the Gulf of Papua. It is offering the right to buy a stake in a second permit in the same area. Several parties have already accessed the data room, with final bids due early this year, Oil Search said. The company recently sold stakes in some other permits in the Gulf of Papua to Total SA. Group oil and gas output for the three months to December 31 of 1.79 million barrels of oil equivalent was up 9.1 per cent from a year earlier, while revenue for the quarter rose 8.3 per cent to $US218.2 million ($209m), the company said in the statement.
CHEVRON has made two separate natural gas discoveries in remote waters offshore Australia, indicating the resource for its Gorgon and Wheatstone gas-export projects could be larger than it originally anticipated. The drilling success in previously unexplored waters will stoke hopes abundant quantities of conventional fossil fuels still exist in locations open to foreign investment, which can be developed to meet fast-growing energy demand in Asian economies such as China.
It’s make or break for LNG as global pressures mount on Woodside and Shell
Australia tipped the big loser as energy giants push US to approve gas exports
IN the coming months, Woodside Petroleum chief executive Peter Coleman and the head of Royal Dutch Shell’s Australian operations Ann Pickard will sit down in Perth to decide the fate of Browse liquefied natural gas project off northern Western Australia.
AUSTRALIA and other gas exporting nations stand to lose billions of dollars if large-scale US gas exports are approved, according to oil giant ExxonMobil, which has stepped up pressure on the US government to take the economic benefits for itself.
The pair will be joined by representatives from the project’s other joint venture partners -- who after a dramatic year of transactions now include PetroChina, Mitsubishi, Mitsui and BP -- with the assembled parties poised to vigorously debate the merits of what analysts predict would be a more than $40 billion investment.
The calls come as Royal Dutch Shell, who has warned high costs here would crimp or delay investment, revealed the company planned to develop an LNG plant to export shale gas from Savannah, Georgia.
Origin reaps $286m from output deal
China fuels up for future with record oil and gas
ORIGIN Energy said it had agreed to sell a portion of its future oil production for $US300 million ($286m), helping bolster its balance sheet and easing pressure on the company to raise equity following a recent earnings downgrade. Origin said it had agreed to sell a portion of its oil and condensate production from its Australian east coast and New Zealand assets from 2015.
CHINA is buying up oil and gas reserves across the world at an unprecedented pace. Figures for 2012 show the world’s second-biggest economy unleashed its spending power on energy assets this year, spending a record $US35.7billion. The figure includes oil and gas prospects and assets further down the supply chain, such as refineries.
Albany 104.9FM Broome 104.5FM Busselton 1404AM Carnarvon 96.5FM Dampier 88FM Derby 88FM Esperance 89.5FM Exmouth 95.7FM
Miles from home but never far from Racing Radio. Just because you’re far from home doesn’t mean you have to go without your Racing Radio. Tune in today, listen on TABtouch.mobi (available free from App Store) or visit racingradio.com.au to stream via internet.
Geraldton 88.6FM Kalbarri 105.3FM Kalgoorlie/Boulder 104.3FM Kambalda 106.7FM Karratha 101.7FM Katanning 88FM Kununurra 105.7FM Laverton 104.5FM Leinster 99.7FM Leonora 96.9FM Mandurah 1449AM Meekatharra 104.7FM Merredin 95.9FM Moora 88FM Mount Magnet 104.1FM Narrogin 88FM Newman 88FM Northam 88FM Paraburdoo 87.6FM Perth 1206AM Pinjarra 1449AM Port Hedland 92.5FM Southern Cross 88.7FM Tom Price 88.0FM Wagin 88FM Wyndham 100.5FM York 88FM
Racing Radio is operated by Racing and Wagering WA (RWWA). To contact RWWA; email: info@rwwa.com.au, via website: www.rwwa.com.au or phone: (618) 9445 5333.
NEWS IN BRIEF » Oil & Gas News highlights for the month
Alcoa Reports Fourth Quarter Income From Continuing Operations of $0.21 Per Share; Income of $0.06 Per Share Excluding Special Items Alcoa today reported income from continuing operations of $242 million, or $0.21 per share, in fourth quarter 2012. Excluding the net positive impact of special items, income from continuing operations was $64 million, or $0.06 per share. Fourth quarter 2012 income compares to a loss from continuing operations of $143 million in third quarter 2012, and a loss of $193 million in fourth quarter 2011.
generated full-year income and met all of its cash sustainability targets for the fourth consecutive year, ending 2012 in a strong cash position. The Company delivered $1.3 billion in productivity and overhead improvements, reduced days working capital by three days, and ended the year in a strong liquidity position with net debt at its lowest level since 2006 and $1.9 billion cash on hand.
“Alcoa hit record profitability in our mid and downstream businesses, and continued to drive efficiency in our For the full-year 2012, Alcoa reported upstream businesses in the fourth quarter, income from continuing operations all while cutting debt and maintaining of $191 million, or $0.18 per share, our cash position,” said Klaus Kleinfeld, compared with $614 million, or $0.55 per Alcoa Chairman and Chief Executive share, in 2011. Year-on-year the realized Officer. aluminum price fell 12 percent, equating to roughly $1 billion in market impact. “We overcame volatile metal prices and global economic instability to deliver on Despite low aluminum prices, Alcoa our targets for the fourth year in a row.
We enter 2013 in a strong position to maximize profitable growth.” In 2013, Alcoa sees global aluminum demand growth of 7 percent, up from 6 percent in 2012 and ahead of the 6.5 percent rate required to meet the Company’s forecast of a doubling in global aluminum demand between 2010 and 2020. Aluminum demand grew 10 percent in 2011 on top of 13 percent growth in 2010. In 2013, Alcoa projects global growth in the aerospace (9-10 percent), automotive (1-4 percent), commercial transportation (2-7 percent), packaging (2-3 percent), building and construction (4-5 percent), and industrial gas turbine (3-5 percent) markets.
State Gov’t approves $3 bILLION Pilbara iron ore investment The State Government has approved proposals by Rio Tinto Iron Ore to expand its iron ore operations and build a major new power station in the Pilbara, clearing the way for a $3 billion investment. Premier and State Development Minister Colin Barnett said the expansion of Rio Tinto’s Nammuldi mine and construction of a 130MW power station at Cape Lambert would help to sustain Western Australia’s strong economic performance. “This major investment by Rio Tinto will create almost 1,500 construction jobs and secure ongoing employment for more than 700 people,” Mr Barnett said. “The Nammuldi mine, 60km north-west of Tom Price, includes a major investment in
mine infrastructure, which will see iron ore mined below the water table and increase the mine’s production limit from eight to 23 million tonnes a year.”
This additional power source will help meet the port’s power needs as annual capacity grows from 85 million tonnes to 235 million tonnes by 2015.”
Production of ore from below the water table is expected to begin in the third quarter of 2014.
Both investments were announced by Rio Tinto last year subject to Government approvals.
“Among other uses, surplus water extracted from the mine will be used for hay production, which will provide additional stock feed for local pastoralists,” the Premier said.
Mr Barnett said approvals for the Nammuldi project were granted under the Iron Ore (Hamersley Range) Agreement Act 1963 and for the Cape Lambert Power station, the Iron Ore (Robe River) Agreement Act 1964. Both State agreements are managed by the Department of State Development. Rio Tinto has received environmental approval for both projects.
“At Cape Lambert, Rio Tinto will build a state-of-the-art, fuel efficient 130MW power station to feed into Rio Tinto’s integrated power network.
10 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
LEARN TO FLY
HELICOPTERS Flight Training
• CPL & PPL Licenses • Overseas Conversions • Endorsements & ratings
Charter Ops
• Specialists in air to air work • Media & image capture • Corporate transfers & scenics
CALL 94148584 for $100 off a Trial Instructional Flight... only $230!
JULY 2012 DIGGING & DRILLING MAGAZINE 11
2 Compass Road, Jandakot Airport Western Australia
Rio Tinto anticipates over 2,000 jobs in Western Australia The $1.12 billion joint venture project between Ms Gina Rinehart and Rio Tinto, based in the north of Newman in the Pilbara, has won final approval to proceed. Approval was granted by the Western Australian government to develop a 53-kilometre railway line for the future Hope Downs 4 mine, together with construction of a 220-kilovolt electricity transmission line to connect the new mine to existing infrastructure
12  DIGGING & DRILLING MAGAZINE  JULY 2012
Rio Tinto anticipates over 2,000 jobs in Western Australia
R
io Tinto will expand its Australia economy was set to iron ore operations in benefit from the investment. the Pilbara with a $3 “This major investment by Rio billion dollar investment set Tinto will create almost 1,500 to create over 2000 jobs in the construction jobs and secure ongoing employment for more region. than 700 people,” Barnett said. Rio Tinto announced a massive $3.1 billion expansion to its “The Nammuldi mine, 60km Pilbara iron ore operations north-west of Tom Price, early last year with the includes a major investment in majority of the investment mine infrastructure, which will used to extend the life of its see iron ore mined below the Nammuldi iron ore mine, with water table and increase the the site receiving a $2 billion mine’s production limit from eight to 23 million tonnes a boost. year.” A further $1.1 billion will be used on early works to expand “At Cape Lambert, Rio Tinto the company’s Cape Lambert will build a state-of-the-art, port and rail facilities including fuel efficient 130MW power the construction of a 130MW station to feed into Rio Tinto’s power station at the company’s integrated power network. Cape Lambert port and rail This additional power source facilities. will help meet the port’s power needs as annual capacity grows Premier and State from 85 million tonnes to 235 Development Minister Colin million tonnes by 2015,” he Barnett said the Western added.
14 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
In announcing the expansion last year, Rio Tinto Australia chief executive Sam Walsh predicted iron ore demand from Asia was “forecast to grow strongly”. He said the investments at Cape Lambert and Nammuldi were a “significant milestone” in the company’s plans to increase its WA iron ore operations by 50 per cent. Rio Tinto said the Nammuldi expansion was expected to deliver first ore in the third quarter of 2014 and increase the mine’s life by 14 years.
Westsea Solutions
Providing Tugs & Barges for
WA-based company Westsea Marine is working with Saipem-Leighton Consortium(SLC) to supply vessels and barges for the Chevron-operated Gorgon project.
technologies and a modern fleet of vessels, we are the preferred provider of offshore support vessels in the oil and gas industry.
Westsea is a trusted partner, acknowledged and depended upon for our experience and capabilities. Combining a dedicated and highly skilled team with innovative
Westsea Marine is supplying 28 vessels comprising of Work Barges, Anchor Handling Tow Tugs and Support Vessels, to support the construction of the 2.1km LNG jetty and marine structures at Barrow Island, off the north coast of WA.
16  DIGGING & DRILLING MAGAZINE  JULY 2012
Our know-how, expertise and marine experience delivers innovative and cost effective solutions to our clients across the oceans in the most challenging offshore environments.
Marine Solutions. The total value of the contract is in excess of $100 million, with the first phase of vessel deliveries already being completed earlier this year. The SLC contract includes the construction of the LNG Loading Jetty, Heavy-Lift Facility and Tug Pens at Barrow Island to facilitate the transport of LNG to international markets. Westsea Marine has been involved in providing offshore marine solutions and vessels in Australia since it was established in 2002. The company is proud to continue being a part of the Gorgon project, and is already providing quality marine equipment for Preliminary Works and the Materials Offload Facility Wharf Construction phases.
Westsea Marine started its operations in Perth, WA, providing specialised offshore marine solutions to serve its Australian-based clients with a nationally compliant fleet of ocean going towing tugs, anchor handlers and work barges. The Gorgon Project is a joint venture between the Australian subsidiaries of Chevron, ExxonMobil, Shell, Osaka Gas, Tokyo Gas, and Chubu Electric Power. For more information, visit:
www.westseamarine.com
Deployment of Westsea Marine vessels on the Gorgon Project, utilizing the Westsea Anne Marie, Westsea Kestrel, Westsea Hawk, Westsea 3006 off Barrow island WA.
Westsea Gail mobilising Westsea 79 - 300ft Rock Barge For Gorgon LNG Jetty Construction Project
r My Africa: Kenya POSTCARD The PROJECT»
Madrid Spirit UnderwaY
Vessel Name: Madrid- Spirit Vessel Type: LNG-Carrier Operator: Teekay LNG
18 DIGGING & DRILLING MAGAZINE JULY 2012
JULY 2012 DIGGING & DRILLING MAGAZINE 19
FEATURE ARTICLEÂť
Liquid Natural Gas Carrier
Woodside output up 30% in 2012 as Pluto outperforms
WOODSIDE Petroleum’s $15 billion Pluto liquefied natural gas plant in Western Australia is poised to overtake the giant North West Shelf as the company’s biggest single earner after the “game-changing” project drove a 30 percent surge in the group’s total output and sales revenue last year.
T
he Perth-based producer forecast yesterday that Pluto -- where production started early last year-- would account for 41 percent of Woodside’s output this year, compared with 47 percent from the North West Shelf gas plant and 12 percent from other assets. Pluto’s contribution to Woodside’s bottom line will only grow in the next few years as the project ramps up, whereas production from the 25-year-old North West Shelf is gradually declining. Woodside owns 90 percent of Pluto but has only a 16.7 percent interest in the North West Shelf, which it also operates. Releasing its fourth-quarter production report yesterday, Woodside retained its previous production guidance for this year of 88-94 million barrels of oil equivalent, implying production growth of 4-11 percent compared with last year.
to the market in October. The “We understand some cargoes met group’s share price rose in early swap contract obligations arising trading but finished the day from mitigation of the delayed unchanged at $35.20. start-up at Pluto-1, and did not generate any revenue for the Woodside chief executive Peter quarter,” Mr Hirjee said. Coleman said the production numbers showed that Pluto, Pluto’s full potential rests with an which suffered from a series of expansion that has so far been cost blowouts and delays during prevented from proceeding due construction, had become a to Woodside’s lack of success in “game-changer” for Woodside, shoring up enough gas. allowing it to pursue overseas One analyst yesterday said the investment opportunities. market would reserve its full “It has resulted in a step-change judgment on Pluto until there in our annual sales revenues, were developments on a possible positioning us to pursue value- expansion. Mr Coleman last year adding growth opportunities such ordered a halt to the drilling as potential LNG developments in campaign for the Pluto expansion Israel and exploration activities in and is expected to attempt to Myanmar,” Mr Coleman said in a strike a deal with third-party gas statement. owners. Woodside’s production in the December quarter was up 46 percent to 24.3 mboe, fuelling a 43 percent increase in revenues to $US1.77bn.
However, Deutsche Bank analyst Woodside said it produced 84.9 John Hirjee said the revenue mboe last year and its revenues figure was below expectations surged to a record $US6.2 billion and had been affected by Pluto’s ($5.9bn) due to the strong start- swap cargo obligations and higher than expected exploration up at Pluto. write-off. The result was in line with guidance that Woodside released
Woodside said yesterday that it still expected to make a final investment decision on its Browse project before June 30 and said it had started “active engagement” with customers as part of a marketing deal with Japan’s Mitsubishi and Mitsui. But analysts say they expect Browse gas to be developed on a floating LNG plant rather than on the Kimberley coast. Courtesy: ANDREW BURRELL – the Australian
FEBRUARY 2013 DIGGING & DRILLING MAGAZINE 21
FEATURE ARTICLEÂť
Karoon discovers
oil in the Kangaroo-1
exploration well in Brazil
Shell has given the go ahead to develop its Prelude and Concerto gas fields off the northwest coast of Western Australia using its innovative Floating Liquefied Natural Gas (FLNG) technology.
K
angaroo-1 was drilled to a depth of 3049 MRT and a light oil column has been confirmed by mudlog, wireline petrophysical and MDT pressure data of the Eocene aged rocks. A gross oil column of 25 metres and an oil water contact has been established from pressure data interpretation.
A wireline program is underway and full results are expected in the coming days. A decision to run a drill stem testing program will be assessed at the completion
of the wireline evaluation program. As this was not the primary target at Kangaroo-1, the well intersected the Eocene reservoir section 300 metres down dip from the trap crest as interpreted on seismic mapping. A potential gross hydrocarbon column of approximately 350 metres is estimated for the entire trap.
the other prospects within Karoon’s Blocks including the Emu/Cassowary and Bilby exploration targets. The Kangaroo-1 well is located within Blocks S-M-1101 and S-M-1165. The evaluation program is expected to continue through February with results being released as they become available.
The discovery of oil in Eocene aged reservoirs at Kangaroo-1 provides additional confidence in
Drilling Semisubmesible
FEATURE ARTICLE»
Upcoming Well Program The Emu-1 and Bilby-1 wells will be the second and third wells in Karoon’s Santos Basin exploration drilling campaign. These wells are located in blocks S-M-1102, S-M-1137 and S-M-1166. These
wells will evaluate multiple work commitments for Block targets at Miocene, Eocene, S-M-1101, SM- 1102, S-M-1037, Maestrichtian, Campanian and S-M-1165 and S-M-1166. Santonian levels. Completion of these three wells will satisfy the minimum
Block Background Karoon’s Santos Basin blocks are located 112 kilometres off the coast of the Santa Catarina region of Brazil, south of Rio de Janeiro, in 400 metres of water depth. The Santos Basin has recently yielded multiple oil discoveries and is becoming an exciting area for exploration. Karoon was awarded 100% participation in the blocks during 2008. The five blocks total 865 square kilometres.
In the period since acquiring the blocks, Karoon has completed extensive technical work in preparation for drilling, including the acquisition, processing and interpretation of a Wide Azimuth 3D Seismic survey, the first of its kind in Brazil. In the shallow water Santos Basin, several recent discoveries have also been made in the same area with similar geological characteristics
to Karoon’s blocks. These discoveries include the Sabia, Piracuca, Tiro, Sidon, Guaiama, Panoramix and Vampira discoveries all in the same trend as the earlier discovered Merluza, Mexilhao and Caravela fields further to the north. It has been reported that these fields have collective, in-place, prospective resources in the billions of barrel of oil equivalent.
Karoon’s Interest Karoon currently holds 100% in Santos Basin exploration equity of the operated Santos blocks, S-M-1101, S-M-1102, Basin blocks; however, it S-M-1037 and SM- 1165 with has completed agreements Pacific Rubiales also holding with Pacific Rubiales Energy an option to acquire a 35% Corp. (TSX: PRE; BVC: PREC; participating interest in S-MBOVESPA: PREB) to divest a 1166. 35% participating interest
26 DIGGING & DRILLING MAGAZINE JULY 2012 2013 FEBRUARY
Karoon is currently the operator of S-M-1101, S-M1102, S-M-1037, S-M-1165 and S-M-1166.
Government of Western Australia Department of Mines and Petroleum
Environment reforms in focus
Government of Western Australia
Department of Mines and Petroleum Environment
The Department of Mines and Petroleum (DMP) is looking to attract additional environmental staff to significantly enhance its regulatory services. DMP Environment Division Executive Director Dr Phil Gorey said a number of positions would be advertised during the coming months. “The department is recruiting senior staff to the Environment Division,” Dr Gorey said. “We will also be introducing new competency requirements, and training and development programs.”
“The State, industry and the community will directly benefit from these reforms through more effective application of environmental standards within the industry, and a more responsive regulatory agency.”
Dr Gorey said the recruitment campaign was part of the State Government’s commitment to reforming environmental regulation in the resources industry. “These are challenging positions and present an exciting opportunity for people to get involved in these vital reforms,” he said.
An important aspect of the reform program has been consultation with stakeholders. “We already have formal consultation structures as a part of the reform program, such as the Ministerial Advisory Panel, but it is important this is augmented with less formal consultation like regional visits,” he said.
The department launched the Reforming Environmental Regulation (RER) program in May this year. “The RER program will help deliver greater certainty, confidence and clarity surrounding the department’s environmental regulatory system,” Dr Gorey said.
“We want to make sure we use multiple forms of consultation to really test what we are doing and make sure it is going to meet the objective of ensuring a healthy regulatory system. “We don’t want to rely on one single channel of feedback.”
Dr Gorey said it was important to see how the department’s decisions are perceived amongst stakeholders. “Formal and informal consultation really allows you to gain a perspective of how decisions are received, how engaged people feel when the department is developing policies and how well communicated the department has made those decisions,” he said. “It gives us feedback on how the department’s transparency is being perceived by our stakeholders from a practical sense.” For more information about the department’s RER program go to www.dmp.wa.gov.au/rer If you would like to find out about the department’s current job opportunities, go the employment section of the DMP website.
www.dmp.wa.gov.au
FEATURE ARTICLE Âť
IMF downgrades Australian growth outlook The International Monetary Fund has trimmed its 2013 forecast for Australia’s economy and warned of sluggish global growth for this year and next.
FEATURE ARTICLE»
However, the Fund says Developing world unemployment is only likely to rise slightly, and the wave of The IMF’s chief economist, Olivier mining investment has insulated Blanchard, said “familiar forces the nation against much of the were to blame for the slowdown, slowing in Asia. In its latest World with budget cuts in the developed Economic Outlook, released this world hampering economic morning, the Fund says Australia’s growth”. economy will grow by 3% next “In advanced economies, growth is year, a downgrade from its now too low to make a substantial previous April forecast of 3.5%. dent in unemployment. And in major emerging market economies, growth that had been Local slowdown strong earlier has also decreased,” The IMF’s forecast of slowing he said. global growth reflects a widelyheld view that the world economy While this environment is is being held back by weakness expected to weaken commodity in the United States, Europe exporters such as Australia, the and China. Australia is directly Fund did not predict an abrupt exposed to such a slowdown slow-down. because of its heavy commodity In a view that is more positive exports. Last week the Reserve than many market economists, it Bank last week cited softening forecast no major changes in the overseas as one reason for its unemployment rate. The jobless 0.25 percentage point cut in the rate would edge up from 5.1% cash rate. Many market watchers today to 5.2% this year and 5.3% are forecasting another rate cut next year, it said. in November, which would take the official cash rate to 3%, the same level as during the global Mining weakness financial crisis of 2008. While Australia’s growth had been Official figures on Australia’s supported by “strong mining unemployment rate, now activity and related investment,” 5.1%, will be published shortly. the short-term outlook for our Economists are tipping a rise after key trading partners in Asia was a recent wave of job cuts in the “less buoyant” than in recent resources sector. BHP Billiton has years. become the latest to confirm job cuts, saying it has started China’s economy was unlikely to redundancy and redeployment return to double digit growth in talks with staff in its iron ore the year ahead, it said, but would division.
still drive much of the region’s activity.
“Growth in China is projected to be about 7.75% this year and then to strengthen to 8.25% in 2013 as domestic demand growth, especially investment growth, picks up with the policy easing now under way,” the report said. Although the Eurozone’s debt crisis had deteriorated since April, Dr Blanchard said that recent moves to help boost the capital held by Spanish and Italian banks were positive steps. If Eurozone governments continued with a complex series of recent reforms to bolster the region’s banking system without adding to sovereign risk, “one can reasonably hope that the worst might be behind us,” he said. But the fund has no expectations of a fast recovery for the world economy. Last week Dr Blanchard said it would take 10 years for the world economy to emerge from the 2008 financial crisis.
FEBRUARY JULY 2012 2013 DIGGING & DRILLING MAGAZINE 29
FEATURE ARTICLE »
Anglo American Platinum
taking action to create a
sustainable, competitive & profitable
platinum business
30 DIGGING & DRILLING MAGAZINE JULY 2012 2013 FEBRUARY
A
nglo American plc notes today’s announcement by Anglo American Platinum Limited (“Anglo American Platinum” or “the Company”), its 79.8% owned subsidiary. Anglo American supports Anglo American Platinum’s conclusions of the review of its business, announced in February 2012, and endorses the clearly defined proposed strategy to create a sustainable, competitive and profitable platinum business for the long term benefit of all its stakeholders.
decisions for the benefit of all its many and varied stakeholders.
“Anglo American recognises the potential impact of these proposals on our people and their communities. We have designed a comprehensive social plan to ensure we make a positive difference in the Rustenburg and labour sending areas, creating at least the same number of new jobs as may be affected as part of the restructuring. A stable and competitive Anglo American Cynthia Carroll, Chief Platinum will be on a sure Executive of Anglo American footing to continue substantial and Chairman of Anglo investment in South Africa American Platinum, said for the long term, enabling “Anglo American Platinum more secure employment has concluded its thorough for its 45,000 employees and business review in the context delivering more sustainable of the Company’s revised returns.” demand growth expectations As a result of the review, and the many structural changes that have affected the Anglo American Platinum profitability of the platinum proposes to: business in recent years. In - reconfigure its Rustenburg that context, Anglo American operations into three mines, Platinum has identified the with aligned processing optimal mining configuration operations and the appropriate processing footprint, overhead structure - divest the Union mines at the and commercial strategy to right time – to maximise value improve profitability and under different ownership drive greater performance. - deliver R3.8 billion of annual The objective has been clear benefits by 2015, through from the outset – to create a efficiency and cost reduction sustainable business by facing initiatives, including annual the tough and necessary savings of R390 million from
optimising structure
its
overhead
• provide a comprehensive package of support to its employees and communities in Rustenburg and the labour-sending areas • create at least 14,000 new jobs to balance the number of jobs that may be affected by the restructuring The Company’s review of its business is in response to its revised expectations for platinum demand growth and a number of structural changes that have eroded profitability in recent years, including capital intensity, mine depths, ore grades, higher-thaninflation unit cost increases, jewellery demand elasticity and increasing secondary supply of platinum. Anglo American Platinum has previously stated that a number of its mines have been under considerable economic pressure for some time. The continued operation of unprofitable shafts within the current configuration, and in light of the Company’s revised demand and cost expectations, is not sustainable. Anglo American Platinum therefore proposes to reconfigure its Rustenburg operations into a sustainable 320-350,000oz
JULY 2012 FEBRUARY 2013 DIGGING & DRILLING MAGAZINE 31
FEATURE ARTICLE »
Anglo American Platinum taking action to create a sustainable, competitive & profitable platinum business (cont...)
platinum producer across three operating mines. Four unsustainable, high-cost shafts, namely Khuseleka 1 and 2 and Khomanani 1 and 2, will be put on long-term care and maintenance. As a result the production profile will be reduced by approximately 400,000oz per annum with a baseline production target of 2.1 – 2.3 million oz per annum. The Rustenburg processing operations will also be reconfigured to align with the revised mining footprint, which may include closing the Waterval UG2 Concentrator and No. 2 Smelting Furnace. Anglo American Platinum believes that the Union mines (“Union”) are likely to be of greater value under different ownership, particularly in comparison to the other attractive growth options in the Company’s portfolio, and it therefore proposes to divest Union at the right time. In the interim, it is proposed that Union be reconfigured to protect nearterm value, by stopping mining activities at the Union North Declines, combining Union North and South Shafts into
one operation and putting the Mortimer Merensky concentrator on long-term care and maintenance. The restructuring of joint venture operations has also been reviewed in order to optimise long-term profitability and competitiveness. This may include rationalisation of farm boundaries to optimise lifeof-mine extensions and other commercial considerations. Prevailing and forecast market conditions necessitate cash preservation and the optimal allocation of capital. The proposed restructuring of the operations will ensure more effective capital allocation towards the Company’s mines that are best placed to sustain and create employment over the long term. The Company proposes to reduce its planned capital expansion expenditure over the next 10 years by approximately 25% to R100 billion to focus investment on low-cost, high-margin projects.
billion of annual benefits by 2015 through cost reduction and efficiency improvements, including savings of R390 million to be achieved through a redesign of the Company’s overhead structure. As a result of the proposed changes to the business, a total of up to 14,000 jobs may be affected, 13,000 of which will be in the Rustenburg area.
Anglo American Platinum will continue to take its social responsibilities seriously, particularly to its employees and surrounding communities, and proposes to provide a comprehensive package of support to any affected employees and communities. In particular, the Company will target the creation of at least 14,000 jobs - an equivalent number of jobs to those that may be affected by the restructuring. The job creation initiatives will focus on housing, infrastructure and In line with the small business development in proposed changes to Anglo Rustenburg and the labourAmerican Platinum’s mining sending areas. and processing operations footprint, the Company proposes to deliver R3.8
32 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
Chris Griffith, CEO of and to benefit our customers, Anglo American Platinum, says: suppliers, shareholders – which include more than one million “The platinum business beneficiaries in our local has attractive underlying communities and key labour fundamentals, but we are sending areas via our Alchemy facing tough decisions to community share ownership restore profitability to our programme and some 48,000 operations. We must evolve employees in our Kotula to align the business with employee share scheme – and our expectations of the the South African economy as platinum market’s long-term a whole.” dynamics and address the structural changes that have eroded profitability over time. We have reviewed our business across the entire value chain, building upon the steps taken to improve operational performance in recent years, and will be consulting extensively with our stakeholders in relation to our proposed changes. “We have designed a comprehensive social plan to ensure that we can compensate for any necessary labour restructuring and make a positive difference through job creation. By creating a sustainable, competitive and profitable business, we will be in a stronger position to continue substantial investment, provide more secure and stable employment,
“As a result of the proposed changes to the business, a total of up to 14,000 jobs may be affected, 13,000 of which will be in the Rustenburg area.“
FEBRUARY 2013 DIGGING & DRILLING MAGAZINE 33
SUB FEATURE »
Runge: Rigorous Discipline in Mining Economics Key to Success
With expertise across a range of mining disciplines, Runge’s approach to the business of mining is strongly grounded in economic principles and delivering mine planning solutions that are tightly coupled with technological support and training. Runge currently operates 21 offices in 12 countries throughout the world.
E
fficiency of production will become the watchword of tomorrow’s mining successes, according to Runge Limited, mining’s trusted technical experts.
But it is a message that may have been lost in the boom era. Philippe Baudry, General Manager – Asia and Russia Operations for Runge Limited, said “as we see demand for mined resources drop, we will see a far greater importance placed upon This is the company’s strong message to mining maximising margins on projects.” “We must draw investors that they will deliver at today’s Discover a tighter focus on efficiency,” he said. Mongolia International Mining Investors Forum. Runge Limited has been sponsoring the event for The Discover Mongolia Forum represents an excellent opportunity to deliver the Runge Limited the last four years. message to Mongolia and globally. “We’re pleased Dr Ian Runge, who founded Runge Limited in the to be able to sponsor such an exciting and forward late 70s, and will speak at the Forum, said “in this thinking event,” said Mr Baudry. changed world, the winners will be the ones who understand the economics of their mine and can “Runge Limited has been helping new and existing adapt and change to maintain and improve these projects deliver on their potential for 35 years now. And every year this Forum adds more to mining’s economics.” global knowledge community,” he said. It is not a new message from Dr Runge, who has championed rigour and discipline in mining economics for all his professional life, nor is it new from the company he founded, which has delivered certainty to mining companies and investors for 35 years. Courtesy: Runge
34 DIGGING & DRILLING MAGAZINE FEBRUARY 2013
For further information please contact 08 9479 9700 or visit www.cobham.com.au