Moranbah - Aussiehome

Transcription

Moranbah - Aussiehome
positive property report
positive property report
2013
2013
ISSUE 10
ISSUE 10
Moranbah:
NEW BOOM
FOR BOOM TOWN
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positive property report
ISSUE 10
2013
Introduction
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Contents
Moranbah – Queensland’s Number One Boom Town .................................................................................4
Key report findings .....................................................................................................................................................5
Queensland’s leading boom town ................................................................................................................................5
Macroeconomic investment story.................................................................................................................................6
Queensland’s Premier Mining Boom Town..................................................................................................7
$15.4bn in major infrastructure projects.....................................................................................................................11
One of Australia’s strongest economies and lowest sustained unemployment rates.......................................................12
Queensland’s Leading Boom Town............................................................................................................14
Floods, strikes and rental freezes are over..................................................................................................................16
Population level is “30 years ahead of its time”...........................................................................................................19
The Great Chinese Urbanisation ................................................................................................................21
Three phases of the commodities boom.....................................................................................................................25
Rising demand for coking and thermal coal................................................................................................................27
Miners - Australia’s “Wealthiest Workforce”............................................................................................29
Queensland Boom Continues.....................................................................................................................31
Queensland coal production could triple by 2020........................................................................................................32
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Moranbah – Queensland’s
Number One Boom Town
This report details the greatest boom town in Queensland – Moranbah – which
has been supercharged by its proximity to the largest number of active coal
mines in Australia and is posed for the biggest property boom in its history,
with $15bn in infrastructure projects planned (with $7.4bn of this approved or
under construction) within a 60km radius of the township.
Straining under a massive population explosion, led by an army of highly paid
fly-in/fly-out (‘FIFO’) workers, Moranbah has seen median rents rise a staggering
91% and median house values soar 34% over the last year according to Residex.
While recently battered by industrial strikes and a unique ‘rental freeze’ by a major
employer, the tide is turning as union action ends, three major projects have been
approved, and a population growth tsunami begins to hit this boom town.
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Key report findings:
Queensland’s leading boom town
1. Moranbah is the number one boom town of the Bowen Basin, directly servicing 14 mines within
60km of the township (more mines than any town in Australia) and has one of the largest number
of fly-in/fly-out (‘FIFO’) mining workers in Queensland;
2. $15bn in approved and proposed infrastructure projects assure the long term future of Moranbah,
with over $7bn in approved coking coal projects;
3. Moranbah has one of the strongest economies in Australia, with a median household
income more than double the national average and one of the lowest sustained
unemployment rates in Australia’s history, a three year low of a mere 1.1% (vs 5.6%
for Queensland) and only 150 unemployed people in the entire local council region;
Property prices have risen by an amazing 23% per annum
on average over the last 10 years and rents have risen by
over 1,000%, rivaling the gains of WA boom towns such
as Port Hedland and Newman.
4. Union strikes, a flood of rentals and a rental freeze have created havoc in the town’s
property market but these forces are beginning to unwind, paving the way for the next major
boom for Moranbah;
5. A population 30-years ahead of its time and forecast to boom by 47% by 2018 is likely to assure
the continued prosperity of the Moranbah property market, with some 265 dwellings required
each and every year over the five years to 2018.
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Macroeconomic investment story
1. Global demand for coal is underpinned by the greatest economic event in the world’s history –
the urbanisation of China and the emerging world, which will drive unprecedented demand for
coking coal (for steel production);
2. The commodities boom is actually a three phase, sequential boom in prices then investment and
finally volumes. While the first phase may have seen prices peak, the largest creator of new jobs
is the investment phase and we are only one third of the way through this phase of the boom;
3. Chinese demand for steel is to double by 2025, which is forecast to drive global imports of
coking coal by 80% in the same time (with the Bowen Basin in Queensland being one of the
world’s leading coking coal sources);
The mining industry – on average – pays its workers
100% more than the average Australian wage and the
peak construction workforce for Queensland mining
infrastructure projects is not expected until 2015.
4. The boom in Queensland major projects is far from over and the total number of
construction workers isn’t expected to peak until at least 2015;
5. The rapid expansion of coal mining in the Bowen Basin will potentially see a 100% increase in
coal production between 2012 and 2020, principally driven by coking coal mining.
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Queensland’s Premier
Mining Boom Town
One of the ‘youngest’ towns in Queensland, Moranbah (population: 13,575)
was specifically created for miners and their families around 40 years ago.
The town services 14 operating mines, including the large Peak Downs, Goonyella
Riverside, Broadmeadows and Moranbah North mines and has had a soaring
economy since the start of the commodities boom.
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Over the years, Moranbah has significantly grown and developed (and now boasts plenty of modern
facilities, including shopping facilities, childcare, a library, public swimming pool and sporting
grounds), it is distinguished amongst Australian mining boom towns by the fact this Bowen Basin
coal mining town has more operating mines within an approximate 60km radius than anywhere else
in the nation – if not the world.
Map 1: Bowen Basin
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Image: BMA, Metallurgical Coal
Moranbah is also one of the leading FIFO townships in Australia and has been a focal point for a 2012
Federal Parliament Special Committee on the effect FIFO workers have on mining towns. Specifically, the
recent approval of four separate billion dollar mining projects has seen FIFO numbers surge by over 63%
in the last year to 4,585 workers – the highest number of FIFO workers in the Bowen Basin and one of
the largest in Queensland.
While there are many affects FIFO workers bring to mining towns, the most prominent is severe rental
shortages and skyrocketing rents. Indeed, rents until recently hit $3,000/week and median house values
have risen a staggering 59% in the last two years.
One of the Leading FIFO Townships in Australia
4,585
$3,000
59%
‘Fly-in-fly-out’
(FIFO) Workers
Weekly Rental
Value
Increase Rate of
Medium House
Values
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Image: BMA Billboard
The surge in FIFO workers has also been reflected in the massive growth in airline passenger numbers.
Built in 2003 and operated by BHP Billiton Mitsubishi Alliance (‘BMA’), who own the majority of mines
around the town, the capacity of the Moranbah Airport was exceeded by the commodities boom by almost
15,000 passengers a year.
Consequently in 2010, BMA spent $46m to make major upgrades to the airport and progressively
expanding its capacity until completion in June 2012. This facilitated an immediate and breathtaking
800% surge in passenger numbers (virtually all FIFO workers) from 14,800 in 2010 to 119,000 by 2012
(representing some 60 flights a week).
Chart 1: Moranbah Airport Passenger Numbers
Source: Federal Bureau of Infrastructure, Transport and Regional Economies
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$15.4bn in major infrastructure projects
The importance of Moranbah to the Bowen Basin region is underscored by the 14 major coking and
pulverized coal injection (both used to produce steel) projects all located within 60km of the township.
These projects, in addition to a major liquefied natural gas (‘LNG’) pipeline project, have an impressive
value of over $15.4bn – equivalent to $1.1m per person in this town of 13,575 people!
Project
Proponent
Location
Commodity
Status
Cap Ex, $m
Peak
Workforce
Operational
Workforce
Red Hill
BMA
30km N of
Moranbah
Coking Coal
Feasibility
2,200
3,000
1,500
Caval Ridge
BMA
SE of Moranbah
Coking Coal
Approved
1,870
Grosvenor
Underground
Anglo America
8km N of
Moranbah
Coking Coal
Approved
1,650
400
380
Daunia
BMA
25km SE of
Moranbah
Coking Coal
Approved
1,553
1,000
450
Moranbah South
Anglo Coal/Exxaro
4km S of
Moranbah
Coking Coal
Pre-Feasibility
1,500
1,200
650
Eagle Downs
Aquila Resources/Vale
25km SE of
Moranbah
Coking Coal
Approved
1,254
Arrow Bowen Pipeline
Arrow Energy
Moranbah to
Gladstone
LNG
Feasibilty
1,000
650
Broadmeadow
BMA
30kn N of
Moranbah
Coking Coal
Approved
874
650
Eaglefield
Peabody Energy
36km N of
Moranbah
Coking Coal
Feasibilty
700
650
120
Talwood Coking Coal
Aquila Resources
40km N of
Moranbah
Thermal/PCI
Pre-Feasibilty
700
400
300
Codrilla
Peabody Energy
62km SE of
Moranbah
PCI
Feasibilty
500
Winchester South
Rio Tinto
40km S of
Moranbah
Thermal and
Coking Coal
Pre-Feasibilty
500
Grosvenor Phase 2
Anglo America
8km N of
Moranbah
Coking Coal
Pre-Feasibilty
500
New Lenton
New Hope Coal
20km E of
Moranbah
Coking Coal
Pre-Feasibility
400
Millennium
Peabody Energy
22km E of
Moranbah
Coking Coal
Approved
270
160
320
15,471
8,110
4,120
Total = 15 Projects
400
Table 1: Major Infrastructure Projects – Approved and Planned, Moranbah, $bn
Source: BREE, QLD Dept of Natural Resources & Mines, Omega Investments
Combined with the existing 14 operating mine sites around Moranbah, this tight concentration of projects
has been the driver of one of the strongest regional economies in Australia – rivaled only by the Pilbara
region of Western Australia.
Further, the 15 projects proposed in the Moranbah area are expected to bring in a peak workforce of over
8,100 construction workers that is set to guarantee the economic future of the region for the next decade.
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One of Australia’s strongest economies
and lowest sustained unemployment rates
Moranbah is located in one of the strongest economies in Australia, the Isaac Regional Council,
which had a median household income of $2,778/week in 2011 - more than twice the national
average of $1,234 per week and the fifth highest in Australia after South Hedland, Port Hedland,
Newman, Karratha, and Forest (ACT; which tops out at $2,935/week).
With a Gross Regional Product (‘GRP’) of over $7bn for each of the last four years (nearly three
times the economy’s value in 2001), the region has proved very resilient despite a pullback following
the global financial crisis - a fact evidenced by a persistent unemployment rate of 1.5% and the
number of unemployed being a mere 150 people.
Moranbah tops the latest list of 40 localities with
the highest rental yields for houses, according
to information provided by RP Data. Queensland
localities top the list, with 18 suburbs.
Nicole Trotman
Property Observer
Chart 2: Gross Regional Product – Isaac Regional Council, $m
Source: National Institute of Economic and Industr y Research ( NIEIR) @2011. Please note that NIEIR modeled estimates are subject to change and review for the most
recent t wo financial years. Modeled data – All $ values are represented in constant 2008-09 year dollars
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Chart 3: Unemployment Rate – Isaac Regional Council vs Queensland
Source: Australian Bureau of Statistics. Labour force sur vey catalogue number 6202.0 and DEE W R. Small Area Labour Markets – Australia
Chart 4: Number of Unemployed – Isaac Regional Council
Source: Australian Bureau of Statistics. Labour force sur vey catalogue number 6202.0 and DEE W R. Small Area Labour Markets – Australia
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Queensland’s Leading Boom Town
In many ways, Moranbah shares the characteristics of the mighty inland iron ore
boom town of Newman in the Pilbara region of Western Australia. Surrounded
by numerous mines and extremely limited (until recently) in its supply of rental
properties, Moranbah has experienced two major property booms. These two
booms have contributed to an average annual growth rate of 23% in the decade
to 2012 and over a 1,000% increase in median rents from $170/week in 2002 to
a whopping $1,710/week in 2012.
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The first occurred at the start of the commodities boom (2002-2006), when median house values
soared by a staggering average of 37% per annum and peaked at an amazing 57% increase in value
during 2005. While this first boom moderated in 2008 due to the global financial crisis, unlike the
vast majority of property markets around Australia (and similarly to iron ore boom towns, Newman
and Port Hedland in Western Australia), growth remained positive at between 5-7%.
The second boom began in 2011 and coincided with the approval of major infrastructure projects
and near tripling of rents over the two years to 2012, with median rents rising from $650/week to
$1,710/week and median house values rising 18% in 2011 and an impressive 35% in 2012 (year
ending September 2012).
Indeed, according to the Queensland Rental Bond Authority (‘RTA’), median rentals for four bedroom
houses hit $2,600/week in March 2012 – up from $1,100/week in March 2011.
.
Chart 5: Median House Value and Annual Growth Rate - Moranbah
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Floods, strikes and rental freezes are over
While Moranbah has experienced the highs of the commodities boom, there is no denying that 2012
was a very tough year for the township – despite phenomenal growth.
A succession of Queensland floods impacting mines in the Bowen Basin
coupled with nearly two years of prolonged industrial strike action by
mining unions led BMA to strategically impose a rental freeze on all
accommodation in Moranbah.
Faced with falling production due to the floods and strikes, BMA’s decision to declare a rental freeze
at a time of softening demand for new workings in Moranbah was a master stroke.
This rental strike was compounded by reverse ‘sea change’ by long term locals living in Moranbah,
which saw some 200 local owner occupiers sell into the market and move to the ‘beach’ in locations
such as the Sunshine Coast, Whitsundays, Cairns and the Gold Coast. This ‘mass’ selling by locals
saw some 200 homes converted into rental properties and having the combined effect of doubling
the vacancy rate every three months.
Finally, after many years of delays, the production of new dwellings picked up in late 2011 and
numerous new dwellings were delivered for investors and released into the rental market.
Today, the rental market is still working through these issues, with vacancy rates having hit an alltime high of 8% and four bedroom rentals have eased from $2,600/week in March 2012 to $1,450/
week in September 2012 according to the latest RTA data.
SEP 08
M A R 09
SEP 09
M A R 10
SEP 10
M A R 11
SEP 11
M A R 12
SEP/OCT 12
Chart 6: Vacancy rates - Moranbah
Source: QLD RTA
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However, the
these events,
projects have
of 2012 that
worst now appears to have passed. While Moranbah has been impacted by
the fundamentals of 14 operating mines and more than $7bn in approved
not changed. Rather, several positive events have occurred in the last quarter
have set Moranbah for a continuation of the market’s property boom, being:
1. Lucrative pay rises for miners
A landmark enterprise bargaining agreement (‘EBA’) that was finally agreed upon between
union and BMA in October 2012, ending two years of prolonged strikes that had also led to
the closing of two BMA operated coal mines (neither in the Moranbah vicinity). The EBA will
deliver a pay rise of 15% and lift annual superannuation contributions to 12% (up from 9%),
with productivity bonuses of up to $15k pa.
Not only are the majority of workers happy with the three year EBA outcome, they are much
more highly paid (many miners now earning up to $150,000 per annum) and therefore this
will have a strong positive effect on the rental markets in the Bowen Basin. Further, the EBA
essentially guarantees industrial ‘calm’ for the next three years and also includes provisions
for more ‘family-friendly’ rosters that will enable them to live locally.
Chart 7: BMA QLD Coal Production, Mtpa
Source: BH P Billiton
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2. 50% increase in coal production announced by
major employer BMA
BMA has announced that they expect their coking coal production from the Bowen Basin to
increase 50% by 2015 now that the industrial action has ended. BMA has also confirmed that
water logged mines are becoming fully operational again and this will contribute to the rapid
rise in production.
3. Rental freeze lifting
BMA has commenced renting in the market again, signaling their acknowledgment that the
three BMA approved projects ($1.87bn Caval Ridge mine, $1.55bn Daunia mine and $0.87bn
Broadmeadow expansion) are bringing a rapid influx of workers back into town.
3 BMA Approved Projects
Caval Ridge mine
Daunia mine
Broadmeadow
expansion
$1.87b
$1.55b
$0.87b
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Population level is “30 years ahead of its time”
According to the KPMG report Redefining Regional Planning: Managing Change, Measuring Growth
(‘KPMG Report’) released in Dec-11, the Isaac Regional Council has approximately 23,030 residents
and a staggering 19,800 or so FIFO or drive-in/drive-out (DIDO) workers. This growth was enough to
make the Isaac Regional Council the fifth fastest growing local government area in Australia during
2011.
Consequently, previous State Government planning for a population of 43,080 by 2042 has been
completely blown out of the water by 30 years due to the 2011 population of some 42,830 people.
This has naturally placed a huge stress on local infrastructure (eg. hospitals, schools etc.) as well
as being the key reason for the huge boom in rentals and house values.
Chart 8: Population – Isaac Regional Council
Source: K PMG
KPMG
2012.
2050!
actual
then predicted a further jump of 10,000 in the non-residential population (eg. FIFO/DIFO) in
This would have a population well over 50,000 that would have exceeded the forecasts for
However, as previously noted the combination of floods and industrial action has stymied
growth in 2012.
Based on the 2011 census, the Queensland Department of Treasury and Trade (the ‘Department’)
have revised their 2012 population estimates significantly upwards for the Isaac Regional Council
to 40,850 – inclusive of 17,125 FIFO/DIDO workers. This is well shy of the KPMG forecast of over
50,000 by 2012 but still represents an upward revision of the region’s population by an amazing
17,000 or more people.
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Interestingly, the Department also released the latest population figures for Moranbah, indicating its
population had reached 13,585 – a stunning 43% rise since the 2006 census population of 9,526 –
which is comprised of a residential population of 8,990 and FIFO/DIDO population of 4,585 workers.
More interestingly is the revised population forecasts for Moranbah. The population is expected to
soar by over 47% in the next five years and is expected to reach 19,910 people by 2018. This rise
will be predominantly driven by the influx of highly paid FIFO/DIDO workers.
While these new FIFO/DIDO workers will be predominantly housed in large workers accommodation
villages (or ‘WAVs’), not every worker will be a single man willing to live in glorified caravan camps.
Hundreds of existing FIFO/DIDO workers will choose to bring their families to Moranbah and live
in rental accommodation to commute to the nearby mines or live as DIDO workers to other Bowen
Basin mines further afield.
Further, the residential population is expected to surge 37% or 3,320 people to 12,310 by 2018.
Assuming an average household of 2.5 people, this equates to a demand for 1,328 new dwellings
or some 265 dwellings each and every year between 2013 and 2018.
The demand for new dwellings will naturally act as a strong catalyst for future rental and median
house value gains.
Chart 9: Population – Moranbah
Source: A B S 3218.0, Regional Population Grow th, Australia, 2009-10; OESR, Sur vey of Accommodation Providers, 2006-2010; OESR, 2011
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The Great Chinese Urbanisation
The global economy is expected to grow by around $50 trillion US dollars by
2025 – essentially meaning the economy will double in size over the next
two decades. Across this period, the primary driving force fueling the global
economy will be urbanisation.
Like industrialisation before it, urbanisation is producing a tidal wave of
economic growth and driving the booming commodities industry.
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The global trend of urbanisation is significantly contributing to the increase in demand for resources,
while new forces in the global economy – namely China, India, South Korea and Indonesia – are all
on a path of development and growth that is seeing their need for steel, coal and LNG soar.
Leading this growth is China, a country that is urbanising so fast, forecast to see its economy grow
by a breathtaking 150% between 2011 and 2025. That’s triple the growth rate of the United States
and the Europe Union according to recent analysis by the world’s largest economics organisation,
Global Insight!
GDP per capita
Chart 13: GDP Change Between 2011 and 2025 (2005 real PPP US$ trillion)
The dramatic impact of industrialisation and urbanisation in China is visually best demonstrated by
the growth and change of Shanghai, China’s largest and most modern city over the last 20 years.
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Photo: Shanghai City – 20 years ago and today
According to the United Nations, about 60% of the world’s population will be living in urban centres by
2030, compared to 34% in 1960, and 52% today. Leading the charge is China, which is experiencing
mass migration from rural farmlands to urban centres. It’s believed that almost 255m people will
move to China’s urban regions over the next 15 years, stimulating the creation of 37 cities about
the size of Perth over the next decade or so. China is also a major player in coal consumption and is
experiencing strong demand for energy (thermal coal) and steel production (coking coal).
Chart 11: Major Chinese Cities
Source: BH P Billiton
Note: Tier 1 = 5.0m+ people, Tier 2 = 1.7m to 5.0m, Tier 3 = 1.7m to 5.0m ( but lower nominal G DP/capita than Tier 2)
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Over the next 20 years, the world’s
rural population is forecast to stay
constant at around three billion.
However, the United Nations’
Department of Economic and
Social Affairs predicts that the
number of people living in urban
regions will increase significantly.
In fact, it’s expected to increase
by around one billion people in
just two decades – a whopping
28% increase in the world’s urban
(high commodity consuming)
population.
While much has been made of
the ‘slow down’ of growth in
China, Chinese growth has been
Chart 15: Global Urbanisation (billion people)
written-off time and time again
Source: United Nations (Population Division, Department of Economic and Social Affairs)
over the last decade. In fact,
over the last ten years China
has proved consensus economic
forecasts wrong nine times out of ten – with Chinese growth far outperforming forecasts.
The reality is that China is much stronger economically than its critics claim and has many times
the capacity to stimulate its economy than the US or Europe. Indeed, in September 2012, China
launched a US$150bn stimulus program to build infrastructure projects across 18 of its cities.
During the GFC, it launched an even larger US$500bn stimulus program that drove commodity
demand through the roof.
Unlike US stimulus spending that
ends up on Wall Street and the
casino speculation of its investment
bankers, Chinese stimulus packages
actually build ‘real’ things – things
that require immense amount of
coking coal (for steel making),
thermal coal and LNG (both for
electricity production).
Chart 13: Chinese GDP Growth Forecasts (annual average)
Source: A B S; CEIC; Consensus Economics; RBA
* * As at Januar y of first forecast year
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Three phases of the commodities boom
As iron ore and coal prices began decreasing in 2012, the newspapers couldn’t jump on the story
quick enough. “The commodities boom is over!” they declared. “The mining boom is done and dusted!”
While it’s true that commodity prices did retract, the reality of the situation is that the commodities
boom is anything but over. In fact, it has barely begun. Mainstream media may be peddling fear
with their reporting on a fall in Chinese growth, but the facts and figures present a different story.
While China’s growth is slowing, it is still traveling strongly at 8%, despite troubles in Europe and
the US. The reality is that China has become so big that it cannot grow as fast as it may have once
done, however this does not mean that it will produce smaller waves. The vast Chinese economy will
continue to bring waves of prosperity to Australia for years to come.
China’s growth is doing anything but stalling, Federal Treasurer Wayne Swan has said:
China is now 40% larger than in 2008, so its growth rate
can be 20% lower for it to make the same contribution
to global GDP growth.
We are only part of the way through the current mining boom, which can be characterised as three
overlapping phases: a boom in prices, then investment, and then in exports.”
While Mr Swan says we have passed the peak in prices, the second and third phases still have a way to run.
“In the 2012 June quarter, business investment as a per cent of GDP reached its highest point in 40
years at 17.1%, and we expect it to rise further over the next year or so,” Mr Swan adds.
The Federal Treasurer is not alone in his thinking, with Professor Quentin Grafton, Chief Economist
of the Federal Government’s Bureau of Resources and Energy Economics (‘BREE’) telling attendees
at the 2012 Australian National Conference on Resources and Energy:
The investment phase began before the 2011 price peak and has yet to reach its maximum.
Projects that have passed final approvals and final investment decisions currently
amount to over $260bn – more than two and a half times that spent since the
commodities boom commenced.
Therefore, even if there were to be no new additions to the Major Projects list, Australia is still only
about a third of the way (in value terms) through the investment phase of the boom.
“There’s about $260 billion investments on the books… which indicates there’s a large pipeline of
investment underway in Australia,” Professor Grafton adds.
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400% 5
Increase of Commodity
Prices Since 2003
600%5
Approved Infrastructure
Project Spending
This will drive export volumes in 2017 to levels
that are 250% higher than when the boom started.
“We’ll expect a very large increase in volume over the next decade, and that volume increase will
leave at a higher level than we were before the boom. So in other words, we’ll have prosperity in
the context of much higher volumes for some time to come, even though prices will eventually, and
already are, moderating.”
JP Morgan Australia chief economist Stephen Walters says that although “the first phase of the
mining boom – the sustained rise in commodity prices that boosted growth in national income – has
probably ended, the mining boom in itself is not over”.
He confirms that across the country, “resources firms plan to spend another $120 billion by June 2013”.
Chart 14: Phases of the Australian Mining Boom
Source: BR EE; A B S
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Rising demand for coking and thermal coal
Demand for coking coal to soar 80% by 2025
The urbanisation of China - and other developing countries such as India, South Korea, Malaysia and
Indonesia – is creating an immense thirst for coking coal for steel manufacturing and thermal coal
for the generation of electricity.
Specifically, the production of steel in China alone is currently nearly equal to the rest of the world
combined at a staggering 650Mt per year. With 37 new cities being built in China alone over the next
15 years it is expected that its steel production will reach a mammoth 1.1bn Mt by 2025.
Chart 15: Global steel production
Source: CEIC; World Steel Association
This demand for steel is forecast by the global commodities research and consultancy firm, Wood
McKenzie, to translate into a lift in coking coal imports by 80% from 250Mt per annum in 2011 to
nearly 450Mt per annum by 2020.
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Chart 16: Annual seaborne coking coal demand (million tonnes)
Source: IE A, Macquarie Bank
Demand for thermal coal also to rise 30% by 2030
Rising energy demand – particularly from China – will also see approximately a 30% increase
in thermal coal seaborne demand globally according to Wood Mackenzie.
Chart 17: Seaborne thermal coal demand
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positive property report
Miners - Australia’s
“wealthiest workforce”
No other industry has impacted the Australian economy more than the mining
industry over the past 10 years. Ever since the resources boom in early 2000,
Australia’s mining industry has been at the forefront of wage growth in Australia.
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This is because soaring global demand for commodities has ensured that mining workers remain
in demand. As the mining sector has increased production, it has raised its employment levels and
(especially) wages to attract new workers. Particularly for workers going to high demand areas like
Moranbah in the Bowen Basin.
Significantly, after two years of bitter strike action, a new Oct-12 EBA
reached between BMA and mining workers in the Bowen Basin allowed for
bonuses of up to $15,000 a year, guaranteed 5.0% pa pay rises for three years,
minimum ‘basic’ wage of $84,000 before overtime, 3% rise in superannuation
contributions to 12%, $75/hour overtime, and top mining wages $139,000
rising to $153,000 by 2014.
Furthermore, a recent report by Suncorp Bank found that miners are the new elite of Australia’s
workforce – out-earning all other industries by an average of $60,000 per year.
In an industry where overtime is common, these ‘fluoro’ collared workers, alongside their blue
collared brothers, have overtaken their white collar counterparts in the wages war. Among them, the
FIFO miners are now amongst the highest paid workers in Australia.
It’s no wonder then that, according to a study by Commonwealth Bank, the largest wage increases
in Australia were in the mining sector at +5.2% over the year to June 2012.
Chart 18: Average Wages by Industry, 2012
Source: Suncorp Bank Wages Repor t 2012
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Queensland Boom Continues
Queensland’s world-class coal mines and infrastructure make it the Australian
coal capital. Electrified rail links from the coal fields allow efficient production
and transport of coal to destinations around the world, totaling some 230Mt of
export annually – worth a staggering $29.04bn in 2011.
The number of construction workers required for major projects valued at
$100m+ will continue to climb in the short term, according to the Queensland
Major Contractors Association (QMCA), up from 6,400 in 2012, peaking at more
than 19,000 in 2015.
And while some media pundits talk about a mining slowdown, on the ground in
Queensland, activity couldn’t be higher. Mining giants such as BHPB, Vale and
Peabody are advancing major projects, including the $1.7 billion Grosvenor coal
mine Anglo American commenced in July 2012 less than 20km from Moranbah
and the $1.8bn BHPB Caval Ridge mine 15km to the south of Moranbah.
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Thousands
These are not signs of a commodities slow-down – but rather, signals that the industry is growing
and expected to continue its upward trend for decades to come.
Chart 19: QLD Major Projects – Construction Workforce ( Thousands)
Source: BIS Shrapnel, A B S Data QMCA
Queensland coal production could triple by 2020, with coking
coal production to rise 100%
In 2011, sale-able exports of coal mined in Queensland (not all coal exported is classed as sale-able)
totaled 162.5Mt, and was principally comprised of coking coal (116.3Mt) produced in Queensland’s
Bowen Basin. Thermal coal is predominantly exported from the Port of Newcastle in New South Wales.
According to the Queensland Resources Council, following a modest 50% growth in coal production
over the previous eight years, the large scale expansion of mines in the Bowen Basin will see
production increase by 100% by 2020.
Chart 20: Queensland Coal Production – Mtpa
Source: A B S, DEEDI, QRC sur vey results. Note: P = projections based on QRC sur vey results
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Biographies
Crawford Property Group
Ryan Crawford has been involved in the property investment
industry for over 10 years, making the transition from successful
investor to real estate professional. Developed in 2008 Crawford
Property Group was created to provide an innovative solution to
real estate investing in the Pilbara and Australia-wide. With their
core focus on positive investment property and wealth creation,
Crawford Property Group has fast become the network of choice when
choosing to invest in positive property. From the dynamic website to
their smart investor list, Crawford Property Group are dedicated to
providing the most up to date information and properties in positively
geared hotspots Australia-wide. Ryan is a firm believer in the positive
power of real estate investing and offers his service and advice
as a seasoned investor, with a sizable portfolio in the Pilbara and
throughout the state. Ryan is the CEO of the Crawford Property Group.
www.crawfordpropertygroup.com.au
Flynn De Freitas is the Principal of Omega Investments and one
of Australia’s leading infrastructure spotting specialist. He has
extensive experience researching and working on major residential
subdivisions in Australia’s hottest areas and, as a result, he offers a
unique insider’s perspective on boom town property markets.
Omega Investments focuses on “infrastructure spotting”, rather than
property hot spotting: that is, investment in high yield, high growth
residential properties located in regional boom towns of Australia
with a major impending or commenced infrastructure project.
An active and successful residential property investor specialising in
infrastructure towns, Flynn is a former investment banker with USbased Merrill Lynch and management consultant for the international
consultancy McKinsey & Company. He has also worked extensively in
the Australian retail banking industry.
He has also spent four years working for a private property
developer, focusing on mining town developments. This experience
has helped him develop his extensive knowledge and understanding
of towns exposed to the commodities boom.
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Visit us at: www.crawfordpropertygroup.com.au