Emerald hit by coal downturn, property prices may improve: Terry Ryder

Emerald hit by coal downturn, property prices may improve: Terry Ryder
Emerald hit by coal downturn, property prices may improve: Terry Ryder

There was a time when the announcement of a $6 billion mine creating 7,300 jobs would have set investors’ pulses racing and their fingers dialing.

If your heart is pounding at the prospect of a property boom around the China Stone coal mine in central Queensland, you haven’t been keeping up with modern trends.

The way mining companies operate these days, it’s possible to have thousands of highly-paid personnel working on a resources project without creating any local real estate demand to speak of.

Last week there was an announcement about the mine planned by Chinese mining company Macmines in the Galilee Basin region near Emerald. It was more of a confirmation than an announcement because, despite many newspapers treating it as new information, the project has been known a long time.

Construction cost $6.7 billion, 3,900 construction jobs, 3,400 operational jobs, $6 billion in royalties to government – it’s all been reported before.

China Stone is one of six mega-mines planned for the Galilee Basin, the others being Carmichael, Alpha, Kevin’s Corner, China First and Galilee South. They add up to $40 billion in investment, tens of thousands of jobs and lots of court time dealing with environmental opposition.

There was a time when this would have meant a property boom in the immediate area, with mining personnel paying huge rents for local houses.

But towns like Moranbah and Chinchilla in Queensland, and Port Hedland and Newman in Western Australia, became victims of their own success. The resources industry rebelled against rents topping $2,000 per week and tin-shed houses fetching over $1 million.

This created the concept that is now the scourge of many rural communities: the FIFO workforce and construction of temporary accommodation camps.

A mega-billion mine with thousands of employees doesn’t add up to a property boom any more. In many recent cases, it has destroyed real estate markets. 

Developers have piled in, building lots of new homes in expectation of rich rewards, while the big miners have flown their workers in and out, putting them up in special camps outside the towns that expected to benefit from the influx of workers and money.

Massive vacancies have resulted in the towns of the Surat Basin and the Bowen Basin in Queensland. If developers haven’t done their research, it will happen again in the Galilee Basin.

There are scarcely any benefits to local towns from major mining projects now. Locals don’t even get to apply for jobs in the big mines on their doorsteps, because the workers are recruited elsewhere and flown in.

In the case of the multiple mega mines of the Galilee Basin, there will be economic benefits for nearby regional centres with airports, such as Emerald, if and when one of the mega projects starts construction. 

Emerald has been hit by the current downturn in the coal industry, with vacancies around 7% (previously as high as 10%), houses typically taking 5-6 months to sell and discounting close to 20%. The median house price dropped 16% in the past 12 months and is now well below the level of five years ago.

If one of these mines proceeds, there will be a considerable uplift in air and road traffic through Emerald and inevitably some boost to its economy.

Consequently, the property numbers will improve.

But the days when Emerald and nearby coal towns like Moranbah and Dysart boomed, with astronomical prices and rents, are over - until the system changes.

In the current climate, these coal mines represent fools gold for developers and investors.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or follow him on Twitter.

Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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