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WESTERN AUSTRALIA’S INTERNATIONAL RESOURCES DEVELOPMENT MAGAZINE
December 2003–February 2004 $3 (inc GST)
Whicher
Range
Amity Oil optimistic
LNG exports
Gorgon taps
into China
Oil
50th anniversary
of Rough Range
discovery

WESTERN AUSTRALIAN OFFICES
Department of Industry and Resources
Mineral House • 100 Plain Street • EAST PERTH WA 6004
Tel: +61 8 9222 3333 • Fax: +61 8 9222 3430
www.doir.wa.gov.au
Investment
168–170 St Georges Terrace • PERTH Western Australia 6000
Postal address: Box 7606 • Cloisters Square
PERTH Western Australia 6850
Tel: +61 8 9327 5555 • Fax: +61 8 9222 3862
Email: investment@doir.wa.gov.au
INTERNATIONAL OFFICES
Europe
Government of Western Australia
European Office • 5th floor, Australia Centre
Corner of Strand and Melbourne Place
LONDON WC2B 4LG • UNITED KINGDOM
Tel: +44 20 7240 2881 • Fax: +44 20 7240 6637
Email: agent_general@wago.co.uk
India — Mumbai
Western Australian Trade Office
93 Jolly Maker Chambers No 2
9th floor, Nariman Point • MUMBAI 400 021 INDIA
Tel: +91 22 230 3973/74/78 • Fax: +91 22 230 3977
Email: sonia.grinceri@doir.wa.gov.au
India — Chennai
Western Australian Trade Office - Advisory Office
1 Doshi Regency • 876 Poonamallee High Road
Kilpauk • Chennai 600 084 • INDIA
Tel: +91 44 640 0407 • Fax: +91 44 643 0064
E-mail: kvrdctwa@md2.vsnl.net.in
Indonesia — Jakarta
Western Australia Trade Office
c/- Australian Trade Commission • Australian Embassy
JI H R Rasuna Said Kav C15 - 16, Kuningan
Jakarta 12940 • INDONESIA
Tel: +62 21 2550 5331 • Fax: +62 21 522 7103
E-mail: trevor.boughton@austrade.gov.au
Indonesia — Surabaya
Western Australian Trade Office
Graha Pena 17th floor • Jalan Ahmed Yani 88
Surabaya 60234 INDONESIA
Tel: +62 31 829 9979 • Fax: +62 31 829 9975
Email: lydia.agam@doir.wa.gov.au
Japan — Tokyo
Western Australian Government Office
Australian Business Centre
28th floor, New Otani Garden Court
4-1 Kioicho, Chiyoda-Ku • TOKYO 102-0094 JAPAN
Tel: +81 3 5214 0791 • Fax: +81 3 5214 0796
Email: tokyo@wajapan.net
Japan — Kobe
Western Australian Government Office
6th floor, Golden Sun Building • 3-6 Nakayamate-dori
4-Chome Chuo-Ku • KOBE 650-0004 JAPAN
Tel: +81 78 242 7705 • Fax: +81 78 242 7707
Email: kobe@wajapan.net
Malaysia
Western Australian Trade Office
4th floor, UBN Tower • 10 Jalan P Ramlee
KUALA LUMPUR 50250 MALAYSIA
Tel: +60 3 2031 8175/6 • Fax: +60 3 2031 8177
Email: elaine.yong@doir.wa.gov.au
Middle East
Western Australian Trade Office • Emarat Atrium
PO Box 58007 • Dubai • UNITED ARAB EMIRATES
Tel: +971 4 343 3226 • Fax: +971 4 343 3238
E-mail: chris.heysen@wato.ae
People’s Republic of China — Shanghai
Western Australian Trade & Investment Promotion
Shanghai Representative Office • Room 2208, CITIC Square
1168 Nanjing Road West • Shanghai 200041
THE PEOPLE'S REPUBLIC OF CHINA
Tel: +86 21 5292 5899 • Fax: +86 21 5292 5889
Email: bj.zhuang@doir.wa.gov.au
People’s Republic of China — Hangzhou
Western Australian Trade & Investment Promotion
Hangzhou Representative Office
Room 910 • World Trade Office Plaza
Zhejiang World Trade Centre
15 Shuguang Road • Hangzhou 310007
PEOPLES REPUBLIC OF CHINA
Tel: +86 571 8795 0296 • Fax: +86 571 8795 0295
E-mail: stella.bu@doir.wa.gov.au
Taiwan
WA Business Development Manager
Australian Commerce & Industry Office
Australian Business Centre
Suite 2606, International Trade Building
#333 Keelung Road Section 1 • TAIPEI 110 TAIWAN
Tel: +886 2 8780 9118 ext 216 • Fax: +886 2 2757 6707
Email: nicholas.mckay@austrade,gov.au
Thailand
WA Business Development Manager
Australian Trade Commission • Australian Embassy
37 South Sathorn Road • BANGKOK 10120 • THAILAND
Tel: +662 287 2680 Ext 3307 • Fax: +662 287 2589
E-mail: siraphop@austrade.gov.au
FROM THE MINISTER
The Western Australia Government reconfirmed its
commitment to social, economic and environmentally
conscious development in the recently released State
Sustainability Strategy. This strategy will see the Government
work more closely with industry in the future to ensure
sustainable development and a strong contribution to
environmental improvement globally.
This commitment links closely with another Government aim —
to offer an environment for responsible and rewarding
investment in Western Australia.
The National Australia Bank index indicates there has never
been a better time to invest in Western Australia, with business conditions at their
highest level in a decade. In fact, business investment in our State was the stand-out
performer of the domestic economy over 2002-03, increasing by nearly 22%, while the
State’s economy grew by 7.7% — the fastest rate in five years and well above the national
average of 5.8%.
The main contributors to this strong performance were private expenditure on
buildings and structures and private expenditure on machinery and equipment — data
confirming that the Government is solidifying Western Australia's position as the engine
room of the national economy.
Our resources sector is driving a strong period of economic growth in WA, creating jobs
and opportunities and making us the envy of the eastern seaboard. With a number of
our major resources projects yet to begin construction, the potential for even stronger
growth in the years ahead is high.
We are at the dawn of a prosperous era — one that will be built on our strong foundation
of innovation and strategic sustainable development.
FROM THE DIRECTOR GENERAL
This edition of Prospect focuses on the South West region of
Western Australia, an area with considerable resources
development potential.
The region already produces more than A$5 billion worth of
minerals and petroleum annually, equating to 18% of Western
Australia’s total yearly production of these commodities. And
there is so much potential to build on that success, especially
with employment-boosting downstream processing industries.
Overall, Western Australia’s mineral and petroleum sales reached
$28 billion in 2002-03. That’s a good outcome, considering the
increased value of the Australian dollar against the US currency
and the industry’s extraordinarily high growth rates in recent
years.
Clive Brown, MLA
Minister for State
Development
Jim Limerick
Director General
Department of Industry
and Resources
This edition of Prospect also reports on an agreement between
partners in the Gorgon gas project to supply A$30 billion worth
of LNG to China, the potential development of a stainless steel industry in the State and
the Supreme Court of Western Australia’s decision to grant proponents in the Hope Downs
iron ore project third-party access to BHP Billiton’s rail network in the Pilbara.
We at the Department of Industry and Resources wish all of our Prospect readers a happy
and safe Christmas, and a prosperous year in 2004.

2 GORGON GAS
In what’s shaping up as the LNG industry’s biggest
single export deal, partners in the Gorgon gas project
have signed an agreement to supply China with 100
million tonnes of LNG worth up to A$30 billion.
3 STAINLESS STEEL
The head of the Australian Stainless Steel Development
Association says Western Australia has the potential to
become a major production centre for the commodity.
4 INVESTMENT OPPORTUNITIES
The Department of Industry and Resourceslists a
number of resource-related investment prospects for the
South West of Western Australia.
8 PETROLEUM EXPLORATION
Big rewards await those who can find commercial
quantities of gas and petroleum in the Perth Basin.
14 ALCOA ANNIVERSARY
After 40 years of mining bauxite in Western Australia,
Alcoa now employs 4300 people and produces A$2.3
billion worth of alumina annually.
Front cover:
Amity Oil’s exploration drill
rig at Whicher Range near
Busselton.
Prospect ISSN 1037-4590
Western Australian Prospect magazine is published quarterly by the Western Australian Government’s Department of Industry and
Resources (DoIR) and Ray Burns Media.
Editorial management: John Terrell, DoIR Communications & Marketing Division. Tel: (08) 9327 5555 • Fax: (08) 9327 5500.
Advertising management: Ray Burns Media, PO Box 1230, South Perth Westerm Australia 6951
Tel: (08) 9474 3288 • Mobile: 0408 474 328 • Email: rayburns@rayburnsmedia.com.au
Prospect has been compiled in good faith by the Department of Industry and Resources from information and data gathered in the
course of the magazine’s production. Opinions expressed in Prospect are those of the authors and not necessarily those of the
Department of Industry and Resources. No person or organisation should act on the basis of
any matter contained in this publication without considering, and if necessary taking,
appropriate professional advice from other sources. The Department of Industry and
Resources, its employees and contracted personnel undertake no responsibility to any
person or organisation in respect of this publication.
ABN: 69 410 335 356
in this issue �
special feature
SOUTH WEST
In this edition, Prospect
takes a look at the South
West of Western Australia,
an area with a reputation
not only for fine wines,
timber and tourism, but also
for its mineral, petroleum
and renewable timber
potential. Turn to pages
4-21 for more details.
15 MINERAL SANDS
Doral Mineral Sands Pty Ltd creates a good impression in
and around Dardanup where it has established a new heavy
mineral sands mine and plant.
16 COGENERATION
Alinta and Alcoa combine with a plan to lower CO 2 emissions
and save millions of dollars with a cogeneration plant at the
Pinjarra alumina refinery.
17 CLEAN COAL
Often seen as a dirty fuel, coal is fighting back with
researchers heralding a brighter future for the State’s coal
industry.
21 WATER SUPPLIES
Progress with the development of A$80 million worth of
water infrastructure for gas processing projects on the
Burrup Peninsula.
22 OIL MILESTONE
December 2003 marks the 50th anniversary of the first oil
discovery of oil at Rough Range in northwest Western
Australia. Petroleum is now the State’s No. 1 resource
commodity, with output worth in excess of A$10 billion
annually.
36 RESOURCES MAP
Department of
Industry and Resources
www.doir.wa.gov.au
Prospect December 2003–February 2004 1

It’s the biggest, as Gorgon taps into China
Gorgon partnership: Among those attending the Canberra ceremony to mark the
agreement for the supply of A$30 billion worth of LNG from the Gorgon project to China
were the President of CNOOC, Fu Chengyu, Western Australian Premier, Geoff Gallop, and
the Managing Director of ChevronTexaco Australia Pty Ltd, Jay Johnson.
Welcome to DoIR’S new website
2 Prospect December 2003–February 2004
The Department of Industry
and Resources (DoIR) has
totally revamped its website to
reflect its wider responsibilities
and improved customer focus
since the amalgamation of the
former Department of Mineral
and Petroleum Resources
(MPR) with the industry and
trades responsibilities of the
former Department of industry
and Technology (DoIT).
Prospect readers are invited to
explore the website, and gain a
better understanding of the
new organisation, and
the many services
that it offers to
clients and the public
at large.
In Australia’s and the liquefied natural gas (LNG)
industry’s biggest single export deal, partners in
the Gorgon gas project have entered into an
agreement to supply China with 100 million tonnes of
LNG worth up to A$30 billion.
The deal, with the China National Offshore Oil
Company (CNOOC), was signed in Canberra on 24
October during a visit to Australia by China’s President
Hu Jintao. It coincided with the signing of a broader
trade and economic accord between Australia and
China.
“Past, present and future, we see Australia as our
important economic partner,” President Hu declared
during his visit.
This spells good news not only for Western
Australian-based LNG traders, but also several
mineral producers that have either established or are
currently forging new alliances and markets in China.
Western Australia’s Premier, Geoff Gallop, said the
agreement would further strengthen the State’s
reputation as a world-class supplier of high-quality,
competitively priced and environmentally friendly
energy, and would further enhance its growing
relationship with China.
The agreement anticipated that CNOOC would
buy an equity in the Gorgon gas project.
ChevronTexaco Australia Pty Ltd’s Managing
Director, Jay Johnson, said the agreement was
significant as it provided a basis to underpin the
commercialisation of the Gorgon field.
The Gorgon development received in-principle
approval in September, and a State Agreement was
signed to facilitate the establishment of gas
processing facilities on Barrow Island, off Western
Australia’s northwest coast.
CNOOC is currently involved in the development
of two LNG receival terminals in China, one in
Guangdong province, the other in Fujian.
CNOOC's President Fu Chengyu, who
accompanied the Chinese President on his visit to
Australia, said the Gorgon deal strongly reinforced the
ties of friendship between China and Australia, and
was a result of the good relations that had developed
over the last few years.
“We look forward to becoming an active and
constructive player in the Australian hydrocarbon
business as a Gorgon participant,” he said.
Key economic benefits for Western Australia from
the Gorgon project include:
• jobs for 3000 people during the construction phase
and 400 permanent jobs,
• 6000 indirect jobs across the nation,
• annual exports valued at A$2.5 billion,
• A$18 billion in royalties to the Federal and Western
Australian governments, and
• a A$2 billion per year boost to the State
economy.

Great stainless steel opportunity
for Western Australia
Western Australia is leading the race
over other Australian States to
become a significant producer —
and exporter — of stainless steel.
One of the world’s biggest iron ore traders
(with Brazil), and the world’s third largest
producer of nickel (behind Canada and
Russia), Western Australia is well positioned
to host the nation’s only stainless steel
production facility, according to Richard
Matheson, Executive Director of the
Australian Stainless Steel Development
Association.
Mr Matheson said Western Australia had
relatively cheap energy, it had a skilled
workforce, and was advantaged by its
proximity to growing markets in Asia.
The only other ingredient required to
make stainless steel is chromium. While
Western Australia has small, but promising
chromium resources in the Pilbara, it may be
necessary to import supplies of this
commodity across the Indian Ocean from
South Africa if a stainless steel plant was
established here, Mr Matheson said.
A good investment opportunity awaits any
company or consortia with the vision to
become the foundation operator of a
stainless steel production facility in Western
Australia.
Such a plant would add to the diverse
range of minerals and value-added products
that the State already exports to various
markets around the world.
Rio Tinto’s HIsmelt pig iron plant at
Kwinana, currently under construction, could
become a catalyst for the company’s
extension into stainless steel production.
Since 1950, the demand for stainless steel
has grown globally at a rate of 5.8% per year.
Currently, world usage is about 20 Mt/a, and
based on current forecasts, the demand is
expected to be 30 Mt/a 10 years from now.
About 128 000 tonnes of stainless steel of
various grades was imported into Australia
last year, while Australian foundries produced
a mere 4000–5000 tonnes of stainless steel.
The Western Australian resources sector is
a big user of stainless steel products, and with
billions worth of petrochemical and other
resource projects slated for development, the
demand will continue to rise.
Mr Matheson said an Australian-based
stainless steel plant would need to have a
capacity of around 500 000 tonnes per year,
preferably with a 50% charge of scrap
material.
Polished performance: Since 1950, the demand for stainless steel has grown globally at a rate
of 5.8% per year. Current world usage is about 20 Mt/a, and based on current forecasts,
demand is expected to be 30 Mt/a 10 years from now. Many new buildings are now featuring
long-lasting stainless steel cladding.
However, he added, new technology could
also make it attractive to produce stainless
steel from virgin material.
Production of stainless steel in Australia
ended when BHP closed its electric arc
furnace at Port Kembla in 1987, and the
company’s cold-rolling mill in Wollongong in
1997. Australian imports are now mainly
sourced from Europe (Sweden, Finland,
Germany, Italy, France, the United Kingdom
and Spain), Korea, Taiwan, Japan and South
Africa.
Key industries in which stainless steel plays
a part are food and beverage manufacturing
(including wine production), food preparation
and storage, household product
manufacturing, automotive, resource
processing, petrochemical, transport, marine,
medical, water treatment and architectural
construction industries.
Prospect December 2003–February 2004 3

INVESTMENT OPPORTUNITIES — SOUTH WEST REGION
Direct reduced iron (DRI) and hot briquetted
iron (HBI) at Geraldton. This would be based
on the development of the Koolanooka, Mt
Gibson and Tallering Peak iron ore deposits,
using Western Australian natural gas to fuel
such a development.
Further iron-related downstream processing
opportunities based on the abovementioned
and other resources in the Mid West.
Copper and zinc
Based on resources from the Golden Grove
mine in the Mid West, a copper–zinc smelter
could be competitive if located in the region. A
port upgrade is now in progress in Geraldton,
providing an opportunity to feed into expanding
Asian and Indian markets.
Tantalum alloy production
Greenbushes tantalum is currently exported as
a concentrate, but there is scope to upgrade
this material for the aerospace market, and
specialty chemicals used for silicon chips for
mobile phones.
Titanium metal (sponge) production
Any expansion of the Dampier-to-Bunbury
natural gas pipeline should lower the price of
gas and electricity, opening the way for a
titanium metal (sponge) plant to be
established, using product from the two
existing low-cost titanium plants at Kwinana
and Kemerton.
Titanium dioxide pigment
Despite already significant production,
additional scope exists for further pigment
manufacture to supply future growth of this
basic commodity, which is used to make
paints and plastics.
Nickel–cobalt refining/smelting and stainless
steel production
Western Australia has world-class iron ore and
nickel resources, plus competitively priced
natural gas to support such an industry.
Synergies associated with the nickel refinery
and HIsmelt iron plant at Kwinana, plus the
proximity of increasing markets in Asia,
present many possibilities.
High-purity silicon smelting
The availability of high-purity silica sand, hard
rock quartz deposits and reductants make it
attractive to expand an existing smelter, or for
a new smelter to be established. Markets
could be linked to aluminium metal production
and the manufacture of semiconductors.
Prospects are enhanced by Western
Australia’s proximity to markets in Asia,
especially Japan and India.
Aluminium smelting
Such a project could be linked to some of the
world’s most efficient alumina refineries in the
4 Prospect December 2003–February 2004
South West of Western Australia. The
looming sale and likely expansion of the
Dampier-to-Bunbury natural gas pipeline, plus
deregulation of the State’s electricity
industry, should pave the way for cheaper
energy to become available. The availability
of efficient road, rail and port infrastructure
makes an aluminium smelter a real
possibility.
Oil and gas developments in the Perth Basin
Under-explored onshore and offshore sites
provide huge potential for explorers to tap
into nearby ready-made markets in the most
populated region of Western Australia.
Coal
Technology advances make clean coal an
exciting option for power generation.
Extensive sub-bituminous coal deposits and
the increasing use of coal derivatives for
chemical and pharmaceutical applications
provide a raft of potential investment
opportunities.
Kaolin
Massive untapped kaolin resources exist in
the State’s South West which could be
exploited for local and export markets.
Renewable timber plantations
Wood pulp mill
Woodchip export business
The South West of Western Australia has
been identified as a highly favourable area for
further investment in plantation enterprises.
Investment opportunities include the
establishment of renewable bluegums and
other eucalyptus plantations (for greenhouse
gas abatement, to combat land degradation
and other sustainability-related matters), as
well as the processing of timber for
woodchips, saw logs and pulp.
Other sustainable, renewable, carbon-neutral
agri and silviculture businesses
A myriad of other opportunities exist in this
field across the South West. They include
canola for bio-diesel, wheat straw for pulp
mills, low-grade grain for ethanol production
(petrol additive or solvent), canola straw and
other biomass for fibreboard, oil mallees for
eucalyptus oil production, plantation
bluegums for timber substitutes.
Industrial land and infrastructure
The South West of Western Australia has a
number of industrial estates that can
accommodate major resource-related
downstream processing and support
industries. The Department of Industry and
Resources is also keen to hear from any
potential private-enterprise infrastructure
providers that are interested in investing in
Western Australia.
For further information, please contact Steve Arnott or David Ryan at the Department of
Industry and Resources on +61 8 9327 5555.
SOUTH WEST
Mineral and petroleum production 2002
A$ million
Alumina 3400
Clay, gravel, sand 7
Coal 266
Gold 307
Gypsum 2
Heavy mineral sands 873
Iron ore 110
Nickel/cobalt 100
Limestone/limesand 11
Petroleum 25
Salt 6
Silica sand 6
Spongolite 1
Talc 9
Tin, tantalum, lithium 5
Total 5128

South West
Geraldton q
PERTH
Bunbury q
q
Esperance
q Albany

Amity Oil remains optimistic
Since its discovery more than 30 years
ago, the Whicher Range gas project in
the South West of Western Australia has
promised to enhance the economic
prosperity of the region by providing a
competitive source of fuel for power
generation. Unfortunately, extracting the gas
out from the 4 trillion cubic feet field has
proved difficult. However, project operator,
Amity Oil NL, is hoping for some good news
by year’s end.
Amity and its partners are currently
spending A$10–12 million to drill down to
the start of the reservoir at 3700 metres.
Since the discovery of the field by Union Oil
Development Corporation in 1968, four
holes have intersected the gas field, but the
use of mud and water in the drilling process
caused damage to the reservoir and resulted
in sub-commercial quantities of gas being
recovered.
Under the latest drilling program, mud
and water will again be used to reach the
reservoir, but the drilling medium will then
be replaced by air to pump the gas out in a
bid to avoid damage to the reservoir.
Amity Oil managing director, Howard
McLaughlin, said there was considerable
potential for the gas if it could be proven to
the market that the resource was
commercial.
"Potential markets for the gas exist south
of Perth and include power generation and
individual users," said Mr McLaughlin.
"Once that’s achieved, we will secure
contracts, drill more wells, complete
permitting and land rights negotiations and
work through any remaining road blocks."
Large projects on the drawing board that
could benefit from a local source of energy
for cheap power generation include a
proposed pulp mill, an aluminium smelter,
expansion of existing mineral processing
operations and power generation.
The success of the Whicher 5 well was still
uncertain at the time Prospect magazine
went to press on Friday 5 December 2003.
If the well fails to live up to expectations,
there are still some courses of action open to
Amity and its partners — such as horizontal
drilling or hydraulic fracturing using carbon
dioxide.
Remedial work on the damaged Whicher
4 well in 1999 resulted in a flow rate of 2.5
6 Prospect December 2003–February 2004
BY DAMON FRITH
Well spudded: The start of more than 3700 metres of drilling to test the practicality of
extracting tight gas from the Whicher Range field near Busselton.
million cubic feet a day, twice that of previous
flows, but still well below the flow rates Amity
is expecting from its new approach to tapping
the Permian-age Sue Group reservoir.
Located 21 km south of Busselton, the
Whicher project is cashed up following a
farm-in agreement earlier this year by Amity
and United States based GeoPetro Resources
with Korea National Oil Corporation and
Seoul City Gas Company. Under the
agreement, the two Asian companies will
commit A$6.7 million for exploration at
Whicher Range for a 20% and 15% interest in
the project respectively.
If the Whicher partners can turn the
project into an operating field, it will be at a
time when deregulation of the Western
Australian Government owned Western
Power could stimulate interest in the South
West for new private-enterprise generated
power.

Peak potential looms for Kemerton
Industrial Park
Kemerton on the way up: Millennium
Inorganic Chemical’s titanium dioxide plant at
Kemerton will soon have a neighbour, in the
form of a 260 megawatt power station to be
operated by Transfield Services Limited.
Kemerton Industrial Park, long
overlooked as a preferred site for
major industry in Western Australia’s
South West region, has scored a major coup
by being chosen as the location for a new
A$250 million gas-fired power station.
The 260 megawatt power station, to be
owned and operated by Transfield Services
Limited, is designed to meet the peak-load
requirements of Western Australia’s largest
electricity provider, Western Power.
Kemerton was chosen ahead of four other
sites for the new power station. Other
options included Pinjar, north of Perth, where
Western Power operates a number of gasfired
power generating units, two sites in the
Kwinana – East Rockingham area and another
at Bunbury.
Western Power has negotiated a 25-year
power purchase agreement with Transfield
that will come into effect when the Kemerton
power station is operational in late 2005.
The station will be built by Siemens under
a fixed-priced turnkey contract with
Transfield.
About 400 people will be employed during
the 14-month construction phase, with
Australian content and local contractors to be
used wherever possible.
The A$250 million cost includes two gas
turbines, new substation works and a hookup
to the nearby Dampier-to-Bunbury
natural gas pipeline.
8 Prospect December 2003–February 2004
Construction is expected to start in early
2004, with the power station due to be
operating by October 2005.
Kemerton’s success in securing the power
station is a coup for those running the South
West industrial park, because, apart from a
A$15.5 million waste water treatment plant
completed last year, it is the first major new
industry to be established there since
Simcoa’s silicon smelter and SCM Chemicals’
(now Millennium Inorganic Chemicals)
titanium dioxide plant began operations
more than a decade ago.
The latest power station decision renews
impetus for Kemerton Industrial Park to
realise its true potential, and become the
premier hub for major industry south of the
Kwinana industrial strip.
LandCorp General Manager Operations,
Mike Moloney, is optimistic that the power
station deal will kick-start a bright new future
for the industrial park.
“While we recognise there have been no
new major industries established there for
more than a decade, the ground work has
been laid at Kemerton for many exciting
development opportunities to unfold in the
years ahead,” he said.
With plenty of land available, natural gas
and electricity running right through the park
and a major new power station, Kemerton
presents an attractive proposition for
industrial developers.
Kemerton has everything waiting to catch
the overflow from Kwinana. In fact, its
industrial core is being expanded from 1151
to 2106 ha. Significant environmental work
has been undertaken to assist developers
establish their projects inside the industrial
core, with a substantial 5437 ha buffer zone
separating it from non industrial land.
The park has excellent road access both to
the Port of Bunbury and the Perth
metropolitan area, via the Old Coast Road.
Environmental approval is currently being
sought for a rail link between Kemerton and
the port at Bunbury.
The new private power station earmarked
for Kemerton also provides an opportunity to
meet the additional energy requirements of
new industries within the industrial park in a
competitive environment. Possible new
industries include a pulp mill and aluminium
smelter.
Enquiries should be directed to LandCorp:
Telephone: +61 (8) 9482 7499
Facsimile: +61 (8) 9481 0861
Email: landcorp@landcorp.com.au
Big incentives
It is becoming increasingly clear that
hydrogen will not replace traditional fuels
overnight.
The timeframe for any major shift to
hydrogen is likely to be long term, perhaps 30
to 50 years, experts are saying.
On this basis, the clean-burning qualities
of natural gas will always be attractive, at
least until the hydrogen economy kicks in.
That’s good news for petroleum explorers
operating within Australia, especially those
eyeing investment opportunities in the
country’s most prospective resources State,
Western Australia.
Investment analysts within the
Department of Industry and Resources say
that an excellent window of opportunity
exists for petroleum companies to find — and
commercialise — gas and oil resources within
the Perth Basin, an area that roughly stretches
from Geraldton south to Augusta.
The current demand for gas in the State’s
South West (an arc from Geraldton extending
to the south coast) is approximately 600
terajoules per day equivalent. Over the next
20 years, the energy requirement for this area
is expected to expand to something like 1200
TJ/d.
That means more energy, particularly gas,
needs to come from somewhere.
Most of the extra demand will be directly
or indirectly driven by the resources sector.
The source of this additional gas is
anyone’s guess. But, it would be a distinct
advantage, both for Western Australia and the
supplier, if it were sourced from the lightly
explored Perth Basin.
A study is currently in progress to
determine likely energy needs of South West
coastal regions of Western Australia over the
next 20 years.
The study will consider broad
requirements to deliver competitively priced
energy to supply mineral developments and
processing in the region. In particular, the
study aims to identify energy prices that will
meet present interest in world-scale
downstream resource projects such as light
metals.
So, potentially good rewards await
petroleum explorers who can discover viable
new gas resources within the Perth Basin.
The Perth Basin has been a reliable gas
producer for a number of decades and first
supplied gas to Perth in 1971, long before the
giant North Rankin gas-condensate field
came on-stream in 1984.

While resources within the fabulously rich
offshore Carnarvon Basin to the north are
sufficient to sustain a world-class LNG export
industry and major gas processing on the
Burrup Peninsula, requirements for gas in the
Perth Basin are orientated towards domestic
fuel and industry needs. Currently, Western
Australia has both the largest industrial gas
market in Australia, and the highest
penetration of gas as a fuel for industry.
BY DAMON FRITH
United States-based Red
Mountain Energy could
soon be an Australian listed
company if its project to
extract gas from coal beds
south of Dunsborough can be
made commercial.
Red Mountain has sufficient cash to carry out a
three-well drill program on the Sue Coal
Measures, which could contain as much as 500
billion cubic feet of recoverable gas. Drilling is
expected to start in March 2004, following
government and native title approvals.
If the wells are successful, Red Mountain
managing director, Steve Thomas, said
additional funding would be required to move to
a commercial operation and a public listing
would be the preferred route.
Under the development proposal, according to
Mr Thomas, each well would be capable of
producing about 150 000 cubic feet of gas a
day, with all producing wells tied into a lowpressure
central gathering system.
The gas would then be passed though micro
turbines about the size of a refrigerator, but
capable of producing 30–60 Kw of electricity
with low greenhouse emissions and no water
used in the process. Unlike diesel generators,
the micro turbines can also work 24 hours a day
without restrictions and little maintenance. The
power generated would flow through to the local
grid for distribution to customers.
Mr Thomas said the project would be a boutique
energy producer with product sold to businesses
such as holiday resorts and small factories.
“We can get by on low production. Each well
costs about $80 000 and production is simple
— each well is essentially a water well with a
pump in it. Well life is seven to eight years,” he
said.
“Environmentally, we have advantages as well.
There are no chemicals used in the wells, the
rigs are compact and the water we extract while
Based on current drawdown figures, the
Perth Basin has reserves for only another 10
years.
A drilling program is currently in progress
in the southern part of the Perth Basin at
Whicher Range, near Busselton, in a bid to
commercialise a known “tight gas” resource,
estimated at 4 Tcf in place.
Any sizeable new gas discoveries could be
readily fed into existing pipeline
dewatering a well prior to production is fresh
and can be used by local farmers.”
Coal bed methane (CBM) gas production is
new to Western Australia, but common in
the United States and of increasing
importance on the east coast of Australia.
Red Mountain had CBM operations in the
US, but sold its assets about nine months
ago. Aside from its Australian project, the
company is negotiating for acreage in
Canada and will seek other opportunities in
Australia, North America and New Zealand.
Mr Thomas said a stable environment was
required to make the operation viable as a
change in pricing policies or the business
regulatory environment could make the
project unviable.
He said the working area for the CBM
project stretched from south of
Dunsborough to Augusta and would keep
the company occupied for the next couple of
years.
The move to establish a public company to
develop the project recently took a step
forward with negotiations currently
underway to purchase a shelf company as
the first step to listing the company in
Australia. A prospectus could be released
soon.
Mr Thomas said progressing the CBM
project to a commercial operation would
require debt or capital funding.
Mr Thomas is the former managing director
of another locally listed company, Growth
Resources, which had exploration
acreage in Alaska.
south west �
for Perth Basin petroleum explorers
BY JIM KENDAL AND JOHN TERRELL • DEPARTMENT OF INDUSTRY AND RESOURCES
Coal bed methane
Gas of a different kind
Turning gas into electricity:
Numerous micro turbines about
the size of a refrigerator, each
capable of producing 30–60 Kw of
electricity using coal-bed methane
as a fuel, could one day be used
to feed electricity into the South
West power grid.
infrastructure in Western
Australia under the State’s
open access legislation, or
be channelled directly to
new or existing gas
markets if developers
decide to build a new
pipeline.
Plenty of minerals
Areas in and adjacent
to the Perth Basin are well
endowed with mineral
resources, and any one of
a number of new resource
projects would benefit
from additional gas
supplies from the Perth
Basin.
Developing resources
such as the Tallering Peak,
Mt Gibson and
Koolyanobbing iron ore
deposits, expanding heavy
mineral sands operations,
increasing bauxite and
gold mining in the Darling
Ranges, the possibility of
an aluminium smelter and
50 km
115° 116°
JT 1 2 7.10.03
development of the Ravensthorpe laterite
nickel project could provide a strong demand
for gas over the next 20 years.
The three key features of the Perth Basin
are its high prospectivity for oil and gas, easy
access to exploration acreage, and a strong
local demand for gas.
Besides the potential mobilisation of
several large resource projects, there is also
potential for a small petroleum refinery to be
established, plus several other downstream
processing industries that could benefit from
any gas discovery in the Perth Basin.
In short, the Perth Basin is a highly
attractive investment opportunity for both
international and junior petroleum explorers.
Explorers will be comforted by the fact
that unlike many other hydrocarbon basins
in Australia, the Perth Basin is not isolated.
Located on or near the lower west coast, it
straddles the largest gas pipeline in Australia,
and is on the doorstep of Perth.
Of course, Perth’s Mediterranean-style
climate and lifestyle (pristine beaches, lobster
fishing, some of the tallest forests in the
world, whale-watching opportunities, worldfamous
wineries, plus affordable
accommodation and outstanding
educational facilities) are additional features
for investors to consider.
Prospect December 2003–February 2004 9
Petroleum well
Prospect
Seismic line
Sundalara
Dandaragan Deep
Gingin Br ook
Ec Eclipse lipse West
INDIAN
OCEAN
Bunbury
Carnamah
Warr o
Pe rth
Ec lipse
30°
32°
34°

The power of biomass
Residue from an innovative timber
project will fuel
Western Australia’s first
biomass power station, based
on the sprawling pine forests
north of Perth.
Beacons International Ltd
is leading a group which plans
a 30 megawatt power station
close to a timber veneer
factory in the City of
Wanneroo, capable of
providing electricity for 24
000 homes.
The plantations cover 21
000 hectares, mainly in the
Gnangara area, as well as
revegetated farming
properties to the northeast,
east and south of Perth. As
the pine trees are cut down
over the next quarter of a
century, the residue will
provide an astonishing 160
000 tonnes a year of waste
material which, without the
power station, would have
been largely wasted.
The laminated veneer
lumber factory to be operated
by Wesbeam Ltd will produce
90 000 tonnes of product a
year.
This massive resource of
fuel will be ideal for the
biomass power station that
will make a contribution to
Perth’s electricity needs.
Biomass, the description
of any residue from
agriculture, is regarded as one
of the most promising of
alternative energy sources, and uses welltried
technology, with generating equipment
readily available.
The Gnangara project is likely to be the
first of several planned by Beacons
International, including the south of the
State, based on the waste material from
woodchip operations.
There are several potential ventures that
would benefit local communities, especially
where there is a growing demand for
electricity.
Although it is less exotic than wind power
and solar energy, biomass makes up the
greatest proportion of sustainable energy
10 Prospect December 2003–February 2004
BYJOHN MCILWRAITH
Biomass bonus: Millions of pine trees have been planted in Western
Australia that will feed timber into a laminated veneer lumber plant (LVL)
in the City of Wanneroo. Bark and other waste material from the LVL plant
will provide fuel for Western Australia’s first biomass power station.
projects around the world at present, and has
the virtue of using material that would
otherwise be discarded.
Biomass power stations in Western
Australia will go a long way towards meeting
the State’s target for sustainable energy, a
target that is likely to be increased in the
future.
At present, the State has an objective of
deriving 5% of its electricity supplies from
renewable energy, but this is an ambitious
objective.
The Gnangara project would use
conventional boiler and turbine facilities, and
would buy, for a modest sum, the residues
discarded by the laminated veneer factory,
and would also benefit from
credits provided by
governments for sustainable
energy projects.
Biomass obviously has a
lower heating value than other
fuels such as coal, and the
modest economics of the
venture requires that
the residue be within
100 km from a power
station with a radius
of 50 km more
desirable.
Because of the
need to have the
stations close to the
source of the energy
crops, they are likely
to be located in rural
areas, a socially
desirable outcome.
Beacons
International has a
long-term objective
of linking biomass
power generation with water
projects, with the most
ambitious concept, that of
desalination.
The ventures it is examining
in the south of the State take
into account water shortages in
some rural areas.
Millions of trees have been
planted in the Great Southern
and adjacent areas over the past
decade, and rapidly increasing
wood chip production in the
next few years will produce a
valuable source of waste
materials. Biomass processes
have the added advantage of using almost all
of the residues with, for example, the nutrient
rich ash being incorporated into fertilisers.
The Gnangara power station project is at
an advanced stage of study, and Beacons and
its fellow participants hope that construction
could begin early in the second half of 2004,
with the first power delivered in the first half
of 2006.
The estimated capital cost of A$69 million
could be easily serviced from electricity tariffs
expected to be secured under long-term
contracts, making it an attractive
investment.

Synthetic rutile research
south west ��
Waste not — as Iluka discovers products
beyond the norm
The resources sector’s current strong
focus on sustainability has resulted in
industries looking hard at the
materials that their processes discard.
Iluka Resources Limited has identified
that reduced waste production in its
synthetic rutile (SR) process would provide
an economic advantage and a perceived
product advantage when compared with
competing products.
So, when its newest SR plant was brought
online in 1997 it was the first to generate
electricity from the waste heat on the kiln.
Much of the electricity for SR production on
the two plants at Capel is now provided from
waste heat generation.
It had been known that the coal used in
the kiln process is highly reactive (in fact,
Collie coal has been regarded as an ideal
medium for direct reduction because of its
reactivity), but much of the charred coal in
the waste streams has the properties to
qualify it as activated carbon.
In 2001, a strategic liaison with Norit
Activated Carbon, a world leader in activated
carbon manufacture and marketing, set Iluka
on a program to recover carbon from waste
streams for use as a highly valued product.
In the past year, more than 1000 tonnes of
char was recovered, upgraded and shipped to
the Netherlands for use in various Norit
products. The development program will see
that tonnage increase significantly over the
coming years with the eventual aim of totally
eliminating carbonaceous waste.
The main discard from the SR process is
the iron oxide extracted from the ilmenite.
While the iron analysis of the material
indicates suitability for production of pig
iron, the very fine size, unusual impurities
and residual salts detract from its value.
Iluka developed a process especially for
the processing of this and similar material,
but the downturn in the global iron and steel
market made the process unviable.
Armed with better knowledge of the iron
and steel industry and an appreciation of the
properties of the iron oxide, Iluka is confident
of finding a long-term use.
The used acid stream in the SR process
offers a number of potential uses.
In control: Already an efficient synthetic rutile producer, Iluka Resources is now capitalising on
waste products to boost the overall efficiency of its South West operations.
Sulphuric acid is used to leach iron and
manganese from the SR as a final process
step. Some of the used acid is recirculated to
the process and some is discarded. The
discarded acid is first neutralised with
quicklime to produce a solid, rich in gypsum
and containing iron and manganese oxides.
The solid separates from the water and has
some useful properties. These properties
make the solids beneficial for upgrading poor
sandy soil — the fine sizing helps moisture
retention, the high pH helps buffer soil
acidity and the complex iron compounds
retain phosphorus.
Effective use as a soil conditioner has been
demonstrated and Iluka is reviewing the use
of the solids in its own rehabilitation
program.
During early demonstration of the solids
as a soil conditioner, a Department of
Agriculture scientist suggested that, with a
small amount of processing, the material
could be turned into a sulphur fertiliser.
Granulating and curing led to the production
of Iron Man Gypsum (named for the iron
and manganese in the product). Iron Man
Gypsum has been sold for five years as a
persistent sulphur fertiliser providing
valuable trace elements — manganese,
iron, calcium and magnesium.
Further review of the origin of the waste
stream indicated a value in the unused
acid, and the concept of using phosphate
rock in place of the lime to undertake the
first stage of the neutralisation of the used
acid was born. Initial test work proved that
a phosphate mineral, insoluble in water
but soluble in the organic acids around
plant roots could be produced. Currently,
work is being undertaken at Perth’s
Murdoch University to optimise the
manufacture of a phosphate fertiliser that
will not contaminate waterways and
groundwater.
The work done on used acid
demonstrates three potential uses. The
solid waste is, in fact, useful as a soil
conditioner and is potentially very
beneficial agriculturally in the poor sandy
soils around Western Australia’s SR plants.
The sulphur in particular, is valuable as a
nutrient, and by investigating further
processing the value of the material can be
enhanced considerably.
Prospect December 2003–February 2004 11

12 Prospect December 2003–February 2004
Portman fast tracks Koolyanobbing
expansion to meet soaring demand
Yilgarn iron ore
producer Portman
Limited has
responded swiftly with the
implementation of the
A$20 million expansion of
its Koolyanobbing iron ore
project to capitalise on
soaring international iron
ore demand.
Buoyed by recent
predictions that iron ore
producers will reap
another substantial price
increase next year driven
by China’s “ravenous
appetite” for steel,
Portman — like its
counterparts at the upperend
of the production
Milestone: Portman’s port operations
supervisor Roger Nancarrow (right) presents
the Esperance Port Authority’s Bill Cutten with
a hand-crafted grass tree bowl to
commemorate the 20th million tonne of iron
ore to be exported from Esperance.
scale, Rio Tinto and BHP-Billiton — is racing to meet the new demand.
A report released by AME Mineral Economics in October predicted that
global iron ore consumption would increase by more than 6% in 2003,
and continue rising over the next five years as demand in China doubles
from the start of the decade to an estimated 500 Mt by 2008.
On this basis, AME predicted that prices for benchmark Australian fines
ore would match the 2002 increase of 9%, making 2003 prices the
highest in a decade.
“It is certainly a very exciting market,” says Richard Mehan, Portman’s
General Manager, Iron Ore, the Portman executive responsible for
overseeing the expansion project.
“Our challenge is to position ourselves to meet the demand as quickly as
possible, particularly considering the fact that the Koolyanobbing
expansion project was held up for a couple of years due to environmental
reasons,” he adds.
The project now has the approval of both the State and Federal
governments.
Environmental approvals are conditional on no more than 30% of the
native population of the plant Tetratheca paynterae being directly
impacted by Portman’s initial mining operations.
This will subsequently be increased to a 50% impact on completion of a
comprehensive research and management plan by Portman which
demonstrates that the remaining population of the plant can be
maintained.
The expansion project involves the development of new mining areas at
Windarling and Mt Jackson, some 100 km north of Portman’s current
mining operations at Koolyanobbing. Ore mined from the new areas will
be trucked to the existing processing plant for blending to extend the life
of the operation and, potentially, increase annual production.
This tight development timetable should see Portman commence final
construction and mine development activity at the Northern Tenements in
early 2004, enabling it to produce first ore around March 2004.
The base production rate for the expanded operation will be 4.8 Mt/a. An
increase in the long-term production rate above 5.2 Mt/a will require a
further capital investment, currently estimated at A$15 million.
“That decision is driven by a number of factors including current market
opportunities, new product opportunities and ore production from the
Northern Tenements,” Mr Mehan said.
Even at the base case production rate, the commencement of ore
production at the Northern Tenements will ensure that iron ore mining
continues at Koolyanobbing for many years to come.
The operation recently celebrated a key milestone with the mining, railing
and shipping of the 20 millionth tonne of ore.

A Bright Future
Planned for Investors in Victoria Petroleum N.L.
Victoria Petroleum N.L looks set to increase oil production after
joining the ranks of Australia's oil producers. Participant in
onshore North Perth Basin 5 MMBO Jingemia Oil Field
production testing up to 1700 bopd in second half 2003.
� Development drilling program in Jingemia Oil Field with
aim to increase production to 4000bopd in 1st Qtr 2004
� Four well November 2003-February 2004 drilling
program in Surat Basin, QLD and Carnarvon Basin, WA
targeting 54 Million bbl oil potential
� Active explorer and major acreage holder in Cooper
Basin, South Australia with 5 wells starting drilling in
March 2004
� Australia and US net oil production of 100 bopd in 3rd
Qtr 2003 with 14 wells planned over next 9 months
CONTACTS John Kopcheff Managing Director Chas Lane Exploration Manager
PHONE 08 9220 9800 FACSIMILE 08 9220 9801 E-MAIL admin@vicpet.com.au
ADDRESS Level 36 Exchange Plaza, 2 The Esplanade, Perth Western Australia 6000
VICTORIA PETROLEUM ASX CODE: VPE FOR MORE INFORMATION PLEASE VISIT www.vicpet.com.au
DHA - VP0098

Environmental excellence
Beenup consultative group gets Gecko gong
Despite the disappointment and
difficulties associated with the
closure of the Beenup mineral sands
project near Augusta, the efforts of one of the
parties involved, the Beenup Consultative
Group, have shone through.
Appropriately, the tireless efforts of the
group have been recognised in the form of a
Golden Gecko award for environmental
excellence — the highest honour accorded to
people, companies and groups associated
with resources development in Western
Australia.
The A$200 million Beenup project
commenced operations in 1997, but two
years later BHP closed the mine after it failed
to reach production targets due to technical
and environmental problems.
Located 17 km from Augusta, the
premature closing of the mine was a blow to
the local community, which had already
planned for the long-term economic benefits
and business opportunities of having a major
minerals project on its doorstep. The Beenup
site lies near the confluence of the Scott and
Blackwood Rivers, and is adjacent to the Scott
National Park.
From its inception in 1989, the Beenup
Consultative Group (BCG) has worked closely
with BHP and local communities to achieve a
result all could live with. From the outset it
had to deal with two polarized camps in its
dealings. The first camp saw employment and
opportunities to boost the local economy,
whereas the second camp viewed the project
as an environmental disaster.
Comprising representatives from the local
community, BHP, conservation groups and
the local council, the consultative group was
an integral part in the successful opening of
Beenup, and its role has progressed through
to the closure and rehabilitation of the site.
BCG chairman, Nicholas Dornan, said
initially the group had worked in an
environment of strained relations between
BHP and the community, but subsequently
the situation had rapidly turned around.
“BHP learned very quickly to provide all
information on the project in an honest and
open manner. It was quite a unique process
— to be so involved with a major company
and opening up new ways to engage with the
local community,” Mr Dornan said.
With the announcement of the closure of
the mine, the role of BCG changed from
14 Prospect December 2003–February 2004
managing the upside potential of the
mine’s presence in the region to
rehabilitation of the site and
salvaging good from the disaster.
Under the rehabilitation plan, a
50 ha dredge pond has been retained
as a permanent water body and
forms part of a 270 ha seasonal
wetland that has undergone extensive
recontouring and revegetation. A further 65
ha has been developed as pastoral land.
The overall aim is to create an
environment that supports a functioning,
self-sustaining ecosystem.
Alcoa anniversary
So far, more than 2.5Mt of sand
have been shifted from stockpiles
and used to re-contour the land,
with particular attention being
given to the re-contouring of the
pond.
The seasonal wetland is being
developed to create a diverse
range of flora and fauna habitats with over
110 million native seeds, representing over
110 plant species, being planted under the
revegetation program. At least four declared
rare flora species have been established on
the site and the project has developed
40 years on and still contributing strongly
Passing parade: This swish-looking black sedan was one of the first survey vehicles that headed
into the Darling Range, southeast of Perth in the early 1960s, to help delineate world-class
bauxite deposits that existed in the area. The coloured photograph shows one of the state-of-theart
pieces of equipment that Alcoa currently uses. It is a remote-controlled Komatsu D575
bulldozer that rips caprock to expose the bauxite orebody.
It all began in July 1963 with 16 and 18
tonne Leyland trucks hauling bauxite ore out
of what is now Langford Park, a popular
picnic spot at Jarrahdale, in the Darling Range
about 40 km southeast of Perth.
Western Australia’s bauxite mining industry
has come a long way since that humble start,
to a point where Alcoa now extracts 28 Mt of
bauxite annually from two mines at Huntly and
Willowdale.
The type of mining equipment employed today
includes Komatsu P1600 excavators, Komatsu
WA900 front-end loaders, 85- and 105-tonne
Komatsu rear dump trucks and Liebherr 994
excavators.
The mining operations also use cutting-edge
technology with remote controlled Komatsu
D575 bulldozers to rip caprock and access the
friable bauxite below. The remote control
technology is a safety measure as it
eliminates risk of jarring to an in-cab operator.
Western Australia’s Premier, Dr Geoff Gallop,
recently acknowledged the massive
contribution that Alcoa had given during its 40
years involvement in mining and mineral
processing in this State.
Alcoa’s first alumina refinery in Western
Australia began producing at Kwinana in
October 1963.
The company now employs more than 4300
Western Australians, and is responsible for the
indirect employment of tens of thousands
more.
With annual alumina output of more than
A$2.3 billion, Alcoa contributes around A$100
million in State royalties, which the
Government uses to fund priority areas such
as health, education and community safety.

innovative germination and propagation
methodologies. The rehabilitation process
has also involved the reinstatement of surface
water drainage across the site.
Of particular concern to the community
and BCG was the handling of pyrite disturbed
during the mining process. When exposed to
air, pyrite can oxidize and form acid and the
potential impact of the material on the
environment could have been counted in
decades or even hundreds of years.
This is now managed in pond and wetland
areas by the extensive use of lime sand to
neutralize the pyrite.
Mr Dornan said there was a “monster
amount of technical data” involved with the
pyrite issue but that he was happy with how
the rehabilitation program has progressed.
BCG’s role is continuing with the project
as it undertakes audits commissioned by BHP
to ensure the rehabilitation plan remains
aligned with community expectations, and to
ensure BHP makes all its commitments to the
program while providing a formal feedback
mechanism on rehabilitation progress and
performance to the broader community.
Doral Mineral Sands Pty Ltd, the latest
company to enter the A$290 million per
year mineral sands industry in the South West,
is creating a good early impression as it
proceeds with the orderly development of its
new mine and processing plant at Dardanup,
about 15 km southeast of Bunbury.
After its first full year of operation, officers
from the Department of the Environment made
a full audit of the mine and the plant — and
gave it a resounding tick of approval.
In fact, no environmental complaints have
been received either by Doral or the
Department since the start of the project in
mid-2002.
Also, to the credit of a lot of people, there
have been no lost-time injuries incurred by any
workers since day one of the operation.
Including a dry processing plant at Picton
(acquired from Japanese-owned ISK Minerals
Ltd in mid-2001), the total operation cost
Doral more than A$30 million to establish. It
now provides employment for about 70 people,
with about half being employed directly by
Doral, and the other half comprising mine,
transport and maintenance contractors.
In October, Doral got into the full swing of
community engagement by sponsoring the
inaugural Bull and Barrel Festival at Dardanup.
The event was established primarily to
south west �
Doral a proud new resident at Dardanup
Dual acceptance: The new mine and wet processing
plant at Doral’s mineral sands operation at Dardanup
have been given a resounding tick of approval by
both the Department of the Environment and the
local community.
celebrate two other key products from the
district — beef and wine — but Doral was still
keen to provide support for the event.
Doral Executive Director, George White, said
his company had supported another five or six
community projects around Dardanup, and was
now proud to be part of the local community.
“And we hope to be around for a long time to
come — at least 15 years, based on the
current throughput figures, and the production
of about 150 000 to 160 000 tonnes of heavy
mineral concentrates annually from the wet
processing plant at Dardanup,” Mr White said.
Prospect December 2003–February 2004 15

Saving energy with cogeneration
Cogeneration — the use of energy
which would otherwise be wasted, for
industrial processes — has a big
future in Western Australia.
A major step forward will be the
construction of a cogeneration plant at Alcoa
Australia’s Pinjarra alumina refinery that will
save millions of dollars in coming years, by
using steam created from waste heat in power
generation to process bauxite, the raw
material from which alumina is extracted.
The use of this energy, in the form of
steam, will enable Alcoa to increase its output
of alumina from Pinjarra by 17%, with only a
nominal increase in gas consumption.
The four alumina refineries in the Western
Australian alumina industry are the most
efficient in the world, and the increasing use
of cogeneration will reinforce this position.
It will also reduce the use of natural gas
consumed per unit of alumina produced,
significantly reducing CO 2 emissions.
A similar cogeneration project exists at the
Worsley alumina refinery, where part of the
energy is supplied by gas, part by coal.
Industry leaders say that if increasing
electricity demand justifies the installation of
additional gas turbines at Pinjarra, all its
requirements for steam could be satisfied by
cogeneration.
There is the potential for the development
of up to 1200 megawatts of cogeneration
capacity at Alcoa’s three Western Australian
refineries — equivalent to 37% of the
generating capacity of Western Power’s South
West Interconnected Grid system.
Supporters of cogeneration believe such
plants could satisfy increasing demand for
electricity in Western Australia, as well as
replace ageing power plants that are less
efficient than modern turbines, and have
high CO 2 emissions.
Because most of the investment they
require will be provided by companies, they
will also offer relief to stretched government
budgets.
There are small cogeneration schemes in
use in the State, but this is the first one linked
to the expansion of a major alumina refinery.
Steam from the new turbine will provide
nearly a quarter of the volume used when
Pinjarra’s capacity is increased from the
current level of 3.4 Mt to 4 Mt per year.
It is well known that the production of
aluminium requires high use of energy,
mostly in the form of electricity which some
16 Prospect December 2003–February 2004
The cogeneration process
The Commonwealth and Western
Australian governments, as well as
industry, have combined to
undertake a study that will examine the
future energy requirements for coastal
regions in the South West of Western
Australia.
The main purpose of the study is to
stimulate private-sector investment in
downstream resource processing in an
area where most of the State’s
population chooses to live.
The study, to be undertaken by an
independent consultant, will examine:
• Known and potential deposits of
minerals in the area
• Energy needs to mine and process
these minerals to various levels
• Prospective energy types in the study
area.
A preliminary assessment of the
potential for new mining and mineral
processing developments that could
result from more competitively priced
energy will generally focus on regional
areas.
The availability of cheaper energy could
trigger:
• A$3 billion in additional capital
investment
• 1500 additional direct jobs
• 5000 additional indirect jobs
• A$80 million in additional direct
income per annum
• A$1.9 billion in additional exports per
annum
• A 1% increase in Australia’s exports.
in the industry describe the
metal as “congealed electricity”.
But, there is also a
considerable need for energy in
the earlier alumina phase of the
process, mainly in the form of
steam.
The marriage of steam-driven
turbines and the alumina process
is logical, with heat which is
wasted after its role in power
generation being harnessed.
Alcoa says there are several
advantages, such as a more
reliable, cost-competitive steam
South West Coastal Minerals
and Energy Study
This study has the support of the Chamber
of Minerals and Energy, the Australian
Petroleum Production and Exploration
Association Limited, the South West
Development Commission, the Peel
Development Commission, Premier Coal,
Kemerton Industrial Park Coordinating
Committee, Great Southern Development
Commission, Kwinana Industries
Coordinating Committee, the Office of
Energy, the Department for Planning and
Infrastructure, and the Department of
Industry and Resources.
The study will take in coastal areas from
Oakajee north of Geraldton to Albany in the
south, and inland, including the Darling
Ranges.
Already about 11% of Australia’s total
exports are fed through the ports of
Geraldton, Fremantle, Bunbury and Albany,
and some observers are suggesting that
this figure could easily rise to 20% if more
competitively priced energy becomes
available to stimulate additional industrial
development, particularly mineral-based
downstream processing industries.
The study is due to be completed in the
second half of 2004, and will be reviewed
by a committee representing industry and
government.
Copies of the study proposal are available
from the Department of Industry and
Resources. The contact is: Jim Kendal,
General Manager, Strategic Planning, PO
Box 7606, Cloisters Square, Perth WA
6850. Telephone +61 8 9327 5456 or
jim.kendal@doir.wa.gov.au by e-mail.

supply and increased flexibility, offering the
option of bringing the original Alcoa turbine
back on line.
This will be a significant contributor to the
company maintaining cost-competitiveness
for its West Australian operations.
Work on the 140 MW cogeneration unit is
about to begin, in an historic agreement in
which Alinta Ltd will become the first major
supplier of electricity in Western Australia’s
deregulated energy market.
A crucial part of the agreement is a
contract with oil and gas producer Santos Ltd
for the purchase of 90 petajoules of gas over
10 years from its East Spar joint venture in the
offshore Carnarvon Basin.
About 12 terajoules a day will be delivered
to the cogeneration unit, scheduled to be
completed by the middle of 2005.
Alinta has secured customers for more
than 110 MW of the electricity that will be
produced.
Natural gas is the ideal fuel for
cogeneration, and it is becoming increasingly
competitive with more traditional coal fired
power generation.
Some Western Australian analysts believe
gas turbines now generate cheaper electricity
than coal fired power stations, although this
is not the case in Eastern Australia.
However, others suggest that a number of
factors can influence this equation. At the
very least, the availability of two fuels for
electricity production provides a robust
competitive market.
The importance of the cogeneration thrust
in the Western Australian alumina industry is
emphasised by its global position — it
produced more than a fifth of the world’s
alumina requirements and the successful
adoption of such an environmentally friendly
process will be an example to many other
industries.
Expected growth in demand encouraged
Alcoa Australia to commit A$400 million to
the expansion of Pinjarra, with the attractive
elements of cogeneration a positive factor in
its decision.
Peter Hawkin, of the Western Australian
Office of Energy, points out there is much
scope for increased use of cogeneration in
Western Australia, in small companies,
industries such as food processing and others
where heat is required. In the future, there
may even be cogeneration in people’s homes,
with some research already testing this
concept.
Western Australian researchers are part
of a national initiative to maintain
coal’s reputation as a key fuel of the future,
in the face of concerns over CO2 emissions
and impact on the Greenhouse Effect.
The researchers, at Curtin University, are
working on projects which support COAL21,
an initiative established by the Australian
coal industry to improve the environmental
profile of the fuel, and find new ways of
using it.
The COAL21 project was established by the
Australian Coal Association with the support
of Federal and State Governments, the coal
and electricity industry, and the research
community.
In Western Australia, the effort is led by
Professor Dong-ke Zhang, professor of
chemical engineering at Curtin, who is
working on a number of projects, some
specifically related to the State’s coal
industry.
With the support of Western Australia’s two
coal producers, Griffin Coal and Wesfarmers’
Energy, Professor Zhang and his group are
seeking ways to improve the attractiveness
of Collie coal for export and to find other
uses for it.
While Western Australian coal has some
attractive elements, it does suffer the
problem of having a high moisture content,
nearly 30%, and a high “reactivity” — that is,
increased risk of spontaneous combustion.
As a result, it has not been possible to
export Western Australian coal, and the local
industry has been restricted to the amount it
can sell locally for power generation.
Professor Zhang is confident that his group
will find a way of reducing the water content
economically, and also the reactivity,
employing a relatively simple and costeffective
procedure.
While Collie coal has lower heating value
than coals in eastern Australia, it does have
some advantages: much lower percentages
of sulphur and ash, and its high reactivity,
when kept under control, can be beneficial to
users.
It is hoped that the research being carried
out at Curtin University could lead to greater
exports of Collie coal, but another thrust is
towards extracting chemicals for synthetic
fuels and chemicals.
A multiple award winner, Professor Zhang is
also part of the national effort to find ways
of using coal that do not emit potentially
harmful gases into the atmosphere.
south west �
Coal: relic of the past or
clean fuel of the future?
UNTIL RECENTLY, COAL WAS A DIRTY WORD. DESPITE ITS SIGNIFICANT
CONTRIBUTION TO AUSTRALIA’S ECONOMIC PROSPERITY THROUGH HIGH EXPORT
EARNINGS AND LOW ELECTRICITY PRICES, COAL WAS IN DANGER OF BEING
DISMISSED AS A RELIC OF THE PAST AND DISOWNED BECAUSE OF ITS GREENHOUSE
IMPACT. BUT NOW, COAL’S POTENTIAL TO PLAY A KEY ROLE IN FUTURE GREENHOUSE-
FRIENDLY ELECTRICITY GENERATION IS TURNING THIS ATTITUDE AROUND.
One direction is to gasify the coal for use as a
fuel and, in the process, attempt to produce
materials for the chemical industry.
Some clean coal technologies produce
hydrogen as a by-product, and hydrogen-rich
synthetic gas could be used for power
generation or in fuel cells, liquid fuels or
chemicals.
The COAL21 researchers believe that the
production of synthetic gas from coal,
accompanied by the carbon capture and
storage technologies also developed for coal,
has the potential to make hydrogen a
competitive Greenhouse-friendly fuel source in
the longer term.
Coal gasification techniques have been
employed for at least a century. Before
natural gas was discovered in Western
Australia the gas burned in Perth homes was
extracted from coal.
The techniques now being examined are more
sophisticated, and seek to make the burning
of coal much more efficient.
One technology being pursued is to extract the
carbon dioxide from coal and store it
underground, which would make the fuel
virtually free of Greenhouse gases.
The COAL21 program aims to make zero
emission technologies for coal widely available
by 2021, an objective that would go someway
towards protecting Australia’s coal export
industry as the pressures to reduce
Greenhouse emissions increase.
Australia earns A$13.5 billion a year in coal
sales, making it the world’s biggest exporter,
and the increasing concerns over Greenhouse
emissions represent a formidable challenge.
About 80% of Australia’s electricity is produced
from coal, the figure for Western Australia is
less (approximately 40%).
An independent study commissioned by the
Federal Government recognises the
importance of coal as a bridge to the future
hydrogen economy.
The study noted that if hydrogen emerged as
the next primary fuel source, it would most
likely be produced from fossil fuels such as
coal and/or natural gas.
The research being carried out in Australia has
won it a reputation as a global leader in clean
coal research and it is a significant member of
international forums on the subject.
The research being carried out by Professor
Zhang and his team makes Western Australia
a key part of this effort.
Prospect December 2003–February 2004 17

Blue gums: a growing market, with solid
pulp mill possibilities
BY DENNIS MCKINNEY • DEPARTMENT OF INDUSTRY AND RESOURCES
Fields of promise: Blue gums, currently being planted at a rate of 5000 ha per year, are
comprehensively replacing native timber as a source of wood chips.
Tasmanian blue gums (Eucalyptus
globulus subspecies globulus) first
established a reputation with
European settlers because of their toughness
and durability.
The timber found ready applications on
Australia’s island state, in bridge
construction, railway sleepers, mine timber
and piling. More recently, though, the wood
has been grown for its superior attributes in
the pulp and paper making industries.
In Western Australia, the era of blue gum
plantations as we now know them, began in
1981 on cleared farmland near Manjimup,
later expanding into the Great Southern
region.
Land was specifically chosen where
annual rainfall regularly exceeded 700 mm,
and where favourable temperatures,
abundant sunshine and year-round access to
water stored in the soil profiles encourage
fast growth. Productivity, expressed as tree
growth, has also being boosted by fertilisers
and pasture legumes from prior land use.
In 1997, the Commonwealth, State and
Territory Governments joined with industry
in launching The Plantations for Australia:
2020 Vision with the aim of trebling
Australia's plantation forest estate from about
one million to three million hectares by 2020.
To achieve this vision, it was estimated that
around A$3 billion would need to be invested
in new plantations, mainly by the private
sector.
18 Prospect December 2003–February 2004
Last year the Western Australian
Government launched an Action Plan for Tree
Farming in Western Australia. The plan
promotes the development of plantations as
an integral part of the State’s overall
environmental strategy, focused on
greenhouse gas abatement, tackling salinity,
conservation of native forests and
sustainability.
In recent years, the South West blue gum
industry has undergone a significant
consolidation, partly induced by managed
investment schemes on rural land.
Notwithstanding the demise of some
companies, the timber-growing sector
recently received a vote of confidence from
investors as a result of clarification of the tax
rules governing the industry.
It is estimated that the area planted by
forestry companies on land leased from
farmers now exceeds 100 000 hectares and is
increasing by about 5000 hectares a year.
Along the way, the plantation industry has
been progressively building its reputation as
a reliable supplier of quality blue gum
hardwood chips to the export market. In fact,
blue gums have comprehensively replaced
the native timber chipping operations in the
South West, which helped sustain a number
of communities for many generations.
Consequently, this renewable industry is
providing regional communities with
alternative employment and development
opportunities as native forest operations
decline.
Apart from being a prized feedstock for
wood pulping, blue gums are also being
increasingly used in the expanding domestic
market for natural timber flooring.
The South West-based blue gum industry
is also taking giant strides in positioning itself
to capture a slice of the growing Asian
demand for raw wood fibre. Companies with
strong links to Asia, particularly through
international ownership, are intent on
establishing new export chipping facilities
close to the major woodchip export port at
Bunbury.
It is expected that blue gum woodchip
exports will rapidly grow from their presents
level of around 1 Mt/a to more than 2 Mt/a
within the next two or three years.
Despite growing exports there are still
valid reasons why the South West – Great
Southern region could host the State’s first
wood pulp mill. The region has substantial
wood resources, well-developed
infrastructure and, above all, a workforce
skilled in timber processing operations.
Western Australia has proved itself as a
reliable supplier to the metals industries of
South East Asia. There is every reason to have
confidence that South West – Great Southern
timber growers can replicate the successes of
their counterparts through development of a
value-adding project such as a pulp mill.
INDUSTRIAL AREAS STUDY
Don’t under-estimate the resources
potential of Western Australia’s
South West.
While not as prominent as the Pilbara
or Goldfields, the South West
nevertheless has great resource
development potential, especially with
regard to downstream processing.
Realising this, the Western Australian
Government recently commissioned
an overview study of strategic
industrial areas (SIAs) in the South
West of the State.
The study will assess the ability of
current and potential new SIAs to
cater for resource processing and
associated heavy industries over the
next 10 to 20 years.
The study will be completed by the
end of 2003, with a report due to be
released in either late January or early
February 2004.

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20 Prospect December 2003–February 2004
south west �
Strong signals about nickel and Ravensthorpe
Proponent praised: Department of Industry
and Resources project manager Ross Guyton
(centre), pictured with other DoIR staff
members during the exploration phase of the
Ravensthorpe nickel project, has praised the
way BHP Billiton has presented its case to
develop the project.
After years of uncertainty following
ownership changes, and then diligent
assessment by BHP Billiton, the A$1.4
billion Ravensthorpe Nickel Project, near the
south coast of Western Australia, is now close
to being evaluated for its investment
potential.
In a climate of soaring nickel prices and
strong demand for stainless steel by
commodity-hungry countries like China,
there appears to be every incentive for BHP
Billiton to endorse a go-ahead for this worldscale
project.
In 2003, the price of nickel has nearly
doubled to over US$11 000 a tonne, and
Macquarie Bank’s senior commodity analyst
Jim Lennon has forecast that it could go
beyond US$20 000 over the next few years, as
it did in the late 1980s.
With hindsight of price volatility, and
difficulties experienced by the first
generation of Western Australian lateritic
nickel projects in the late 1990s, the
Ravensthorpe project has been subjected to a
most rigorous assessment process by BHP
Billiton.
Since May 2000, extensive trial mining and
pilot-scale testing have been carried out to
first identify the preferred process (Enhanced
Pressure Acid Leach), and then prove
technical aspects of the project. BHP Billiton
has, in fact, spent about A$70 million on this
proving phase, with encouraging results
being aired by the company during
presentations in late September 2003.
The company’s final feasibility study is
due to be completed late in 2003. A report
will then be prepared for a BHP Billiton board
meeting in March 2004 at which, according to
recent company announcements, an
investment decision is expected to be made.
The project has two components —
development of a new lateritic nickel mine
and processing plant at Ravensthorpe, and
expansion of existing refining capacity in
northern Queensland. It is proposed that the
Yabulu nickel refinery near Townsville will be
expanded to accept an intermediate nickel
product from Ravensthorpe known as mixed
hydroxide precipitate (MHP). This nickel and
cobalt concentrate product will be shipped in
containers from Esperance to Townsville at a
rate of about 220 000 tonnes per year. The
combined capital cost of both the
Ravensthorpe and Yabulu operations will be
in the order of A$1.8 billion.
The Ravensthorpe project received State
environmental approval in September 2003
following a review under Section 46 of the
Environmental Protection Act, and has been
Arecent visit by Seipem’s massive semisubmersible
pipelaying barge, Semac 1,
to the Australian Marine Complex (AMC)
at Cockburn Sound, near Perth, has given the
facility an early psychological boost.
The four-week visit in September and
October, for a special pipe jointing exercise
and maintenance pit-stop ahead of pipelaying
on the Minerva gasfield in Bass Strait, was
the first major resource-related undertaking
at the AMC since the facility began taking in
work in June.
Semac 1 sailed into Cockburn Sound after
being involved in pipe laying for a second
offshore trunkline between Dampier and the
two main gas production platforms for the
North West Shelf project (North Rankin A and
Goodwyn A).
During its port-of-call stopover at Cockburn
Sound, some 800 lengths of 12 metre
carbon steel and 120 lengths of 12 metre
duplex steel pipe were double jointed and
placed in storage racks aboard Semac 1. As
well, two two-inch chemical flow lines and an
umbilical connection for the Minerva gas
production platform in Bass Strait to the
mainland in western Victoria were spooled
and made ready for deployment.
Intricate pipework for tie-ins associated with
the Minerva project were processed in a
hired-out section of the common-user
fabrication hall in the middle of the AMC
compound at Cockburn Sound.
One of the main purposes of the AMC is to
generate greater levels of local content in
marine and resource-related projects. During
the Semac 1 visit, about 80 local welders
and pipe fitters found work, resulting in an
the subject of extensive community consultation
by BHP Billiton. This process was started by
Comet Resources from the mid- 1990s to about
mid- 2000, when the ownership structure began
to change.
Department of Industry and Resources
project manager Ross Guyton, who has been
closely associated with the Ravensthorpe Nickel
Project for over three years, said he was greatly
impressed with the way BHP Billiton had
presented its development case to various
stakeholders, including fence-line neighbours.
“As a result of its open approach, BHP Billiton
has developed a strong level of goodwill with
local consultative groups, as well as the shires of
Ravensthorpe and Esperance, the Goldfields
Esperance Development Commission and other
government agencies that had been involved,”
Mr Guyton said.
Australian Marine Complex
Semac 1 visit could be the tip of the iceberg for AMC
Port of call visit: the giant pipe laying barge
Semac 1 during its recent stay at Cockburn
Sound.
estimated A$5–6 million worth of business being
injected into the local economy.
Business Development Manager for facility
manager JBFM Babcock, Richard Clark, described
the barge’s visit as a promising early sign of
things to come for the AMC.
“We are hoping this is just the tip of the iceberg,
and that many more big vessels and projects of
this type can be attracted to the AMC.”
Other work on the horizon includes:
• A six months lease on the main fabrication hall
by Cryeng Pty Ltd to build the cryogenic tanks
for the Kwinana HIsmelt project; and
• Final assembly and loadout of Apache Energy’s
Linda production platform.
In early October, virtually every building at the
AMC was being used, including one by US
defence technology contractor, Raytheon.

BHP Billiton says that since July 2000, it has
spent more than A$8 million within the shires of
Ravensthorpe and Esperance on various aspects
of its studies.
If the project proceeds to development, it will
generate up to 1000 construction jobs and 300
permanent jobs once the mine and process
plant are up and running in late 2006. About 100
of the employees new to the region are expected
to be located at Hopetoun, and another 100 in
Esperance. The balance of the workforce is
expected to be engaged locally. Additional
employment opportunities are expected in
Ravensthorpe and Esperance through support
industries, such as new services in
Ravensthorpe, additional long-distance haulage
capacity and increased activity at the Port of
Esperance.
Until the 2003 mid-year completion of the A$200
million AMC common-user facility, work such as
that associated with the Semac 1 would have
gone to shipyards in Singapore and other places
in the South East Asia region.
One of the most exciting maritime activity clusters
in the Asia–Pacific region, the AMC promises to
deliver significant value-adding opportunities for
Western Australian industry, and also good value
for organisations seeking support services for the
offshore petroleum industry, the onshore
resources industry, plus defence and marine
services sectors.
“The beauty of this place is that companies don’t
have to make large capital investments to come
here,” said JBFM Babcock’s Richard Clark.
“Our facility offers great flexibility, and has the
advantage of being surrounded by a host of
supporting industries. Visitors can pay a fee and
stay for however long it takes to complete a job.”
Saipem Technical Superintendent, Frank Von
Tilborg, was complimentary about the service
afforded to him and Semac 1’s 200 crew
members during the vessel’s visit.
“Things are a bit different here than Singapore.
However, we were impressed with the facilities at
the AMC — plenty of space, good supplies of
potable water, good ship-to-shore communication
systems, goods support services and good
security.”
Centrepiece of the AMC’s common-user facility is
Australia’s largest mobile assembly hall, a 4800
square metre shed that is designed to travel up to
80 metres on an east–west traverse. Highly
adaptable for multi-purpose fabrication, assembly
and loadout work, and suitable for overlapping
projects, the hall design incorporates extensive
portal and gantry crane systems with 30 metre,
under-hook capacity of 200 tonnes.
Other important features include two wharfs, one
350 metre-long marine services wharf (which
Semac 1 used), and a smaller 3000 tonne
loadout wharf that is 200
metres long.
Assured water supplies
for the Burrup
“Water, water
everywhere … nor
any drop to drink” are
the famous words that British poet
Samuel Taylor Coleridge (1772–1834)
wove into his classic The Rime of the
Ancient Mariner.
A couple of centuries later, the
same words must have rung in the
ears of planners aiming to establish a
world-class gas processing precinct
on the strategically important Burrup
Peninsula in northwest Western
Australia.
However, the Western Australian
Government has addressed this by
injecting A$80 million worth of
infrastructure into a program to
ensure an efficient long-term water
supply for industry in the area.
Part of the State Government’s
A$137 million infrastructure package,
the water supply system comprises a
A$60 million seawater scheme and a
A$20 million desalination plant
servicing the Burrup Peninsula’s
foundation ammonia producer,
Burrup Fertilisers Pty Ltd.
Earthworks for the ammonia plant,
the first of potentially five petrochemical
industries on the Burrup, commenced last
May. Production is due to start at a rate of
760 000 tonnes of liquid ammonia per
annum from the second quarter of 2005.
Site works for the seawater scheme
commenced in July 2003, including
preparation for the desalination plant —
the biggest thermal seawater desalination
plant in Australia.
Water Corporation project manager
Graham Tresidder said the project was
progressing to schedule, and on track for
completion in September 2004.
The seawater scheme includes:
• A 4.2 km large-diameter seawater
supply pipeline, a seawater pump
station, filtration facilities, a control
tank, and a 33 kV power network;
• A return brine disposal pipeline
paralleling the seawater supply pipeline,
a break tank, plus a 1.3 km ocean outfall
facility on the west side of the Burrup
Peninsula; and
• A mechanical vapour compression
(MVC) desalination plant, to be built
within the Burrup Fertilisers complex.
The Burrup Fertilisers site requires 62
million litres (ML) per day of seawater
from November 2004 to meet the demand
of its seawater cooling towers and the
desalination plant.
Seawater pipeline route
Brine pipeline route
Note:
Pipeline route shown comprises two
pipelines approximately one metre
apart and an overhead powerline
Dampier Public Wharf
Woodside
Supply Base
Proposed brine
outlet site
Proposed seawater
intake site
King Bay
Woodside
gas plant
Dampier
Nitrogen
Desalination Plant
Former
Syntroleum
Site
Burrup
Fertilisers
Desalination
Desalination
Plant
Withnell Bay
Liquigaz
Former
Methanex
Site
Japan
DME
NORTH
0 1000
metres
The desalination plant — to be built,
owned and operated by the Water
Corporation of Western Australia under a
commercial agreement with Burrup
Fertilisers — will be capable of producing 3.6
ML of desalinated water a day.
This is not large by world standards —
some plants in the Middle East are up to 20
times bigger. However, the seawater
desalination plant is big by Australian
standards. In fact, most of the seawater
desalination plants around Australia are
associated with tourism and are quite small
by comparison. For example, the plant on
Rottnest Island produces only 200 kL/d while
most of those on resort islands off the
Queensland coast have a capacity of around
600 kL/d.
In New South Wales, a desalination plant
used to polish re-cycled “blow down” water
for steam generation for the Bayswater Power
Station produces around 30 ML/d.
However, the volume of raw seawater to be
made available for industries on the Burrup is
quite substantial. The seawater scheme has a
design capacity of 280 ML of water per day,
which is about 20% of the daily peak summer
potable water demand for Perth.
That is equivalent to the volume of about
7000 standard backyard swimming pools
per day.
Prospect December 2003–February 2004 21
Hearson
Cove

The magic of oil
50th anniversary of Western Australia’s first oil discovery
December 2003 marks one of the most
significant milestones in the history
of resources development in Western
Australia — the 50th anniversary of the first
oil discovery at Rough Range on the Exmouth
peninsula.
Remarkably, it was achieved with the first
“wildcat” drill hole put down in the area by
West Australian Petroleum Ltd (WAPET).
During a 25 hour production test, oil had
rushed through a quarter-inch pipe at 20
barrels an hour at a depth of 3605 to 3620ft.
Despite high hopes, the reservoir proved
to be thin. But, the discovery sparked a
widespread exploration program,
culminating in WAPET’s discovery of oil and
gas at Barrow Island in 1964. In 2000, prior to
its merger with Texaco in 2001, Chevron
assumed responsibility for WAPET’s
operations in Australia.
While the Rough Range oil discovery failed
to live up to expectations, it did, however,
spark a wider search for hydrocarbons in
various parts of the State. In 1995, Western
Australia overtook Victoria as Australia’s
leading producer of oil, and today, petroleum
is Western Australia’s No. 1 commodity with
production worth A$10.2 billion in 2002.
Notable oil finds in Western Australia since
the original Rough Range discovery include:
Barrow Island (by WAPET in 1964), Mt Horner
(WAPET, 1965), Legendre (Woodside, 1968),
Egret (Woodside, 1973), Hermes (Woodside,
1974), Blina (Home Energy, 1981), Goodwyn
No. 6 well (Woodside, 1981), South Pepper
(Mesa, 1982), Sundown (Home Energy, 1982),
Chervil, Harriet (Apache, 1983), North Herald
(Mesa, 1983), Talisman (Marathon, 1984),
Saladin (WAPET, 1985), Lloyd (Home Energy,
1987), Rosette (Bond Corp., 1987),
Yammaderry (WAPET, 1988), Chinook (BHPP,
Oils ain’t oils: Rough Range No. 1 had all
the hallmarks of being a “gusher”, spewing
out 20 barrels of oil an hour. But as this
drill rig attendant —and others — later
learned, the 1953 oil discovery on the
Exmouth Peninsula fell short of becoming
Australia’s first commercial oil field.
22 Prospect December 2003–February 2004
1989), Cowle (WAPET, 1989), Wanaea
(Woodside, 1989), Griffin (BHPP, 1990), North
Yardonogo (Barrack Energy, 1990), Roller
(WAPET, 1990), Cossack (Woodside, 1990),
Wandoo (Ampolex, 1991), Skate (WAPET,
1991), Leatherback (Lasmo, 1991), Maitland
(WMC, 1992), Stag (Hadson Energy, 1993),
Crest (WAPET, 1994), Wonnich (Ampolex,
1995), Agincourt (Novus, 1996), Cornea (Shell,
1996), Buffalo (BHPP, 1996), Laminaria East
(BHPP, 1996), Woolybutt (Ampolex, 1997),
Jaubert (Woodside, 1997), Gipsy (Apache,
1998), Sage (Apache, 1999), Coaster (WAPET,
1999), North Gipsy (Apache, 1999), North
Harriet (Apache, 1999), Vincent (Woodside,
1999), Enfield (Woodside, 1999), Laverda
(Woodside, 2000), Coniston (BHPP, 2000),
Cliff Head (Roc Oil, 2001), Hovea (Arc Energy,
2001), Beharra Springs North (Origin, 2001),
Corowa (Santos, 2001), Gibson (Apache,
2001), Simpson (Apache, 2001), South Plato
(Apache, 2001), Double Island (Apache, 2002),
Little Sandy (Apache, 2002), Pedirka (Apache,
2002), Victoria (Apache, 2002), Norfolk
(Santos, 2002), Exeter (Santos, 2002),
Third party access decision
welcomed by Department
The Department of Industry and
Resources welcomed the Supreme
Court's decision on the 6 November
2003 regarding an application by Hope
Downs for access to BHP Billiton's
railway from Newman to Port Hedland.
The outcome of the decision is important
for the State in that it maintains the
integrity of third party access provisions
to infrastructure, which are a common
feature of many of the State Agreements
in operation throughout the resources
sector.
A considerable portion of the State’s
mining and petroleum industry operates
under more than 60 State Agreements,
which date back to the 1950s. Iron ore State
Agreements, in particular, feature third party
access provisions to critical infrastructure
such as ports and railways. These provisions
were key requirements put in place by
governments of the day with a long-term view
to having economic and efficient infrastructure
operating in the Pilbara region, for the overall
good of the iron ore industry.
Hope Downs’ initial efforts to negotiate
access to the Mount Newman railway were
unsuccessful with BHP Billiton arguing that,
under the relevant agreement provisions, it is
only obliged to negotiate with access seekers
who were already producing iron ore. This
position was confirmed when Hope Downs
unsuccessfully launched a legal challenge in
Hot news: Drillers on the Rough Range project
listen on the radio for the official announcement of
the oil discovery that excited people throughout
Australia.
Jingemia (Origin, 2002), Eremia (Arc Energy,
2003) and Stybarrow (BHPP, 2003).
These discoveries indicate the search for
oil remains alive and well in Western
Australia, despite giant gas discoveries giving
the impression that the State is gas prone.
Rail access: More rail infrastructure like BHP Billiton's
railway from Newman to Port Hedland will become
available to third party resource users following a recent
ruling by the Full Court of the WA Supreme Court.
the Supreme Court. However, following an
appeal by Hope Downs, supported by the State
Government, the Full Court of the Supreme
Court reversed its position and now requires
BHP Billiton to enter into negotiations with Hope
Downs for the use of the Mount Newman
railway to transport ore from its proposed mine
to Port Hedland.
The decision is consistent with the
Department’s view that the third party access
provisions of iron ore State Agreements are in
place to foster new developments in this sector.
It comes at a time of rapidly expanding global
market opportunities for existing and new
Western Australian based iron ore
producers.

As part of our commitment to
sustainable development, Shell is
sponsoring a major new greenhouse
gas reduction initiative called ’CO2CRC’.
The initiative is studying the
geological sequestration, or permanent storage, of fossil
fuel emissions in permeable sandstone formations within
the earth’s subsurface.
Australia is well placed to make use of geological storage
of carbon dioxide and our research will ensure that CO2 can
WHEN SHELL LOOKED TO
REDUCE CO2
EMISSIONS,
A SOLUTION WAS RIGHT
UNDER OUR FEET.
be safely and effectively disposed of
in the deep subsurface.
So rather than releasing it into the
atmosphere where it would contribute
to the build up of greenhouse gases,
we’ll essentially be putting CO2 back where it came from.
For more information on this and Shell’s other sustainable
development activities, visit www.shell.com.au/listeningresponding
SHA1232

Iron ore
Hamersley heralds a A$1.25 billion Yandicoogina expansion
Western Australian iron ore producer,
Hamersley Iron Pty Limited, is the latest
company to accelerate development plans to
take advantage of a flourishing international
market for iron ore and steel products.
On 4 December 2003, the company
announced that it would boost production by
half from 24 Mt/a to 36 Mt/a at its
Yandicoogina mine, in the Central Pilbara, by
early 2005. This will help lift the company’s
overall export capacity from 74 Mt/a to 116
Mt/a.
The announcement is another indication of
how the market views high value-in-use pisolite
ores. Over the last 10 years, pisolite fines
have moved from a niche market to supplying
nearly 50% of iron ore product sales from
Western Australia.
Hamersley Iron will outlay A$1250 million to
enable it to boost output and export sales.
This will comprise A$945 million on upgraded
port facilities at Parker Point and East
Intercourse Island within the Port of Dampier,
A$270 million at the Yandicoogina mine and
A$35 million on rail upgrades.
This represents one of the largest investments
in recent years for a mining project anywhere
in Australia.
Meanwhile, BHP Billiton and its partners in
Western Australia’s rich Pilbara iron ore
province are spending more than A$1 billion to
Golden Opportunity for
Nickel Prospects.
East Kimberley Nickel Project WA Acquired (pegged) early 2002; ten ELs, 2,000 sqkm; owned 50:50 with Ripplesea Pty Ltd; Halls Creek area; prospective for
nickel, copper and PGMs; adjacent Sally Malay nickel deposit and Panton Sill PGM deposit; conceptual, ultramafic feeder root zone; possible Voisey Bay equivalents.
ASHBURTON MINERALS LTD
ABN 99 008 894 442
raise shipping and rail capacity from 81 Mt/a
to 100 Mt/a by mid-2004.
Hamersley’s parent company, Rio Tinto
Limited, said the decision to expand its iron
ore capacity in the Pilbara was a significant
step in ensuring its ability to meet the needs
of customers and the strong growth in demand
for iron ore in China.
China’s voracious appetite for iron ore and
steel has caused prices to rise by more than
9% in 2003, and the demand is expected to
continue to grow strongly over the next five
years, and even longer if the economic growth
plan for China is maintained to reach the
Drummond Basin Gold Project, Qld
• Epithermal gold province
• 140,000 oz oxide resources
• 300,000 oz sulphide resources
• 1.5 Mtpa treatment plant
• 3,600 km2 tenements
ASHBURTON PROJECT
PERTH
EAST KIMBERLEY
PROJECT
DRUMMOND BASIN
PROJECT
Ashburton
Gold Project, WA
• 10 granted ELs
• Drill targets at Soldiers Secret,
Top Camp and Red Hill
BRISBANE
country’s standard-of-living goals
by 2020. Most industry analysts
are predicting that iron and steel
prices will rise between 10% and
12% in 2004.
Construction work associated with
the Yandicoogina expansion
commenced shortly after the
announcement was made.
The construction workforce will
peak at about 500 at the port
around mid 2004 and about 250
at the Yandicoogina mine by mid
2004. The net gain in permanent
jobs will be in the order of 200
jobs, adding to the 2000 workers
that Hamersley Iron currently
employs the Pilbara.
Studies are progressing into the provision of
additional rail, power and other infrastructure
to complement the new port and mine
requirements. Studies into further new mine
capacity to meet future growth are also
advanced.
The Department of Industry and Resources
predicts that iron ore capacity in Western
Australia could be around 260 Mt/a within the
next three years, and exceed 300 Mt/a within
six to seven years.
Telephone 61 8 9321 6600 • Facsmile 61 8 9321 6633
Email ashburton@ashburton-minerals.com.au • www.ashburton-minerals.com.au
Suite 3/2 Richardson Street West Perth, WA 6005 • PO Box 517 West Perth WA 6872
DHA ASH-0001
Prospect December 2003–February 2004 25

the big picture�
The Global Scene
Renewed optimism on global economic recovery
The outlook on global economic recovery has noticeably improved in
recent months. Economic growth in the US economy is expected to lead to
renewed economic growth in Asia since the US is the largest market for
Asian exports. In the US and Western Europe, interest rates are currently
at record lows in an effort to strengthen economic growth.
As Chart 1 illustrates, global optimism has continued to drive equity
markets, triggering new 52 week highs for several markets across the
globe. Tokyo’s Topix reached a 16 month high in October 2003. This was
mirrored in the US where the Tech focused Nasdaq Composite was
recently at a 12 month high and the mainstream S&P 500 Index closed
marginally off its high point for the past year.
After successfully managing through the financial impact of the Severe
Acute Respiratory Syndrome (SARS) virus, Asia is regaining control over its
economic future. For instance, Singapore’s economy rebounded strongly in
the September quarter of 2003 on the back of a recovering global
economy. The Singapore government said in a recent statement that GDP
surged 15% in the September quarter on an annualised basis, marking
the fastest expansion on a quarterly basis since 1997.
In Europe, expectations about economic performance are improving
following the reduction in European Central Bank (ECB) interest rates and
recent increases in stock prices. However, the general pace of recovery
continues to be gradual.
Overall, global economic recovery appears to be well underway.
Forecasters expect the global economy to have grown 3.25% in 2003 and
4% in 2004. According to the Australian Bureau of Agricultural and
Resource Economics (ABARE), an assumed increase in world economic
growth in 2004 mainly reflects an expected strengthening in economic
growth in the United States and, to a lesser extent, in Western Europe. It
also reflects an assumed economic recovery in non-OECD Asia from the
disruptions of the SARS outbreak earlier in 2003.
Despite the optimism, there are a small number of analysts who are less
optimistic about global economic recovery, pointing out that the world
economy is too reliant on the US. The gap between the US and European
growth rates has widened, leaving the former as the main driver of the
global economy. This may prove to be an unhealthy situation if the US
rebounds strongly while other economies remain sluggish. This may see
America’s already massive current account deficit widening further.
Analysts point out that the world economy would be a lot healthier if
Europe and Japan took some strain off America by pursuing strong
reforms to boost their own growth.
United States
Follow my lead
The US economy has continued to show notable signs of improvement in
recent weeks. GDP growth was 7.2% in the third quarter of 2003. Recent
better than expected jobs data from the US in October 2003 renewed
hopes that the world’s largest economy is finally responding to low
interest rates and fiscal policy such as the huge tax cuts.
US based JP Morgan Chase and Co. estimates consumer spending grew
at 6.1% annual rate between February and August 2003, the fastest pace
in 16 years. Also, the S&P Retail index reached three-year highs in
October 2003. Trading was powered by robust September sales. This
has bolstered hopes that the US economy is indeed improving and that
the consumers still have an appetite to spend. This is encouraging for the
US economy as consumer spending may provide considerable support for
areas of the economy that have struggled in 2003.
26 Prospect December 2003–February 2004
Looking to the year ahead, there is continued optimism on the US economy in
2004. Economic growth is expected to continue at a steady pace supported
by low interest rates and high consumer spending. ABARE forecasts that
economic growth will be around 4% in 2004 up from 2.5% in 2003.
Japan
A genuine recovery or another false start for Japan?
Japan continues to show encouraging signs of an economic renaissance,
showing an impressive GDP growth of 2.2% over the past year that is
comparable to that of the United States. Data released recently also showed
an improvement in domestic conditions with increases in industrial production
and a rise in nominal wages.
Further evidence of an economic recovery was revealed at the East Asia
Economic Cooperation (APEC) summit in October 2003. The Minster of State
for Financial Services stated that the debt problem plaguing Japan over the
last decade was beginning to ease. For example, non-performing loans in the
Japanese banking system stood at 7.2% in October 2003 down from 8.1% in
April 2003.
Despite the positive outlook, some analysts remain cautious about economic
recovery in Japan. According to the International Monetary Fund (IMF),
Japan’s financial sector remains weak and is holding back prospects for a
sustained economic recovery. In addition, deflation continues to remain
entrenched in the Japanese economy.
Although Japan has a history for brief spurts of economic recovery, only to be
extinguished by policy mistakes, a genuine recovery will occur once the
banking system is rectified and deflation is defeated.
Non- Japan Asia
Non-Japan-Asian growth continues
Economic activity in East Asia continued to strengthen in the second half of
2003. The relatively quick passing of the SARS virus was accompanied by
rebounds in the retail sector and tourism sectors. According to the APEC
secretariat, the economic cost of the SARS epidemic was in the range of
0.5% to 1% of annual GDP growth for many of the economies in the APEC
region.
The Chinese economy continues to grow. Industrial production increased
16.5% over the nine months to September 2003. In recent times, China has
been the critical driver of demand in raw materials. Economic growth in China
is particularly significant for Western Australia as Chinese growth is focused
on the consumption of basic raw materials for infrastructure development
such as steel, iron ore, nickel, copper and aluminum.
After years in economic limbo, the Thai economy is also expanding at a rapid
pace. The latest economic data show that the production of manufactured
goods rose by 10% in July 2003. Private consumption continues to play a
major role in the economy with the private consumption index rising by 3.6%
year on year in July 2003.
There are also encouraging signs of recovery in Hong Kong and Taiwan with
the retail and tourism sectors in these countries showing noticeable signs of
recovery.
The economic outlook for the Republic of Korea has weakened in recent
months. Economic data show that industrial production decreased 0.3% in
July 2003 owing to a strike at the country’s largest car maker, Hyundai
Motors. Other factors that have weakened the Korean economy are high
consumer debt levels and new credit restrictions that have led to decreased
consumer spending and housing construction.
Overall, ABARE forecasts that economic growth will be around 3.3% in 2003
for the South East Asian region, before strengthening to 4.3% in 2004. This
compares with 4% in 2002.

Chart 1: Global Sharemarkets to end of September 2003
Index: June 2000=100
110
100
90
80
70
60
50
40
Jun-00 Feb-01 Oct-01 Jun-02 Feb-03 Oct-03
Chart 2: Annual Output Growth
Per cent per annum
8
7
6
5
4
3
2
1
0
-1
-2
1990-91
TWI,Yen
85
80
75
70
65
60
55
50
45
1991-92
1992-93
1993-94
US Japan Germany Australia
OECD
1994-95
Western Australia
1995-96
1996-97
1997-98
Australia Forecasts
1998-99
Chart 3: Australian Dollar Exchange Rate
against Major Currencies
1999-00
2000-01
2001-02
2002-03
40
0.45
May-99 Nov-99 May-00 Nov-00 May-01 Nov-01 May-02 Nov-02 May-03 Nov-03
TWI Yen $US Euro
8
7
6
5
4
3
2
1
0
-1
2003-04 -2
$US,Euro
0.75
0.70
0.65
0.60
0.55
0.50
Western Europe
Gradual economic growth for Europe
Economic conditions in Europe remained weak for much of 2003. The largest
economy in the region, Germany, remained sluggish for much of 2003.
However, economic data released in October 2003 indicated that Germany
could be finally emerging from three years of economic gloom. There was
renewed consumer and investor confidence, along with improved factory
orders. The unemployment rate decreased to 10.1%, down from 10.7% in
September 2003, suggesting that Germany might have started to turn the
corner.
The French economy has also remained weak in 2003. Analysts forecast that
Real GDP will be around 0.4% for 2003 before picking up to 1.7% in 2004.
Despite the weaknesses of public finances, the French Government has
committed itself to further cuts in income taxes in 2004.
The United Kingdom again showed the strongest growth in the European
region area despite key indicators such as the growth rate of employment and
household consumption all slowing down. Nevertheless, in September 2003,
the government announced that unemployment had fallen to its lowest level in
28 years.
The Euro has maintained its recent appreciation against other international
currencies and was trading at US$1.18 in late October 2003.
Looking ahead into 2004, ABARE forecast economic growth to be around
1.4% in the Western European region in 2004, compared with 0.5% in 2003.
Western Australia
The Western Australian economy continues to grow
The Western Australian economy has continued to perform strongly. According
to the Australia New Zealand Bank (ANZ) State Economic Update released in
September 2003, final demand in Western Australia grew at 9.3% over the
year ending June 2003. This is above the national average of 4.7%.
The resources sector continues to drive economic growth in Western
Australia. Major resources projects such as the expansion of the North West
Shelf project and the Telfer Deeps gold mine have underpinned business
investment growth in Western Australia.
Western Australia’s export value continues to increase. The Australian
Bureau of Statistics (ABS) released trade figures in September 2003 that
reaffirmed Western Australia’s position as Australia’s leading exporter.
Western Australia is now responsible for $A32.3 billion in merchandise
exports, which represents 29% of the nation’s total exports.
Recent ABS data revealed that Western Australia’s unemployment rate, at 6%
in August 2003, was the third lowest among Australia’s States and territories.
As Chart 2 illustrates, strong growth is predicted for 2003-04 estimated at
4.5% compared with 3.5% nationally.
The Australian dollar
Economic trends
Compiled by DoIR’s Economic Analysis Branch
...and the dollar continues to appreciate
As Chart 3 illustrates, the Australian dollar ($A) has continued to appreciate
since mid-2002 and in recent months has remained solid at higher levels. It
has risen by around 35% from around 52 US cents mid August 2002 to its
highest levels for six years trading at 71 US cents in November 2003.
The Australian dollar has rebounded 13% against the euro, 9% against the
British pound and 13% against the yen. According to analysts, the rally in the
Australian dollar was driven by Australia’s favourable interest rate differential
with the US and a boom in commodity prices. Other factors that continue to
contribute to the appreciation of the Australian dollar is the weakness of the
US currency highlighted by trade and budget blowouts in the US.
Currency movements are particularly critical in the resources sector. For
instance, analysts forecast that Australian iron-ore exporters are expected to
win price increases in US dollar contract prices over the Japanese 2004-05
fiscal year that runs from April 1 to March 31. However, if the Australian
dollar keeps rising, increases in US dollar prices might mean very little as the
strong currency will erode profits.
ABARE forecasts the Australian dollar to average around 64 US cents in
2003-04, compared with an average of 58 cents in 2002-03.
Prospect December 2003–February 2004 27

the big picture�
China supports mineral markets
While the US and European economies have remained weak, China’s continues to surge in
leaps and bounds, underpinning the demand for metals employed in construction and
durables. In the last quarter the US has shown indications of an economic recovery, which
could lead to a heightened pressure on several metal markets already tightly in balance.
While most metal prices would benefit from such a recovery, the associated heightened
interest rates and re-hedging paint a bleaker outlook for gold.
Nickel prices show no signs of halting their ascent
All indications are that the Chinese economic growth will continue for the immediate future,
which implies a continued high growth in steel demand and derived demand for nickel.
Despite stunning results from month to month and many analysts scrutinising the Chinese
economy for signs of overheating, none are apparent. China's domestic consumption and
investment continue to grow with no signs of inventories increasing, rapid inflation or an
increase in interest rates.
Supply remains tight
The booming Chinese economy is coupled with extreme tightness in the global nickel
market brought on by strikes at INCO. This was balanced in the short term by a hastened
release of Norilsk’s nickel stockpiles. Nickel projects set to come on stream in the next two
years fall far short of the predicted consumption increases, leading to the most severe
imbalance of all the base metal markets. This is partially due to the excesses of the past,
which resulted in spectacular project failures due to underestimation of capital costs. This
has resulted in a mood of conservatism by the market when reviewing potential greenfields
nickel projects. Investment in new nickel capacity has thus lagged behind the tremendous
growth in demand spurred on by China.
As a consequence of all these factors, analysts are predicting sustained high nickel prices
for the next 2-3 years, until such time as nickel projects come on stream to bring the
market back into balance.
Oil prices steady … relatively speaking
Important factors determining oil prices are demand-driven political, economic and climate
events. These by their very nature are difficult to predict with any degree of certainty.
Experience in the past year, for instance, saw the WTI (West Texas Intermediate) oil price
rise from US$25 per barrel in September 2002 to US$37 just prior to the war in Iraq, and
then dip back to US$26 by May 2003. In the last months leading to November WTI prices
had settled into a price band around the US$30 mark.
OPEC continues to restrain output
On the supply side it is relatively easy for OPEC members to increase output substantially
in the short to medium term by utilising and expanding capacity. Despite political turmoil
reducing output from Venezuela in the last year, remaining OPEC members readily picked
up the slack to meet the group’s targets. In the longer term, several OPEC members have
announced intentions to increase output, not the least of which being Iraq as it attempts to
fuel its economic recovery.
OPEC has gradually lost market share to non-OPEC producers, in particular the Former
Soviet Union (FSU). Analysts predict almost half of the increase in non-OPEC production will
come from the FSU in the next two years.
OPEC currently has its target oil price band (for a basket of OPEC produced oils) set
between US$22 and US$28 per barrel. In September, OPEC called for a production cut as
it held the view that there was a potential oversupply problem. By early October, the oil
price had already exceeded the group’s upper limit for several days, leading to calls for the
organisation to increase output again rather than the further 3.5% cut planned for 1
November. This calls into question OPEC’s ability to micromanage the market, but at the
very least the target price band indicates the group’s intentions.
Given relatively low levels of oil stocks entering the northern hemisphere’s winter period
(when consumption levels for heating purposes rise significantly), it is forecast that prices
will remain in the high end of the OPEC price band or beyond for the immediate future, but
will ease in the long run as several countries expand production.
Gold recaptures lost lustre
After reaching a seven-year high (US$391.85/oz) on 25 September 2003, gold lost its
upward momentum, with prices slipping towards the US$370/oz range. The average price
for September 2003 was US$379/oz, up 5.3% on the previous month. This average price
was maintained in October.
28 Prospect December 2003–February 2004
Nickel prices continue to soar
US$/t
12,000
11,000
10,000
9,000
8,000
7,000
6,000
5,000
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02
Sep-02
Oct-02
Nov-02
Dec-02
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Source: Metalprices
Oil Prices show sustained strength
US$/bbl
(WTI)
40
35
30
25
20
15
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02
Sep-02
Oct-02
Nov-02
Dec-02
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
US$/oz
430
410
390
370
350
330
310
290
270
250
Source: EIA (Official Energy Statistics from the US Government)
Gold hits a seven year high
Jan-93
Jan-94
Jan-95
Source: London PM Fix
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Oct-03

Price A$/t
FOB Price A$/t FOB Price A$/t
Australian Ilmenite Prices
210
190
170
150
130
110
90
70
50
Jul-98
Source: ABS
Jan-99
Jul-99
Jan-00
Australian TiO2 Prices
4,000
3,500
3,000
2,500
2,000
Jul-98
Jul-00
Jan-01
Jul-01
Australian Rutile and Zircon Prices
1,100
1,000
900
800
700
FOB
600
Price A$/t
500
400
300
Jul-98
Jan-99
Source: ABS
Source: ABS
Jan-99
Jul-99
Rutile Zircon
Jul-99
Jan-00
Jan-00
Jul-00
Jul-00
Jan-01
Jan-01
Jul-01
Jul-01
Jan-02
Jan-02
Jan-02
Jul-02
Jul-02
Jul-02
Jan-03
Jan-03
Jan-03
Julv-03
Sep-03
Julv-03
Sep-03
Julv-03
Sep-03
Commodity trends
Compiled by DoIR’s Economic Analysis Branch
Major factors supporting gold prices in 2003 include low interest rates, weakness in
the US dollar, disappointing recovery in the world economy, sustained geo-political risk
and producer hedging.
Since 2001, OECD countries have experienced low interest rates. With the lowest US
interest rates in many years, the US dollar has depreciated significantly against other
major international currencies. A weaker US dollar, combined with the slow pace of
recovery in the US economy and wider geo-political tensions in the Middle East and
Korean Peninsula, has provided significant support to gold prices. Furthermore, lower
interest rates reduce the attractiveness of forward selling and optimistic sentiment
about the near-term upward trend, thus discouraging hedging activity by gold
producers.
Economic recovery may limit gold’s rebound
The path of gold prices into 2004 will largely rest with likely changes in these key
factors. ABARE has projected that, with the world economy gradually strengthening,
interest rates will rise moderately in 2004. This will in turn reduce producer dehedging.
The brighter prospect of world economic growth is also likely to encourage
investors to switch funds from "safe haven" assets such as gold and towards equities.
Further downward pressure on gold prices is also expected from higher production and
weaker fabrication demand. According to Gold Fields Mineral Services (GFMS), world
mine production rose by 1.8% in the first half of 2003 while, at the same time, world
gold fabrication demand dropped by 1.8%. Accordingly, many market analysts expect
gold prices to ease in the medium term.
However, considerable uncertainties still exist. The world economic recovery, for
example, is still embryonic and the robustness of the recovery is unclear. Other
uncertainties/risks that may significantly affect gold prices include the valuations of
the US dollar, the lingering threats of terrorism, the regional political tensions in the
Middle East and North Korea and the renegotiation of the Central Bank Gold
Agreement which will expire in September 2004.
Mineral sands show mixed results
Following a 14% rise in July, ilmenite prices retreated in August 2003 with a 23% fall
on the previous month to average at US$70/t, as shown by the latest data available.
In contrast, prices for rutile and zircon rose by 3% and 4% respectively, recouping
some of the losses of the previous month. The average price for August 2003 was
US$471/t for rutile and US$476/t for zircon.
The demand for titanium feedstocks will primarily depend on the pigment industry,
which in turn is significantly affected by the conditions of the world economy. Although
the sluggish economic recovery in the US economy continued to make market
conditions tough for the world TiO2 pigment industry, results from the major pigment
producers showed a continuing improvement in demand for pigment. For example,
both Du Pont and Kerr McGee reported higher sales in the June quarter 2003. During
the past 18 months, TiO2 pigment use increased substantially in Asia, in particular in
China. Chinese pigment imports rose by about 18% in 2002. According to Macquarie
Bank, pigment consumption is forecast to have increased moderately by 2.6% in 2003,
before showing stronger growth of over 3% in 2004.
Pigment market balanced, with potential for oversupply
Helped by the improvement in the pigment market, the feedstock market is expected
to be reasonably balanced with a small surplus in 2003. However, this surplus is
likely to increase significantly in 2004 owing to increases in supply from, for example,
the expansion of Iluka’s Old Hickory operation, Doral’s operation at Dardanup, Ticor’s
slag production at South Africa and higher Indian ilmenite output. Macquarie Bank has
reported that a relatively large number of titanium feedstock projects are currently
under active investigation. This increases the likelihood of oversupply of titanium
feedstocks in the longer term. Without significant demand growth, any price rise for
titanium feedstocks would be dampened by oversupply.
Zircon’s bright future
Unlike the titanium feedstock market, the zircon market remained very buoyant.
Strong zircon demand from China was chiefly responsible for zircon’s resilience. With
limited supply growth, the gap between demand and supply in the zircon market is
anticipated to widen in 2004. The forecast tight conditions in the world zircon market
are anticipated to benefit zircon prices.
Prospect December 2003–February 2004 29

Commissioned Projects
for financial year 2003/2004
IRON ORE
Mining Area C - Iron Ore Mine
BHP BILLITON IRON ORE PTY LTD
Mining operations at deposit C commenced in Q3
2003 after BHP Billiton and the State approved the
development of Mining Area C on 3 April 2002. The
product and capacity expansion (PACE) project at
Finucane Island was approved on 19 July 2002.
Expenditure: A$1b.
Employment: Construction: 500; Operation: 200
Significant resource projects underway or planned in
Western Australia
PROJECT VALUE (ESTIMATED A$)
CONSTRUCTION PERMANENT EMPLOYMENT
IRON AND STEEL
Yandicoogina mine and infrastructure expansion $1250m 750 200
Mining Area C iron ore mine and infrastructure $1000m 500 200
Hope Downs iron ore mine $1050m 500 300
Fortescue (Cape Preston) mine and HBI plant $3000m 5000 1050
Kwinana HIsmelt pig iron and steel plant $600m 320 80
Koolyanobbing iron ore mine expansion $25m 120 35
Tallering Peak iron ore mine $50m 80 30
Sub total
NICKEL/COBALT
$6975m 7270 1895
Mount Keith mine expansion $150 n/a n/a
Ravensthorpe mine $950m 1000 300
Cosmos Deeps $33m 15 55
Sally Malay $50m 150 120
Sub total
PETROCHEMICALS
$1183m 1165 475
Burrup Fertilisers ammonia plant $630m 500 60
Japan DME — di methyl ether plant $1000m 1000 150
Liquigaz methanol plant $770m 500 60
Ammonia–urea plant $900m 1000 130
Sasol Chevron gas-to-liquids plant (stage 1) $2000m 2500 200
Sub total
GAS
$5300m 5500 600
Gorgon project $6000m 2900 600
LNG Train-4 and trunkline $2400m 2000 70
Train-5 LNG project $1600m 2000 70
Sub total
OTHER
$10 000m 6900 740
Alcoa Pinjarra alumina refinery optimisation $400m 1500 250
Alcoa Wagerup refinery Train 3 expansion $1200m 1500 250
Boddington Wandoo gold mine expansion $500m 500 350
Kemerton titanium dioxide pigment plant expansion $470m 60 200
Telfer gold mine expansion $1200m 1222 620
Kalgoorlie manganese dioxide plant $136m n/a n/a
Sunrise Dam underground gold project $87m n/a n/a
Mt Weld rare earths project $40m 100 35
Jaguar base metals $35m n/a n/a
Various port upgrades $220m n/a n/a
Sundry projects — at least another $3000m 1500 300
Sub total $7288m 6382 2005
TOTAL A$30 746 million 27 217 5715
n/a = not available
NICKEL
Cosmos — Nickel Mine (sulphide ore)
JUBILEE MINES NL
A feasibility study based on the Cosmos Deeps
ore reserve of 520 000 tonnes at 7.2% nickel was
completed in April 2001. The company is
currently in the final stages of mining at the
open pit. After an 18-month development
program, underground mining at Cosmos Deeps
commenced in Q2 2003. Based on current ore
reserves, production will continue to 2008.
Exploration drilling is continuing in and around
the Cosmos Deeps orebody.
Expenditure: A$33m.
Employment: Construction: 15; Operation: 55
Committed Projects
as at 4 November 2003
GOLD
Telfer - Gold Mine (Expansion)
NEWCREST MINING LIMITED
Feasibility studies for the Telfer expansion have
identified a large low-grade resource (up to 200 Mt of
sulphide and 50 Mt of oxide ore). Newcrest
commenced construction of the mine extension in
late 2002, with commissioning scheduled at the end
of 2004 and full capacity to be reached by 2005.
Production is estimated at 800 000 oz/a of gold and 30
000 t/a of copper over a 24-year period. Newcrest
Mining will also build a new 18 Mt/a processing
plant. A major component of the project will be a 440
km gas pipeline from Port Hedland to the minesite.
Expenditure: A$1.2b.
Employment: Construction: 1222; Operation: 620
IRON ORE PROCESSING
Kwinana - HIsmelt Commercial Iron
Making Plant
HISMELT CORPORATION LIMITED
HIsmelt Corporation, in a joint venture with Nucor
(25%), Mitsubishi (10%) and Shougang (5%),
announced on 24 April 2002 a commercial-scale
HIsmelt process plant at Kwinana, near Perth. The
first stage of the plant will produce around 800 000 t/a
of pig iron from iron ore fines, coal and fluxes.
Construction commenced in January 2003 with
commissioning due to commence in late 2004.
Expenditure: A$600m.
Employment: Construction: 320; Operation: 80
Mt Gibson - Iron Pellet Plant
MT GIBSON IRON LTD
Mt Gibson Iron Ltd has commenced a 1.5 Mt/a iron
ore mine at Tallering Peak, 130 km northeast of
Geraldton. The first overseas shipment of ore from
Geraldton is expected to occur in January 2004. The
company is also evaluating the possibility of
commissioning a second mine at Mt Gibson about
300 km southeast of Geraldton by the end of 2004.
This has the potential to double the company’s
output to 3 Mt/a.
Expenditure: A$50m.
Employment: Construction: 80; Operation: 30
Lake Johnston (Emily Ann/Maggie Hays) -
Nickel Mine/s (sulphide ore)
LIONORE AUSTRALIA (NICKEL) LTD
LionOre Mining is developing the Maggie Hays
deposit as an integrated development with its nearby
Emily Ann mine near Lake Johnston. Construction at
Maggie Hays commenced with a boxcut being
completed in April 2003, while the main decline and
ventilation drive portals are currently under
development. Mining at Maggie Hays is planned to
commence in Q3 2004 and will double production
from the region to about 10 to 12 000 t/a of nickel.
The concentrate will be shipped to Inco Ltd of
Canada under a life-of-mine offtake agreement
negotiated for the Emily Ann mine.
Expenditure: A$28m.
Employment: Construction: 25; Operation: 167
Sally Malay - Nickel Project
SALLY MALAY MINING LIMITED
Construction at the Sally Malay project has
commenced. A 120-person village is scheduled to be
operational in Q4 2003, with plant commissioning
scheduled for Q3 2004. The first shipment of
concentrate to the Jinchuan Group in China is
planned for Q3 2004. Sally Malay plans to employ
both open-cut and underground mining methods to
extract the ore, which will be processed via a 750 000
t/a mill. A bulk nickel/copper/cobalt concentrate will
be shipped by road and exported through the
Prospect December 2003–February 2004 31

Committed Projects
as at 4 November 2003
upgraded port of Wyndham. The project is
expected to have a mine life of 5.5 years on
current resource estimates.
Expenditure: A$50m.
Employment: Construction: 150; Operation: 120
OIL & GAS DEVELOPMENTS
North West Shelf - Project Expansion -
4th LNG Train, Second Trunkline
WOODSIDE ENERGY LTD
Proposals by the NWS partners for additional
LNG Trains 4 and 5, and a second trunkline and
expansion of the Domgas plant, received
environmental approval in 1998 and 1999. The
LNG expansion is based on growing Asian energy
markets. In April 2001 the partners committed to
development of the A$1.6 billion LNG Train 4.
Construction of Train 4 commenced in Q3 2001.
In December 2001 the joint venturers approved
expenditure for the A$800 million second subsea
trunkline linking the offshore production
facilities to the onshore gas plant on the Burrup
Peninsula. Substantial progress has been made
in the construction of Train 4 and the laying of
the second trunkline has commenced. The
trunkline is scheduled to be completed in April
2004 to coincide with the completion of Train 4.
Expenditure: A$2.4b.
Employment: Construction: 2000; Operation: 70
PETROCHEMICALS/CHEMICALS
Burrup Peninsula - Ammonia Plant
BURRUP FERTILISERS PTY LTD
Burrup Fertilisers is developing an ammonia
plant at the King Bay/Hearson Cove industrial
area on the Burrup Peninsula, near Karratha.
Around 760 000 t/a of liquid ammonia will be
produced and exported to India and other world
markets for the manufacture of fertilisers. SNC-
Lavalin Australia Pty Ltd, is the EPC contractor
and Sinclair Knight Merz the environmental
management consultant for the project. The
Harriet Joint Venture has an agreement to supply
82 TJ/d of natural gas to the project.
Construction commenced on 30 April 2003 and
production is planned to start in Q3 2005.
Expenditure: A$630m.
Employment: Construction: 500; Operation: 60
TIMBER
Flynn Drive - Laminated Veneer
Lumber Plant
WESBEAM PTY LTD
WESBEAM Pty Ltd has reached an agreement
with the State, which has been ratified by
Parliament, for the development of an A$80
million laminated veneer lumber (LVL) plant at
Flynn Drive, Neerabup. Construction of the plant
has commenced with first production due in the
second half of 2004. LVL is prepared by peeling
pine logs into sheets, then re-aligning and gluing
them to produce very strong engineered wood
products. Timber feedstocks will be pine trees
harvested from State Government owned
plantations at Gnangara and other areas. The
project will sell LVL and veneers to Australian
and overseas markets.
Expenditure: A$80m.
Employment: Construction: 200; Operation: 140
32 Prospect December 2003–February 2004
Projects under consideration
as at 4 November 2003
AGRICULTURE
Mantinea Flats - Ord River Irrigation
Scheme (Stage 2 Development) - Mantinea
Flats
HENRY WALKER ELTIN LTD.
The project consists of developing and servicing
approximately 80 farms (about 4200 ha total) at
Mantinea Flats for irrigated intensive horticulture which
will then be offered for sale. Following an Expression of
Interest process in late 1998, a consortium headed by
Henry Walker Eltin Limited was mandated to carry out
the development, subject to a successful feasibility study
and associated approvals. The studies have been
deferred pending resolution of land access issues.
Expenditure: A$108m.
Ord River - Ord River Irrigation Scheme
ORD STAGE 2 M2 AREA
The potential exists for a 30 500 ha irrigated agricultural
development immediately to the northeast of the
existing Ord Stage 1 development. The WA and NT
Governments are committed to investigating the project
feasibility and propose to consult with the local
community before progressing the re-tendering of the
Ord Stage 2 M2 area. Environmental approval has been
given for an irrigated agricultural project in the M2 area.
Possible crops include sugar, cotton, leucaena or
horticultural crops.
West Kimberley - Water & Land Resources
Development Project
WESTERN AGRICULTURAL INDUSTRIES PTY LTD
Western Agricultural Industries Pty Limited (WAI) was
appointed in August 1997 to carry out feasibility studies
into establishing an irrigated agricultural industry based
on the ground and surface water resources of the
Canning Basin and Fitzroy River system. Results to date
indicate that there is sufficient potential to establish a 20
000 ha groundwater-based irrigated cotton industry in
an area situated about 200 km south of Broome.
Feasibility studies have been deferred pending
resolution of land access issues. WAI’s MoU with the
State, which allows WAI to undertake its feasibility
studies, has been extended to 30 June 2004.
Expenditure: A$600m.
Employment: Construction: 250; Operation: 2000
BAUXITE/ALUMINA
Pinjarra/Huntly - Alumina Refinery
Optimisation
ALCOA
Alcoa is planning a A$400m optimisation of its Pinjarra
alumina refinery that will add an additional 0.6 Mt/a to
raise total refinery capacity to 4 Mt/a. Subject to
environmental approval and market conditions, it is
planned to bring the additional capacity on stream at
the end of 2005.
Expenditure: A$400m.
Employment: Construction: 1000; Operation: 65
Wagerup/Willowdale - Alumina Refinery
Train 3 Expansion
ALCOA WORLD ALUMINA AUSTRALIA
Environmental approval was granted in August 1995 to
increase the mining rate and expand the Wagerup
refinery to 3.3 Mt/a by construction of a third
production train and round-out of total facilities. An
increase in capacity of 25% was completed in 1999.
Commitment to build the third train is dependent on
market and community factors.
Expenditure: A$1.2b.
Employment: Construction: 1500; Operation: 250
GALLIUM
Pinjarra - Gallium Extraction Plant
GEO SPECIALTY CHEMICALS INC.
In March 2001, GEO Speciality Chemicals Inc of the USA
announced plans to construct a major new gallium
metal extraction facility at Pinjarra, south of Perth, on
the site of the former Rhodia gallium chloride plant. The
facility is planned to have an ultimate capacity of 100
t/a of ‘4N’ gallium metal. The gallium will be extracted
from the Bayer liquor stream generated in Alcoa’s
adjacent alumina refinery. Timing is dependent on
favourable market conditions and statutory approvals.
Expenditure: A$75m.
Employment: Construction: 150; Operation: 50
GOLD
Boddington - Gold Mine (Wandoo
Expansion)
BGM MANAGEMENT COMPANY PTY LTD
Boddington Gold Mine is managed by BGM
Management Company Pty Ltd on behalf of Newmont,
AngloGold and Newcrest. BGM has environmental
approval for the expanded Wandoo project, based on
mining the extensive bedrock that underlies the minedout
oxide resource. The project includes a dedicated
100 MW gas-fired power station. Project go-ahead will
be subject to commercial factors.
Expenditure: A$500m.
Employment: Construction: 500; Operation: 350
Sunrise Dam - Gold Mine - Underground
Development
ANGLOGOLD AUSTRALIA LTD
AngloGold Australia Ltd has announced it will begin a
three-year underground development in Q4 2003 at the
Sunrise Dam gold mine to test the feasibility of later
committing to a full-scale underground operation. The
study will involve the development of two declines
totalling 9 km in the vicinity of previously defined
reserves. The company expects to make a decision on
whether to proceed to full-scale underground mining in
early 2007. A positive decision is expected to increase
the life of the project to at least 2012.
Expenditure: A$87m.
HEAVY MINERAL SANDS
Jangardup South - Mineral Sands Mine
CABLE SANDS (WA) PTY LTD
Cable Sands has outlined a titanium minerals orebody
adjacent to D’Entrecasteaux National Park. Feasibility
and environmental studies are underway. A formal
proposal to mine has been put to Government. An
environmental impact statement for the project is due
to be released in the second half of 2003.
Expenditure: A$40m.
Employment: Construction: 100; Operation: 50
Kemerton - Titanium Dioxide Pigment Plant
Expansion
MILLENNIUM INORGANIC CHEMICALS LTD
Millennium proposes a major expansion of its
Kemerton titanium dioxide pigment plant to 190 000
t/a. The EPA approved the proposal in April 1999. A
decision to proceed is dependent on market factors.
Expenditure: A$470m.
Employment: Construction: 500; Operation: 200
Kwinana - Titanium Dioxide Pigment Plant
Expansion
TIWEST JOINT VENTURE
Environmental approval for the staged expansion of a
pigment plant capacity to 180 000 t/a has been given. A
decision to proceed with further stages within this
expansion is dependent on improved market
conditions.
Employment: Construction: 108; Operation: 98
IRON ORE
Hope Downs - Iron Ore Mine
HOPE DOWNS LIMITED
Hancock and Kumba have completed a feasibility study
of on the Hope Downs project. The project has
environmental approval. The alliance is now
progressing project finance, joint venture and market
agreements. In November 2003, the Supreme Court
ruled in of Hope Downs’ favour in respect of third party
access to the Newman to Port Hedland railway.
Expenditure: A$1.05b.
Employment: Construction: 500; Operation: 300

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Projects under consideration
as at 4 November 2003
Koolyanobbing - Northern Expansion -
Iron Ore Mine
PORTMAN LIMITED
Portman is proposing to increase iron ore
production at its Koolyanobbing operations to 6
Mt/a through the development of deposits located
at Mt Jackson and Windarling, 50 to 100 km north of
Koolyanobbing. The company obtained a
conditional environmental go-ahead in April 2003
to proceed with the expansion and is currently
obtaining other necessary approvals. Mining at the
new deposits is scheduled to commence in early
2004.
Expenditure: A$25m.
Employment: Construction: 120; Operation: 35
East Pilbara - Iron Ore Mine, Rail and
Port Development
FORTESCUE METALS GROUP
FMG is conducting a pre-feasibility study into a new
iron ore development in the eastern Pilbara (based
on the Mount Nicholas, Tongololo Creek, Mindy
Mindy prospects), to be serviced by a multi user
railway and port infrastructure at Port Hedland.
The company expects to refer the first phase of the
proposed project for formal environmental
approval by December 2003. A detailed feasibility
study is expected to commence in December 2003.
Construction on the rail and port facilities is
expected to start Q4 2004/Q1 2005
Expenditure A$1.4 billion
Employment: Construction: 1000; Operation: 300
IRON ORE PROCESSING
Fortescue (Cape Preston) - Mine and
HBI Plant
AUSTEEL PTY LTD
The Austeel consortium is promoting a 3.85 Mt/a
EAF steelmaking project, utilising the Fortescue
magnetite deposits. Austeel plans to produce slab,
hot-rolled and cold-rolled coil and galvanised steel
at a new plant in Newcastle, NSW, that will receive
feed from a new iron ore mine and HBI production
facility at Fortescue. Processing in Western Australia
includes magnetic concentration, pelletising and
DRI processes. HBI(DRI) will be shipped to
Newcastle through new port facilities at Cape
Preston. Environmental approval for the mine to
HBI stage has been granted. Other projects based
on the Fortescue deposits (being promoted by
parent company Mineralogy) involve an export
DRI/slab project and an export pellet project.
Expenditure: A$3b.
Employment: Construction: 5000; Operation: 1050
Kaolin
Thangoo (100km SSE of Broome) -
Kaolin Mine
MANSFIELD MINING NL
A major kaolin deposit, to be mined by Mansfield
Mining NL as the Eaglehawk Kaolin Project, is
situated on Thangoo pastoral station about 100 km
south-southeast of Broome in the West Kimberley. It
is one of Western Australia’s few high-grade
deposits, with proven reserves of around 410 Mt.
The quality of the resource has been verified by
independent bodies (CSIRO, Universities in Qld and
SA). Once operating, the A$90 million project could
produce and export 700 000 t/a of kaolin and byproduct
minerals such as silica sand, ilmenite and
leucoxene.
Expenditure: A$90m.
Employment: Construction: 50; Operation: 130
Lead
Wiluna (Magellan) - Lead Mine
MAGELLAN METALS PTY LTD
The project is based on a lead carbonate (cerussite)
deposit 30 km west of Wiluna. Magellan is wholly
owned by Ivernia West Inc (60%), a Canadian based
resource company and the Sentient Resources Fund
(40%). A feasibility study completed in 2001 is
currently being revised to take account of additional
34 Prospect December 2003–February 2004
ore reserves, revised production strategies, and
current market conditions. The study is expected to
be completed in Q3 2003 with construction to
commence in Q1 2004. It is planned to produce metal
on site through direct reduction of the concentrate
and export the entire production through the port of
Geraldton. Proven and probable reserves total 11.1
Mt at a grade of 6.8% Pb. Annual throughput is
planned at 1.2 Mt/a of ore to eventually produce over
80 000 t/a of soft lead bullion.
Expenditure: A$48m.
Employment: Construction: 100; Operation: 80
MANGANESE
Kalgoorlie Region - Manganese Dioxide
Project - Stage 1
HITEC ENERGY LIMITED
HiTec Energy Limited proposes to produce
electrolytic manganese dioxide (EMD) the power
source for alkaline batteries. The hydrometallurgical
plant will be a brownfield development at Cawse 50
km north of Kalgoorlie, built around an existing
three-year-old electro winning cell house and SX
plant. The planned initial production of 10 000 to 14
000 t/a can be expanded to 23 000 t/a without further
significant changes to the existing plant. It will use
manganese ore from Consolidated Minerals’ Woodie
Woodie mine and manganese waste from OMG’s
Cawse nickel plant.
Expenditure: A$136m.
METHANOL
Burrup Peninsula - Methanol Plant
GTL RESOURCES PLC
GTL Resources proposes to build a plant to produce 1
Mt/a of methanol by late 2005. The plant will be
situated at Withnell East on the Burrup Peninsula. On
17 October 2001, GTL Resources signed a
Memorandum of Understanding with Apache
Corporation, Globex Energy Inc and Santos Ltd for
the purchase of 108 TJ/d of natural gas to supply the
plant. Products will be sold to Swiss company Vitol
for trading on international markets.
Expenditure: A$770m.
Employment: Construction: 600; Operation: 85
NICKEL
Mt Keith - Nickel Mine
WMC RESOURCES LTD
A feasibility study for an expansion of the Mount
Keith operation from 11 Mt/a to 14.2 Mt/a
throughput has been conducted. Options for
implementation, including an incremental
expansion, are under consideration in light of other
nickel sulphide opportunities in the area.
Debottlenecking of the Kwinana nickel refinery will
see production capacity increased from 67 kt/a to
70kt/a by the end of 2004.
Expenditure: A$150m.
Ravensthorpe - Nickel Mine
BHP BILLITON - RAVENSTHORPE NICKEL
OPERATIONS PTY LTD
BHP Billiton’s Ravensthorpe Nickel Operations Pty
Ltd is currently evaluating the production of up to
220 000 t/a of mixed nickel/cobalt hydroxide to be
processed at QNI’s Yabulu refinery in Queensland.
This will increase the annual production of nickel
and cobalt at the refinery by 45 000 t/a (140%) and
1400 t/a (70%) respectively. The feasibility study is
due to be completed by late 2003 and an investment
decision is currently forecast for late in the first
quarter 2004.
Expenditure: A$1.4b.
Employment: Construction: 1000; Operation: 300
OIL & GAS DEVELOPMENTS
Gorgon (Carnarvon Offshore Basin) - Gas
and Condensate Field
CHEVRON AUSTRALIA PTY. LTD.
The Gorgon Joint Venture is considering an LNG (up
to 10Mt/a) and Domgas development at Barrow
Island, based on the Gorgon natural gas resource. The
restricted use of Barrow Island has been approved, in
principle, by Cabinet after an evaluation of
environmental, social, economic and strategic aspects.
Gas reserves have been enhanced by positive results
from an exploration program in the West Gorgon area.
Development decisions by the Gorgon joint venturers
will be subject to market commitments.
Expenditure: A$6b.
Employment: Construction: 2900; Operation: 600
Macedon/Pyrenees (Carnarvon Offshore
Basin) - Oil/Gas Fields
BHP BILLITON PETROLEUM PTY LTD
These are two adjacent, but separate offshore
hydrocarbon fields within the West Muiron structure,
about 50 km north of Exmouth. The Macedon gas field
was discovered in 1992 by the West Muiron-3 well with
a follow-up appraisal campaign in 1994. The Pyrenees
oil and gas field was discovered in 1993. Development
of the Pyrenees heavy oil accumulation would likely
only proceed as part of a larger heavy oil project
undertaking. Macedon is under consideration for
domestic market opportunities.
Employment: Construction: 35; Operation: 5
North West Shelf - Project Expansion - 5th
LNG Train
WOODSIDE ENERGY LTD
Proposals by the NWS partners, for LNG Train 5 and a
second trunkline, and expansion of the Domgas plant,
received environmental approval in 1998 and 1999. The
LNG expansion is based on growing Asian energy
markets. In April 2001 the partners committed to
development of the A$1.6 billion LNG Train 4. Train 5
development is contingent on future market
conditions.
Expenditure: A$1.6b.
Scarborough (Carnarvon Offshore Basin) -
Gas Field
ESSO AUSTRALIA LTD
The field is located in 900 metres of water, 300 km
offshore in the Carnarvon Basin. Development will
depend on reserves proving up to 7 to 11 Tcf of gas.
Further evaluation work is being undertaken, but
currently there are no near-to-mid-term development
plans.
Scott Reef/Brecknock (Browse Basin) -
Gas Fields
WOODSIDE ENERGY LTD
In February 2001, recoverable reserves for the Scott
Reef/Brecknock project were upgraded to 20.49 Tcf of
gas and 311 million barrels of condensate after multidisciplinary
studies incorporating the results of drilling
at Brecknock South. The fields are considered
commercially viable in the future, but await firm
development plans dependent on significant growth in
domestic gas and LNG markets.
Tern/Petrel (Bonaparte Offshore Basin) -
Gas Field
SANTOS LIMITED
The offshore Petrel gas field, discovered in 1969, is
located about 250 km west of Darwin on the WA/NT
seabed border in the Bonaparte Basin. The offshore
Tern gas field, discovered in 1971, is located about 300
km west of Darwin in WA waters in the Bonaparte
Basin. Field development options include installation
of unmanned offshore production platforms with a
pipeline to a gas treatment plant south of Darwin. The
development possibilities for these fields have been
enhanced by recent significant discoveries by other
parties nearby, which may provide tie-in potential for
Petrel and Tern to service domestic gas customers. A
recently completed technical review will assist in
focusing in 2003 on commercialisation of the fields.
Whicher Range (Perth Onshore Basin) -
Gas Field
AMITY OIL NL
The Whicher Range gas field, located 21 km south of
Busselton, was discovered in 1968. The four wells
drilled to date have confirmed a significant-sized gas

field, but gas flow rates have been sub-commercial.
Recent work by Amity Oil to increase gas flow rates
from the extremely tight sands, including high
pressure injection of carbon dioxide, has increased
the possibility of commercial development. Under a
farm-in deal, announced in April 2003, Korea
National Oil Corporation and Seoul City Gas
Company Ltd will earn a 35% interest by committing
up to A$6.7 million for co-funding exploration
activities, including drilling of a new well (Whicher
Range-5) which is currently scheduled to start in
September. If a commercial gas flow is obtained, the
well would be completed for production.
PETROCHEMICALS/CHEMICALS
Barrow Island - Gas to Liquids Fuels
SASOL CHEVRON GLOBAL JOINT VENTURE
Sasol Chevron is considering Australia as a location
for a plant to produce environmentally clean diesel
fuel from natural gas. This gas-to-liquid fuels plant
would initially produce about 50 000 barrels a day of
synthetic liquid product. Future expansions would
provide up to 200 000 barrels a day to supply both
Australian and South East Asian markets with total
investments of AA$10 billion and utilising around 20
Tcf of gas over the 25-year design life. Possible
locations in the North West of Western Australia are
being investigated, including Barrow Island.
Expenditure: A$2b.
Employment: Construction: 2500; Operation: 200
Burrup Peninsula - Ammonia Urea Plant
DAMPIER NITROGEN
The Joint Venture between Agrium Inc of Canada,
Plenty River Corporation Ltd, Thiess Pty Ltd has been
terminated. Plenty River and Thiess have signed a
Cooperation Agreement to develop the AA$900
million ammonia and urea plant while Agrium is
looking to develop a separate project. Both
companies are seeking access to the site on the
Burrup Peninsula that had been set aside for an
ammonia/urea project. The plants being planned
would be world-scale and produce around 1.2 Mt/a
of granular urea and 100 000 t/a of ammonia. Urea
is widely used as a fertiliser, while ammonia is used
in fertilisers, explosives and as a chemical feedstock.
Expenditure: A$900m.
Employment: Construction: 1000; Operation: 130
Burrup Peninsula - Dimethyl Ether
Project
JAPAN DME LTD.
Japan DME Ltd, a joint venture of Japanese
companies comprising Mitsubishi Gas Chemical
Company, Itochu Corporation, Mitsubishi Heavy
Industries and JGC Corporation, plans to develop a
world-scale dimethyl-ether (DME) plant on the
Burrup Peninsula near Karratha. DME is used as an
aerosol propellant and is a likely future
environmentally clean fuel for the power generation
and transportation industries. The proposed plant
will produce methanol for conversion into 1.7 Mt/a
of DME from around 220 TJ/d natural gas. Detailed
feasibility studies are underway. The project was
granted Major Project Facilitation status by the
Federal Government. Environmental consultant,
Parsons Brinckerhoff (Aust) Pty Ltd, has
commenced work on obtaining environmental
approval for the project. A commitment to proceed
is expected in the latter half of 2003. Current
planning is for the plant to be operating by late
2006.
Expenditure: A$1b.
Employment: Construction: 1000; Operation: 150
PLATINUM GROUP METALS
Munni Munni - Platinum Deposit
HELIX RESOURCES NL
Helix Resources NL and UK-based Lonmin PLC, the
third largest PGM producer in the world,
announced a joint venture covering the Munni
Munni PGM deposit with Lonmin to provide AA$8
million in funding to October 2002 in return for 50%
equity in the project. At the end of September 2001,
the indicated resource was 9.2 Mt at 2.9 g/t combined
platinum, palladium, rhodium, and gold, 0.2% nickel,
and 0.3% copper. Preliminary mining studies
suggested a mining rate of combined open cut and
underground production of 1.5 Mt/a. The partners
reported in early 2003 that as a result of poor
exploration results and a decreased palladium price,
further activities had been postponed and Lonmin
subsequently withdrew from the joint venture.
RARE EARTHS
Mt Weld - Rare Earths Operations
LYNAS CORPORATION LTD
A feasibility study is to be completed in Q3 2003.
Lynas is planning to mine at an initial rate of 130 000
t/a ore, producing 33 000 t/a of rare earths
concentrate. In phase 1, the concentrate will be
exported to China for toll processing. Lynas will take
all products from the downstream processing for
marketing under the Rare Earths Direct “RED” Brand.
Lynas is also evaluating the feasibility of secondary
processing rare earths carbonate in Australia.
Expenditure: A$40m.
Employment: Construction: 100; Operation: 35
ZINC/COPPER
260 km north of Kalgoorlie - Jaguar - Base
Metal Deposit
PILBARA MINES LIMITED
Ongoing prefeasibility of Pilbara Mines Ltd’s Jaguar
base metal prospect, 54 km north of Leonora, has
indicated a resource of 1.72 million tonnes. The
development of the underground mine at a capital
cost of A$30–A$40 million is expected to have a 5 - 6
year mine life with possible start up date of October
2004.
Expenditure: A$35m.
Prospect December 2003–February 2004 35

As at December 2003
INSET B
u u
!
!
!
6
O
SEE INSET C
O
Chinook/Scindian
Griffin O
Yammaderry Crest
Saladin
Cowle Skate
Roller
Onslow
Tubridgi
!
Exeter Norfolk
Mutineer Pitcairn
Eaglehawk Egret ! Hermes
Searipple Lambert
Capella O
!
u O u Angel
Perseus
Cossack
North
Gaea
Wanaea
u Rankin
Legendre North
uu
Goodwyn
Echo/Yodel u u
Legendre Burrup Peninsula
N
Dixon/West Dixon
South @ Ammonia
N
N
N Iago/N Tryal Rocks
@ Ammonia-urea
N
u Desalination
u
N
@ Dimethyl Ether
N N
Wandoo !
@ Synthetic Fuels
u
u
LNG
Stag
@
@ Methanol
N
Cape Lambert
u
N
Dampier salt
Dampier
East Spar N
Karratha
!
Enfield Vincent
!
O
Laverda
!
!
!
!
N
I Middle Robe Mesas
I Robe Mesa J
O
Dockrell
; Tidepole
Urania
Jansz
;
Geryon
Reindeer
Wilcox
Maenad
Corvus
Orthrus
Caribou
Chrysaor/Dionysus
West Tryal Rocks
John Brookes
Gorgon
Spar
Woollybutt
Fortescue
I
Austeel DRI/HBI
K Munni Munni
South Chervil
!
Australind!
Pyrenees
N
Scafell N
Macedon CoasterO
I
OO Keast
!
O O
u
Goodwyn South/Pueblo;
n Radio Hill
s
I
Robe
Mesa A
I Bungaroo Creek
Perth-Dampier Natural Gas Pipeline
s Exmouth
Homestead I
Silver Grass I
Nammuldi I
Brockman No. 2 I
0 100 j Paulsens 200 km
Scarborough N
SEE INSET B
Lake MacLeodq
x Lake MacLeod
s
Carnarvon
Major Resource Development Projects: Western Australia
Port Hedland
s Port Hedland Salt
Boodarie HBI Y
I
q
y Hitec EMD
Yarrie
I
Whim Creek Cu
Wodgina t Panorama Zn Cu
Marandoo I I
Yandi/BHPB I Mt Nicholas
Tom Price I
Yandicoogina/HI
Mining Area C I Mindy Mindy
Hope Downs I IRhodes
Ridge
ParaburdooIWest
AngelasI
I
IEast
Angelas
Eastern Range II
Orebody 23 & 25
Channar
Giles MiniI
I
I
I
Mt Whaleback
Jimblebar
Mt Olympus
c Coobina
Plutonic
Fortnum
j
j
Horseshoe South r
Woodie Woodie r
Nifty Cu
Dinichthys
Gorgonichthys N
N
N
NN Titanichthys
Scott Reef Brewster
N Brecknock
N Brecknock South
Broomeq
j
jJundee/Nimary
Wiluna j
Big Bell j
Gidgee j
j Bronzewing/Mt McClure
Bulchina
jDarlot
Port Gregory
Hill 50
Agnew j
j
j Lawlers j
G
j
V Windimurra
Granny Smith –
q
Golden Grove Zn Cu
Tarmoolaj
Wallaby
Narngulu Synthetic
j
Geraldtonq
J Rutile
Sons of Gwaliaj
Mount Horner
j
Yardarino
Sunrise Dam
Nu
Dongara
TThree
N
Davyhurst
Springs
j
u m Eneabba
j Carosue Dam
jj
Kanowna Belle – Red Hill
j
Cooljarloo Koolyanobbing
m
I
jj
Super Pit
v Kalgoorlie Ni Smelter
j jJubilee
Marvel Loch – j
Southern Cross j
Yilgarn Star
jSt Ives
t Bald Hill
j Central Norseman
O'Sullivans?
?
Jangardup
m Manjiump
Mirambeena
Thunderbox
q
Bluebird–Meekatharra
Weld Range
Magellan PbZ
I Tallering Peak
Oakajee
j Kirkalocka
j
Z P
jMinjar
R
jMt Mulgine
I
Mt Ida Timoni j
Koolanooka
Cliff Head O
u
I
j
j
Mt Gibson
Paddington
j
j
Cornishman
j
Westonia j
j
q
OO Shark Bay s
m Coburn
I
Honeymoon Well n
Mt Keith
Yakabindie n
Cosmos n
Kwinana/Rockingham INSET A
q AIS Jetty
0 50km
a Alumina Refinery
@ BP Oil Refinery
C Cement and Lime Chandala
@ Chlor Alkali
J Synthetic
Rutile
@ Chemicals Neerabup
@ Fertilizers
1
Fused Alumina
Malaga Brick
@
Middle Swan Brick
@ Fused Zirconia
Midland Brick
Y HIsmelt
•PERTH
Caversham Tile
@ LPG
Nickel Refinery qFremantle
v
Power Station
Armadale Brick
8
Sodium Cyanide
Cardup Brick
@
J Titanium Pigment
@ Zirconia
Pinjarra
a8
ab
Huntly
Pinjarra Gallium
j
Boddington Au Cu
Leinster n
p Marshall Pool
p
Jaguar Whisper
p
Mt Weld
Murrin
I
Hovea
Blue Hills
Murrin
Dongara
Om
Jingemia
Beharra Springs/
Windarling Range
Comet Vale
North Beharra
I
Springs Woodada
Goongarrie n
Mt Jackson I
Cawse
EMD/HiTec y
Mt Pleasant
Kundana nBulong
Frogs Leg
Coolgardie
SEE INSET A
New Celebration
Long–Victor
Kambalda Concentrator
Nepean Beta Hunt
Spargoville
Armstrong
Miitel–Redross
PERTH•
Emily Ann – Maggie Hays
mWaroona
Kemerton
aWagerup
b
Saddleback
@ Chlor Alkali Kemerton
X Silicon Smelter 8 w
Titanium
m
J
aWorsley
JAustralind
Pigment
h 8 Collie
q Bunbury
m Ewington hPremier
Dardanup 1 Dardanup h Muja
Capel m 8
Capel Synthetic J m Gwindinup
Rutile
Tutunup
m
m Yoganup
Whicher Range
N
t Greenbushes
Forrestania
Scaddan
Rav 8
Ravensthorpe n
8
q
Esperance
1
m Jangardup South I Southdown
1 Albany
q
Z
q
Z
PILBARA
n
n
Wonnich
;
N
!
O
Little Sandy/Perdika/
!
O
u
Campbellu
EndymionuuSinbad
NUlidia
Bambra Linda
B Harriet C O uMonty
Varanus Island A
Josephine
Baker
N
INSET C
LeeN
Roseu
Rosette N.Gipsy!
Agincourt u Gipsy
! ! u
Alkimos/Tanami Gibson/S.Plato
/Simpson
@ GorgonN
Hoover Victoria
Barrow
Island
Barrow Island
n
n
n
n Black Swan
n
Koolan Island
Cockatoo Island I I
6 West Kimberley
j Telfer Au Cu
rAnt Hill
Maroochydore Cu Co
0 100 200 300 400
km
n
Z
n
Z
n
n
n n
n
n
n
Z
O Jabiru
O Challis
O
O
N
OliverN
Tenacious N Audacious
!
Maple N
Puffin Swan
Padthaway Talbot
NO Tahbilk
Montara
N
N Crux
N Point Torment
Derbyq Lloyd O Boundary
West Terrace O
Sundown O d Ellendale
Blina
Loxton Shoals
N
Troubador N
Bard N N
Sunrise
N Kelp Deep
Jahal
Laminaria East O
O Kuda Tasi Chudditch
!
N
Buffalo OO
Krill O Elang-Kakatua
N Hingkip
! Bayu-Undan
b Mitchell Plateau
N Tern
Blacktip N
Ord Stage 2-M2
6
Ord Stage 2-Mantinea Flats 6
6
Ord Stage 1
6
q Wyndham
Lake Argyle Hydro
Pillara Zn Pb
Z Kapok Zn Pb
Z
Argyle d
Sally Malay n
Panton Sill
RESOURCE SYMBOLS
Bauxite-Alumina
a Alumina refineries
b Mines and deposits
Chemicals / Petrochemicals / Petroleum
@ Processing plants / refineries
N Natural gas field
O Oil field
! Natural gas / oil field
u Natural gas / condensate field
; Natural gas / oil / condensate field
Chromite
c Mines and deposits
Clays
Brick / tile procesing plants
Coal
h Coal mines and deposits
? Lignite mines and deposits
Copper-Lead−Zinc
Z Mines and deposits
Diamonds
d Mines and deposits
Gold
j Mines and deposits
Gypsum
x Mines and deposits
Heavy mineral sands
m Mines and deposits — titanium-bearing sands
G Mines and deposits — garnet-bearing sands
J Ti02 pigment and synthetic rutile plants
Iron ore
I Mines and deposits
Y Downstream processing plants
Limestone−Limesand
4 Mines and Deposits
C Cement plants
Magnesite
p Mines and Deposits
Manganese ore
r Mines and deposits
y Downstream processing plants
Nickel
n Mines and deposits
v Smelters and refineries
Phosphate
P Mines and deposits
Platinoids
K Mines and deposits
Rare earth elements
R Mines and deposits
Salt
s Production facilities / pans
Silica − Silica Sand
w Mines and deposits
X Silicon smelters
Talc
T Mines and deposits
Tantalum
t Mines and deposits
Vanadium−Titanium
V Mines and deposits
NON-MINERAL PROJECTS
6 Irrigation/water schemes
q Major port handling facilities
8 Major power stations
1 Downstream timber processsing plant
Gas pipeline Proposed gas pipeline
OPERATING PROJECTS ARE SHOWN IN BLUE
POTENTIAL PROJECTS ARE SHOWN IN RED
PROJECTS ON CARE AND MAINTENANCE ARE
SHOWN IN PURPLE
n
KIMBERLEY
Western
Australia
N Petrel
Wingellina
n