Don't be so quick to write off the resources boom: Terry Ryder
Journalists display an extraordinary craving for declaring the resources boom dead.
And in their desire to write what they presumably think is “a good story”, they’re very casual with the truth.
Last week a writer in The Australian declared that Woodside had abandoned its Browse Basin gas project and BHP Billiton had scrapped its expansion of the Olympic Dam mine. Both statements were untrue.
Woodside has not axed its Browse Basin project – it has, however, announced that it won’t be doing the gas processing at James Price Point near Broome.
If I’ve read the situation correctly over the past couple of years, Woodside and its partners never wanted to process Browse gas at this highly contentious site, but were under heavy pressure from WA Premier Colin Barnett to do so for reasons that only Barnett understands.
The Browse project is still very much alive, but floating technology appears to most likely solution to the processing issue.
BHP Billiton has never scrapped the Olympic Dam expansion. What it has said is that is seeking a more cost-effective way of doing it.
Nor has Arafura Resources scrapped its rare earths project in the Northern Territory, as some newspapers would have us believe. It has decided not to process the material at the proposed Whyalla plant in South Australia.
The issue in all these cases is the same: rising costs. The ongoing surge in the resources sector has placed considerable pressure on the supply of expertise, labour and services – and, with that, costs have risen.
The search by mining companies for less costly ways to extract and process resources doesn’t signal that “the party is over”, as The Australian announced with thinly-disguised glee.
Nor does a decision such as that of Arafura Resources kill the property market prospects of locations like Whyalla.
Whyalla is well-placed to benefit from everything that is happening in the resources sector in South Australia. The Eyre Peninsula, for which Whyalla is the key regional centre, is alive with mining projects, particularly for iron ore. It’s also well-placed for a boost from expanding mining activity in the Woomera Prohibited Area.
There are no doubt many disappointed people in Whyalla following the Arafura decision not build a processing plant there, but its property market isn’t going to die because of it, as some have feared.
In the past 12 months, without any impetus from the Arafura proposal, Whyalla recorded a 9% rise in its median house price.
Over the past 10 years, without BHP building any of the proposed facilities connected to an Olympic Dam expansion, Whyalla prices have recorded growth averaging around 12% per year.
And when BHP Billiton finishes working through the issues and gets moving on further exploiting its massive Olympic Dam resource, Whyalla will be a likely beneficiary.
Terry Ryder is the founder of hotspotting.com.au