Resource boom will stretch state to limit
by: Cameron England
From: The Advertiser
January 07, 2012 12:00AM
SOUTH Australia will need three new airports, use twice as much diesel and be forced to cope with four times the number of heavy trucks on the roads as $35 billion in mining projects start in the next decade.
The state will need three new airports, use twice as much diesel and be forced to cope with four times the number of heavy trucks on the roads as $35 billion in mining projects start in the next decade.
In an unprecedented surge in demand for resources, gas use is forecast to increase 20 times by 2014, while water and power use will quadruple.
The stunning figures are in a report commissioned by the State Government, which is now facing calls from the mining industry to help pay for the infrastructure - or risk the boom failing.
"If the Government's not prepared to take some sort of stake in key infrastructure - not everything, just some key ones - then I think half of the potential jobs out there associated with that infrastructure and mining could be either not realised at all or put off for several decades," warned South Australian Chamber of Mines and Energy chief executive Jason Kuchel.
The recommendations which came out of the 2011 Resources and Energy Infrastructure Demand Study have been given to the Government but are being kept confidential. The forecasts may be too conservative.
They are based on the potential development of the 24 most likely mining and energy projects in various stages of development - including Olympic Dam, worth an estimated $30 billion.
If all 42 potential projects are included, the total value rises to $59 billion.
Mr Kuchel said the Government needed to help finance or underwrite infrastructure such as ports to make the projects viable.
Many junior mining companies were aiming to set up small mines, and their ability to fund large infrastructure projects alone was almost non-existent.
"This is very clearly where the Government has to get its head around how does it break that deadlock - and it's not just about planning and co-ordinating," he said.
"It's very clear the Government is going to have to take a greater role than just purely relying on the private sector to provide infrastructure.
"That doesn't mean the government coughing up the whole lot.
"In many areas the government can be justified about putting in dollars, especially where those dollars would be less than the royalties that they would otherwise not see had they not made the investment."
The development of a bulk commodities port at Port Bonython just north of Whyalla has been stalled for the past few years, in part because of questions about who takes on the development risk.
Mr Kuchel said there would be another four or five iron-ore mines operating on the Eyre Peninsula today if that port had gone ahead.
Mr Kuchel said Treasurer Jack Snelling had given indications the Government was not averse to such investments if there was a good business case for it - a break from the approach of the Rann/Foley government which refused to co-invest in mining infrastructure.
A spokesman for Mineral Resources and Energy Minister Tom Koutsantonis said the Government was developing a white paper on the basis of the report's recommendations, which would be released in the first three months of the year.
Aside from ports, Adelaide Airport was expected to need an upgrade in the next decade and three new airports and one new helipad would need to be built in the State's upper north, to accommodate an increase in flights from 800 in 2013 to 1800 per year by 2021.
Adelaide Airport Limited managing director Mark Young said there were upgrades planned at the main terminal and the company would consider operating airports for third parties.
"Adelaide Airport Limited is considering a potential expansion of the main terminal, T1, by adding further air bridges and expanding the number of gates capable of catering for regional, domestic and international traffic," Mr Young said.
There was likely to be an increase of more than 50 million tonnes of rail freight and about three million tonnes of road freight per year, according to the report.
South Australian Freight Council chief executive Neil Murphy said the large forecast increase meant there would be many more b-double trucks and road trains on our roads.
"There will need to be an expansion of capacity on key roads leading to and from mines," Mr Murphy said.
"An increased number of passing lanes on roads with increased traffic, facilitating the interaction of freight with other road-users. Engineering improvements such as wider lanes, a better curve radius, improved lines of sight, et cetera, to facilitate access by larger vehicles."
Water also was a key issue.
"Water scarcity and the lack of information has created uncertainty for projects, and so they have stated that it could lead to unsustainable solutions, selecting less-preferred options or delays to their project while they sought new sources," the report said.
"The development of a desalination facility on the Eyre Peninsula for example could be considered to support planned mine developments by 2016 through further collaboration by industry stakeholders."
About 80 per cent of the water requirements were for non-potable water, with 45 per cent expected to come from groundwater and another 30 per cent from desalinated seawater.
The report noted most companies intended to ship minerals with a minimum of value-adding in SA.
"This presents an opportunity ... to further the potential socio-economic benefit to the state," it said.