ECS 2010 Mining Expansion in the Mid West: Social and Economic Benefits report

Executive Summary

This study was commissioned by the Geraldton Iron Ore Alliance to examine the potential of the emerging Mid West iron ore industry. It follows a similar study in 2007, however also considers the potential of developing early stage projects in the adjacent Northern Goldfields, Yilgarn and southern Pilbara areas, where these projects may utilise the developing infrastructure and future Oakajee deep-water port.

The mining industry has traditionally been a key sector in the economy of the Mid West region, being a major employer and reducing or even reversing the decline in rural populations.

Measured in terms of the value of production, iron ore is set to overtake gold as the major mineral.  Iron ore now represents 14.3% of all mining and petroleum production in the region, and this study illustrates that this contribution will grow dramatically over the next two decades.   A great deal of interest is being taken in the substantial iron ore resources.  A few projects are already in production and a large number are at an advanced stage of planning, with significant investments already committed.

Crucial to the future growth of a significant and efficient iron ore industry is the development of a new port at Oakajee.  This analysis is premised on the new port and associated infrastructure being ready for export operations in 2014.  Oakajee Port has an anticipated capacity of 45Mtpa.  This current study demonstrates that this will be adequate for only a few years.  An expansion of port capacity is anticipated to occur in the early 2020's in response to what is expected to be a much greater demand for throughput.

The economic benefits to the region which will flow from the projects will be huge and have been estimated in terms of the direct impacts and the flow-on, or multiplier, impacts.   The Mid West economy currently has a gross value of output of $4.5 billion and provides jobs for about 25,500 people.  The average increase in economic output in the region as a result of these projects is estimated to be $1.5 billion from construction activities and $7.4 billion from ongoing operations.  So on average, over the next 21 years, economic output generated from these projects is expected to be double the current value of output for the region.

The region is estimated to gain an average annual additional 4,500 jobs from construction work and an additional 10,800 operational jobs. This is equivalent to an increase of 60% on the 2006 level of jobs, as an average over the next 21 years.

These iron ore projects will provide a very strong boost to the regional economy, enhancing prospects for local jobs and for businesses.  There will also be a more direct and immediate benefit for local communities as the Geraldton Iron Ore Alliance and its individual members provide financial and in-kind support to activities that are identified as priorities by community groups.  In addition, similar support is being provided by iron ore miners who are not Geraldton Iron Ore Alliance members and by mining sectors other than iron ore.

As this report considers the potential of the region it should not be utilised for investment decisions as was not commissioned for that purpose.