The Weekend West, Perth
14 Dec 2013
Business News, page 93 - 966.13 cm²
Capital City Daily - circulation 333,768 (-----S-)
Copyright Agency licensed copy
(www.copyright.com.au)
ID 228044916
BRIEF HAN (P)
INDEX 1
PAGE 1 of 3
Gina hits the ground running
IN IdR DIM'S
If there is any lingering doubt
that Gina Rinehart will win the
$7 billion debt package she needs
to build the giant Roy Hill iron
ore project, there is no sign of it
on the ground in the Pilbara.
After signing a $US5.8 billion
fixed -price construction deal for
Roy Hill's port, rail and mine
infrastructure in May, Korean
engineering giant Samsung C &T
hit the ground running, firing off
a flurry of contracts to local ser-
vice providers and wasting no
time in getting Korean boots
dirty in the thick Pilbara dust.
Close to $4 billion in sub-con-
tracts have been granted, and
since July Roy Hill has called in
about $900 million in equity contributions from minority shareholders POSCO, Marubeni and
China Steel Corporation. In September, the equity partners gave
Samsung the go -ahead to spend
$800 million on work on the second stage of project construction,
taking total spending authorised
since the contractor came on
board past $1.2 billion.
Progress is obvious.
Only months ago Roy Hill's rail
centreline was marked out by a
thin, single bulldozer -wide strip
works for the 11 bridges and over -
paths needed along the route.
At Port Hedland, rail contrac-
tor John Holland has already
cleared land for its major production facility.
Now it is bare earth, but by February the workshops will be built
and the contractor will be at work
flash -welding
together 25m
lengths of steel. The welders will
string together 400m -long steel
tracks, in preparation for deliv-
ery of a track -laying machine
which will eventually inch its
way down the cleared line at a
rate of about 17km a week towards Mrs Rinehart's 55 million tonne -a -year mine.
The pace is no less frenetic at
Roy Hill itself.
There are 700 to 800 workers at
the camp today
from NRW
Holdings, Len Buckridge's BGC
Contracting, Samsung C &T and
sundry other contractors. In February, another 1200 workers from
Forge Group and Spain's Duro
Felguera will arrive to start work
on the huge processing facility as
part of a $1.47 billion contract.
As the light plane banks over
the site, even Roy Hill executives
from the mine to Port Hedland.
seem astonished at the progress
of ground -clearing and the build
up of earthworks since their last
shows a broad path, cleared 100m
wide, for much of the length of the
boast, a reason they are the best
the journey. Heavy equipment is
out clearing space around the rail
alignment and building up earth-
docio about its successful challenge to the dominance of Pil-
of red dirt snaking the 344km
Now the view from above
route. Five workers' camps dot
visit in early November.
All of the big miners have a
at what they do. Fortescue Metals
Group has a swaggering bragga-
bara's big two, boasting it does
infrastructure cheaper and better than the rest.
BHP Billiton and Rio Tinto
have bragging rights on the best
grades and the lowest costs in the
Pilbara. They have scale, and the
enormous confidence that comes
with their decades -long dominance of the industry.
If there is a common boast
among Roy Hill workers and
management, it is about how
thoroughly prepared the company is for the project.
Rigs at the site have sunk
640km worth of holes and drilling
covers the entire 25km length of
the mine, including sections not
due to feel the bite of an explosion
for another 10 years. And even
now, 21 months before the first
ore is due to be shifted, rigs are
still working the site, checking
grades to ensure the mine can be
planned out years ahead, and to
within an inch of its life.
The reasons are many -fold, Roy
Hill executives say.
The first comes from the size of
the debt package sought, and the
exhaustive due diligence conducted by banking syndicates.
The second is that Roy Hill,
unlike many of its peers, has only
limited options for expansion,
meaning the 55mtpa run rate
could be a hard limit on exports.
With little room to flex production in response to changes in the
market, cost control is even more
critical for Roy Hill than many of
its peers.
The Weekend West, Perth
14 Dec 2013
Business News, page 93 - 966.13 cm²
Capital City Daily - circulation 333,768 (-----S-)
Copyright Agency licensed copy
(www.copyright.com.au)
Perhaps most importantly,
however, is the timing of the project's entry into the marketplace.
Roy Hill is following in the foot-
steps of Rio Tinto, and latterly
BHP Billiton, in building a
remote operations centre, designed to act as the central controlling and planning hub for the
mine, rail and port.
But unlike Rio and BHP, which
tacked their remote ops centres
onto existing operations, Roy Hill
is starting from scratch.
It will be arguably the first
major bulk commodity operation
in the world designed with a central control hub in mind, and Roy
Hill is taking full advantage of the
opportunities that brings.
Almost all of the major mining
and processing decisions will be
ID 228044916
BRIEF HAN (P)
made from the hub from scheduling and organising diggers and
trucks to planning ore stockpiles
and parcelling batches into the
process plant, the level of control
management will have over operations is unprecedented, Roy Hill
executives say.
That means the major task for
the geologists, metallurgist and
engineers is getting the best information possible back to the
centre.
In a game where shaving margins is the major key to profitability, Roy Hill argues its obsession
with planning will give the company a critical edge, particularly
in a market where iron ore prices
may be falling by the end of 2015,
when the mine will be ramping
up production.
INDEX 1
Roy Hill's senior executives
have softened their rhetoric on
the debt package. Mid -year they
were saying publicly they hoped
to finalise funding by the end of
this year. Now, all they will say is
that discussions are going well,
and Roy Hill is making progress.
But looking at the activity on
the ground it almost appears that
all the speculation about the project's debt funding is irrelevant.
The starter's pistol fired
months ago, and when the bank-
ers finally join the party it will
appear as more of a flourish on
top of an already thriving project,
rather than the official start of
the race to completion.
The reporter travelled to the Pilbara
as a guest of Roy Hill Holdings.
Mapped out: Port Hedland plans.
Relax: The workers' tavern
Boots on the ground: Geologist Greg Almond with a rock sample from the Roy Hill lease. Pictures: Bill Hatta
PAGE 2 of 3
The Weekend West, Perth
14 Dec 2013
Business News, page 93 - 966.13 cm²
Capital City Daily - circulation 333,768 (-----S-)
Copyright Agency licensed copy
(www.copyright.com.au)
ID 228044916
BRIEF HAN (P)
INDEX 1
Ready: The accomodation camp.
Fit for work: The Roy Hill gym.
Under way: Earthworks on site.
Making space: Land cleared for Roy Hill's Port Hedland loading facility.
PAGE 3 of 3