Brisbane Economic Series Issue 5

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Australia’s growing energy and resources sector is the focus of this edition. Dr Geoff Dickie, Queensland Exploration Council, Mark Ingham and Ben Hensman, Deloitte Access Economics, Keira Brennan, Clayton Utz and Ben Willis, Fragomen discuss topics including international skills sourcing, the past and future of minerals exploration, the emergence of Queensland’s world-leading LNG sector, and the delivery of common user infrastructure.

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Brisbane Economic Series Issue 5

  1. 1. brisbaneeconomicseriesissue five: oct 2012energy and resources
  2. 2. foreword Welcome to the fifth edition of the Brisbane Economic Series, a bi-monthly publicationproviding insights into the city’s business, investment and growth opportunities. Australia’s energy and resources sector and how Brisbane can maximise the economicopportunities it brings to our city will be the focus of this edition. We are fortunate to gain insights from industry leaders Mark Ingham and BenHensmann, Geoff Dickie, Keira Brennan and Ben Willis. Brisbane’s economy is worth $114 billion, of which $25 billion is generated from theresource industry. Leveraging this industry and building Brisbane’s capacity and reputation as Australia’snew world city and a leading global resource hub is one of my key priorities. In my latest Economic Development Plan, I have outlined a number of initiativesto ensure Brisbane remains a competitive global resource hub, attracting talent andinvestment from this sector. I have committed to ensuring Council and Brisbane’s economic development agencyBrisbane Marketing are actively focussed on growing Brisbane’s reputation in this industry. Some initiatives I have endorsed include the planning and delivery of infrastructure tomeet projected population growth; ensuring Brisbane has the capacity to be a global fly-in-fly-out hub; and proactively encouraging resource companies to choose Brisbane for futureinvestment, head offices and procurement of goods and services. Brisbane is headquarters to some of the world’s leading mining and energy companies,in fact 170 mining companies are currently based in Greater Brisbane, supporting manyother sectors including professional services and technology. This cluster of mining and energy headquarters represents almost two thirds of thesector in resource-rich Queensland, and underpins the demands of much of Australia andmany parts of the world. Now more than ever the City must harness the major opportunities this sector presentsfor the future growth of our economy.Graham QuirkLord Mayor of Brisbane2 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  3. 3. Issue five 05 07 Queensland’s emergence as a world-leading LNG exporter brings With ever-advancing technology both opportunities and challenges for Brisbane. and an entrepreneurial spirit, mineral explorers will continue Mark Ingham to be rewarded by Queensland’s Partner, Deloitte Access Economics rich lands. Ben Hensman Analyst, Deloitte Access Economics Dr Geoff Dickie Chairman, Queensl and E xplor ation Council3 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES A C K N O W L E D G E M E N T S // C R E D I T S CONTENTS
  4. 4. Issue five 11 14 Common user infrastructure International recruitment in agreements can deliver Queensland’s LNG sector to significant advantages if risks leave strong economic legacy. are managed. Ben Willis Keira Brennan Pr actice Le ader and Special Counsel , Fr agomen Partner, Cl ay ton Utz4 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES A C K N O W L E D G E M E N T S // C R E D I T S CONTENTS
  5. 5. Queensland’s emergence as Despite the patchwork nature of the Queensland Between 2015 and 2035, the expansion of the gas economy, development expenditure in resources has kept industry is projected to boost Queensland’s real grossa world-leading LNG exporter the state’s economy in positive territory this year, bringing state product by approximately $320 billion (AUD). A key both challenges and opportunities. While demand advantage enjoyed by Australia-based LNG exporters isbrings both opportunities and concerns are likely to be prevalent over the short- to the proximity to Asia: shipping costs are usually lower,challenges for Brisbane. medium-term, the longer-term trend of energy demand particularly compared to the Middle East and the eastern and industrial transition remains in place, particularly seaboard of the United States. for the economies of India and China. These forces have The four large Queensland CSG-to-LNG plants inMark Ingham seen commodity prices rise to unprecedented levels Gladstone represent approximately US$78.9 billion inPartner, Deloitte Access Economics in recent years, leading to an equally unprecedented capital expenditure. With a backdrop of increased long supply response from market players, particularly in term demand from Asia, these projects do face severalBen Hensman the coal and LNG space. However, construction-related issues including regulatory delays, feed-in gas supply,Analyst, Deloitte Access Economics commodities demand is now predicted to grow at a cost increases and negative public perceptions around slower rate than in recent years. CSG drilling. An additional challenge is the emergence The Australian Bureau for Resources and Energy of immense domestic gas supply in the United States, Economics has forecast annual demand for metallurgical which provides the potential for that country to become a coal, thermal coal and gas to grow 2.6%, 3.6% and 1.4%, net exporter of LNG. However, domestic demand for CSG respectively to 2025, leading to large, long-life projects in as a clean fuel source will also drive growth, particularly Queensland’s key coal and gas basins. The Galilee Basin for smaller players with less exposure to the CSG-LNG has received particular attention, due to the sheer size of the export market. CSG is likely to become the fuel of choice proposed projects for the area, as well as the investment for domestic energy generation, particularly for the required in infrastructure to bring the product to port. traditionally coal-dependent eastern seaboard.5 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  6. 6. It has been suggested that natural gas as a fuel sourcefor power generation will play a role in achieving the CSG is likely to become the fuelAustralian Government’s clean energy target of a fivepercent cut in carbon emissions from 2000 levels by of choice for domestic energy2020, and an 80 percent cut by 2050. generation, particularly for the Despite slowing growth in the resources sector, traditionally coal-dependentengineering and construction services will continue tobe required. The beneficiaries will be Brisbane-based eastern seaboard.professional and financial services firms, particularlygiven the presence in Brisbane of the head offices ofmany resources firms. In addition to costing, feasibilityand legal assistance, resources firms will likely requireassistance in developing a response to increasing projectcosts, especially due to international competition, thestrong Australian dollar and lower commodity prices.Given the State’s importance to the seaborne coalindustry, Brisbane has become a global resources hub;this global significance has been recognised through the Cost increases, and events such as the scaling For more information on the Queensland economy,choice of Brisbane as host of the next G-20 Summit. back of the Abbot Point coal port expansion to fit the please visit www.deloitte.com/au/queensland_index, When discussing the economic strength of new growth profile will continue to make the news, or contact:Queensland, resources is usually the focal point and as will the struggling housing sector. But despite a Mark Inghamunderstandably so. While the State is well-positioned to slowing of Queensland’s recent record breaking project Partner, Deloitte Access Economicsserve the growing energy and industrial needs of Asia, investment, there will be continuing investment in the Phone: +61 (7) 3308 7206another future theme is food security. The global food state. Queensland has a proud history of its economic Email: mingham@deloitte.com.ausupply and demand imbalance has been foreshadowed growth outpacing that of Australia as a whole, and Ben Hensmanby many: by 2050 the world population will grow by a Deloitte projects that broad trend to continue over time. Analyst, Deloitte Access Economicsthird and food demand is forecast to increase by 70%. Or, as we often put it, Queensland is on the right side of Phone: +61 (7) 3308 7389Food demand in Asia is forecast to double by 2050 due history, perfectly positioned to sell its resources, tourism, Email: bhensman@deloitte.com.auto changes in diet (an increasing proportion of protein), agribusiness and other products into the growth of {increasing affluence (allowing the purchase of more food, emerging Asia, which is the dominant driver of today’sand more expensive food), and population growth. business landscape. Mark Ingham is a Partner within Deloitte Access Economics, and is the leader of the Deloitte Brisbane Economics & Infrastructure Advisory business.This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities(collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking Ben Hensman is an Analyst within Deloitte Access Economics,any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be and is the Editor of the Deloitte Queensland Index.responsible for any loss whatsoever sustained by any person who relies on this publication. Deloitte refers to one or more of Deloitte Touche TohmatsuLimited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.Liability limited by a scheme approved under Professional Standards Legislation. Member of Deloitte Touche Tohmatsu Limited © 2012 DeloitteTouche Tohmatsu6 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  7. 7. Queensland is more than 1.7 million sq km, and only a fraction of that has been explored to any meaningful extentWith ever-advancing technology Observing at close quarters the enthusiasm with which more than 6000 delegates embraced the 34thand an entrepreneurial spirit, International Geological Congress in Brisbane in August I was reminded of just how far the minerals explorationmineral explorers will story has come and how far it has to run in Queensland.continue to be rewarded by After more than 150 years of statehood and progress anchored to mining and agriculture you could be forgivenQueensland’s rich lands. for thinking that all Queensland’s minerals and energy wealth has been discovered.Dr Geoff Dickie However, that perception denies a host of variablesChairman, Queensl and E xplor ation underscoring the dynamic environment in which mineralCouncil exploration occurs. To begin, Queensland is more than 1.7 million sq km, and only a fraction of that has been explored to any meaningful extent. And by ‘meaningful’, I mean that all its possibilities are known in the context of the era when exploration occurs. For example, a mineral of marginal or non-economic value 100, 50 or even five years ago could become the most sought-after component in the world for the next wave of technology.7 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  8. 8. Lorem ipsum Silicon makes up more than one quarter of the earth’s by the banks of Queensland’s Leichhardt River while on acrust and started making its most significant contribution gold prospecting trip to the Northern Territory.as a foundation for modern society in the mid 1950s when Literally poking out of the ground he is reported toit was used to host the first integrated circuit. have ‘stumbled’ on a heavily mineralised rock outcrop Fast forward to the 21st century and the computer- signposting to one of the world’s richest copper, silver,dependent world is looking for a semi-conductor to lead and zinc ore bodies.replace the silicon chip. After almost 90 years of continuous production from Graphene and molybdenite are two of the substances Mount Isa Mines, all Australians have something to showbeing touted as potential substitutes for silicon. Graphene for Miles’ awareness and tenacity.is derived from carbon and Molybdenite – the most In the 1980s, it was aerial gravity survey technologyimportant ore of the metal molybdenum – is available in that delivered Queensland and Australia the CanningtonQueensland in economically demonstrated resources. ore body from beneath a paddock south-east of Mount Isa. Either one of them could become a household name Today there’s much enthusiasm among geologists thatalongside a growing number of Queensland minerals the ‘next Mount Isa’ is still waiting to be discovered, butbeing refined and used in highly productive partnerships. like Cannington, it will not be found by accident. Consider for a moment that the modern compact Its discovery will demand technology not only capableenergy-efficient fluorescent light bulb is a combination of of looking beneath landscape but also defining ore bodiesbauxite, lead, copper, limestone, nickel and phosphorous. with three-dimensional accuracy. The good news for Even humble toothpaste contains silica, limestone, Queensland is that this technology is available to thealuminium, phosphate, fluoride and titanium. many geoscience service companies locating in Brisbane. Another important aspect of the exploration story and Exploration’s voracious appetite for goods and servicesfuture is technology. means that the industry has as much relevance to Historical accounts imply that in 1923 John Campbell metropolitan Queensland as it does to more isolatedMiles was more lucky than observant when he camped parts of the state.8 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  9. 9. Brisbane fits seamlessly into the biggerexploration picture. Its business diversity and growth prospects areinherently linked to innovation – an essential point ofdifference with other cities in the Asia-Pacific region. Brisbane was identified as a ‘hot-spring’ for innovationin 2009 by McKinsey & Company and since then hasemerged as a leader in knowledge-based industries. Nowhere is there more demand for ‘high-tech’services than in exploration and another reason why theQueensland Exploration Council (QEC) that I chair was The risks are high, but so are theformed under the initial patronage of the Queensland rewards, as history confirms.Resources Council and its Chief Executive Michael Roche. The QEC’s vision is clear in aiming to make Queenslanda minerals and energy exploration leader by 2020 withBrisbane as its heart. The QEC’s membership comprises a ‘who’s who’ of theresources sector, together with leaders from the worldsof finance, events and marketing, R&D and government. The QEC also runs monthly investor forums at the Its focus is on influencing perceptions about the Polo Club to allow exploration companies to attract theimportance of exploration, and promoting Queensland’s essential investor support to test exploration ideas.prospectivity to investors and businesses that support the All that said, it takes a special type of individual to be aexploration sector. mineral explorer. Among its flagship events is the Queensland Coupled with an extensive knowledge of how theExploration Breakfast, which this year is being held on 2 earth was formed (aka geology) and an unbridled thirstNovember in conjunction with the Mining 2012 Resources for discovery, a modern mineral explorer’s positionConvention. description must also include: Our keynote speaker is the Chief Executive of the • An intimate knowledge of financial instruments andAustralian Stock Exchange Mr Elmer Funke Kupper risk managementwhose address will focus on the capital-raising • The ability to live out of suitcases and/or swags forenvironment for minerals and energy explorers. extended periods We will also use this opportunity to update • The skill to move seamlessly between the bush andgovernments and industry on the Queensland Exploration boardroomsScorecard launched in 2011. • Levels of persistence and optimism far in excess of any other profession. It provides a snapshot of the state’s performancemeasured by drivers including Queensland’s resources The risks are high, but so are the rewards,prospectivity and endowment, resource prices, political as history confirms.stability, explorer/investor confidence and access to the James Nash’s discovery of gold near the Mary River inessential factors of production (capital, land, skills). 1867 was the salvation of the infant colony following closure9 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  10. 10. of the Bank of Queensland and large scale civil unrest asthousands of unemployed took to the streets of Brisbane. A few years later, a gold mine opened at IronstoneMountain, south of Rockhampton. The wealth created from the copper, gold and silverunearthed at Mount Morgan funded William KnoxD’Arcy’s exploration for oil in Persia, from which theBurmah Oil Company (later known as BP) was formed. A number of exploration companies D’Arcy’s legacy was described at his recent andoverdue induction into the Queensland Business Leaders’ recognised the potential of coal-Hall of Fame as ‘instrumental in changing the course of seam gas in Queensland over 20human history’. years ago and in spite of many QUT Vice Chancellor Professor Peter Little observedthat had D’Arcy not poured money into the exploration and challenges, drilled the early fieldsmining for gold at Mt Morgan, he would not have had the that have translated into thefunds to explore for oil in the Middle East, thereby givingBritain access to oil that not only changed the course of creation of a liquefied natural gashistory in World War 2 but also day-to-day life as we know it. (LNG) export industry. A more recent example was the persistence of KenTalbot and his associates to find some of the untappedcoal resources in the Bowen Basin which led to theformation of Macarthur Coal and the additional value thatcreated for Brisbane and Queensland. Similarly, a number of exploration companiesrecognised the potential of coal-seam gas in Queenslandover 20 years ago and in spite of many challenges, drilledthe early fields that have translated into the creation of aliquefied natural gas (LNG) export industry. As the exploration landscape changes, theentrepreneurial spirit of mineral explorers will ensureQueensland’s rich lands will continue to be fruitful. {potential of coal-seam gas in Queensland over 20 yearsago and in spite of many challenges, drilled the earlyfields that have translated into the creation of a liquefied Dr Geoff Dickie is a former Queensland Deputy Coordinator-General and now provides advisory services to the resources sector. As Deputy Coordinator-General his responsibilities included facilitation and impact assessments of significant public and private sector projects, industrialnatural gas (LNG) export industry. land planning through State Development Areas, and the commercial aspects of infrastructure provision. Geoff has tertiary qualifications in As the exploration landscape changes, the economics and geology and worked previously in mining and petroleum exploration and development in Australia and Canada and was Managing Director of a junior mining company. In ensuing years he managed government resource departments at both commonwealth and state levels,entrepreneurial spirit of mineral explorers will ensure including as Special Advisor, Native Title and Mining, and Executive Director, Minerals and Petroleum Division in the Department of NaturalQueensland’s rich lands will continue to be fruitful. Resources and Mines.10 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  11. 11. Companies are considering alternative ways to fund infrastructure, including the option of entering a common user agreement, where multiple organisations commit to a project.Common user infrastructure COMMON USER INFRASTRUCTURE (CUI) AND THE RESOURCES INDUSTRYagreements can deliver significant In recent years, once-in-a-generation highs inadvantages if risks are managed. commodity prices have led to a dramatic increase in demand for additional infrastructure capacity to support the continuing development of the resources sector. ToKeira Brennan meet this demand, companies are considering alternativePartner, Cl ay ton Utz ways to fund infrastructure, including the option of entering a common user agreement, where multiple organisations commit to a project. Rail and rolling stock, port facilities, water and power are essential infrastructure for most resource companies and common user agreements are providing a viable option for their development. Infrastructure which can be utilised by more than one user has a number of advantages: • For future infrastructure users (including small and medium-sized resource project proponents), it provides an infrastructure solution that they may otherwise lack the scale or means to provide on their own (in contrast to some larger resources companies).11 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  12. 12. Wiggins Island will be a first for Queensland - a privately funded terminal owned by the industry members that will use the terminal to export the coal they produce. • For government, CUI allows the procurement of As the company notes: Wiggins Island will be a first for new infrastructure funded in whole or in part by Queensland - a privately funded terminal owned by the future infrastructure users in a way that minimises industry members that will use the terminal to export the the social and environmental impacts otherwise coal they produce. associated with multiple parallel infrastructure The Curtis Island Pipeline: publicly-owned and partially developments. privately fundedDelivery models This project to deliver water and wastewater services The booming central Queensland town of Gladstone to the various liquefied natural gas projects underprovides two examples of delivery models that may be development on Curtis Island off Gladstone provides anused for CUI: alternative model. The Gladstone Area Water Board andWiggins Island: industry-owned and privately-funded Gladstone Regional Council was asked to provide water and wastewater services to Curtis Island to permit the Following a similar project owned by the Newcastle construction and operation of the APLNG project (a jointCoal Infrastructure Group that delivered a third coal venture between Origin, ConocoPhillips and Sinopec), onexport terminal in the Port of Newcastle, the Wiggins the understanding that, although the project was partiallyIsland Coal Export Terminal project will deliver a new financed by the private sector, the infrastructure wouldexport coal terminal in the Port of Gladstone with the remain in public ownership and be made available forcapacity to initially export an additional 27 million tonne of use by the other LNG project proponents. As the Watercoal per annum (with capability of expanding to 80 million Services Association notes, the resulting Curtis Islandtonne per annum). A special purpose vehicle (Wiggins Pipeline will increase the asset base on which the waterIsland Coal Export Terminal Pty Ltd) was incorporated board can earn a commercial return and provide anby a number of coal exporters to procure the project and infrastructure solution for the LNG industry with lessdeliver the additional export capacity for coal producers environmental and community impact than would havein Central Queensland. Gladstone Ports Corporation been the case had individual desalination plants beenwill operate the terminal. The project is being financed built on Curtis Island for each LNG project.by a combination of preference shares, subordinateddebt and senior debt to be provided by the private sector.12 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  13. 13. Some issues to consider As with all projects, a CUI project presents manyissues for resolution and brings with it complexcontractual negotiations, particularly where the interestsof a number of parties need to be considered.Issues include:How will the project be structured? This is a critical question that will have flow-oneffects for the legal relationships of the proponents,and the manner in which the CUI can be financed.Options include: • Incorporated and unincorporated joint ventures the reimbursement process. Ownership stakes Conclusion which might involve companies or trusts in which the may also have to be adjusted as new users are CUI can deliver significant advantages to the users have equity interests introduced, with an adjustment mechanism included economics of a project and also reduce the social • Provision of infrastructure by government entities in the project documents. and environmental impacts. There are challenges in { where the users either directly provide finance Who has control over the performance standard the managing the competing interests of infrastructure users or repay all or part of the capital cost through infrastructure provider must meet? and the appetite of private sector financiers to accept user charges. some of the specific types of risk which apply to CUI. As the future users of CUI are also funding the project Financiers will be concerned with issues such as (whether in whole or in part), they will usually want somebalancing credit risk (which is essentially being assessed control over, and accountability from the infrastructureon the viability of a number of different resources provider about, the scope of the works to be performed, Keira Brennan is a partner in the Energy and Resourcesprojects) and the interrelationship with other elements the cost of the work undertaken and the timeline for the group at Clayton Utz. Keira is consistently recognisedof the logistics chain (for example, an export coal port delivery. Future users may seek to exert some control by various independent legal directories as a leadingrequires that the upstream rail and mine facilities to be over a CUI project by: practitioner in the energy and resources sector.constructed on time and to continue to operate). Most recently Keira was voted by her peers as one of • Having an involvement in the development of the Australia’s Best Lawyers in Mining. Keira has built aHow will early and late contributions to the project performance specification of the CUI reputation for her insight and understanding of the issuesbe managed? facing the energy and resources industry and her dedication • Imposing regular reporting obligations on the to finding innovative and pragmatic solutions not only for her Infrastructure users will seek to become involved with infrastructure provider clients’ legal issues but also their commercial concerns.and fund CUI at different times in a project’s lifespan. Keira has extensive experience in mergers and acquisitions • Including a requirement that an independent and joint venture arrangements in the resources industryFuture users who commit to funding a CUI project early engineer or verifier certify that the works completed (particularly the coal, gas, gold and base metals sectors),in its development assume more risk than those that are consistent with the performance specification as well as extensive knowledge in access to rail and portcommit to involvement later in the project’s development, infrastructure, the Queensland overlapping tenure regimeand generally expect to have some part of their • Having a project implementation committee oversee and the operational requirements of energy and resourcesoriginal contribution reimbursed by late contributors. the delivery of the project. clients.Reimbursement principles are often complex, and a The nature of the supervision will depend on the The assistance of Nathan Colless, Lawyer,variety of escrow arrangements can be used to manage project structure and delivery model adopted. Clayton Utz, is acknowledged.13 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  14. 14. Foreign skilled operators build the critical mass of skills necessary to move projects forward quickly and also ensure the success of local training and up-skilling programsInternational recruitment in Sourcing highly skilled workers internationally is specialist skills from abroad, at least in the short term, to critical to the growth and development of Queensland’s ensure project demands are met.Queensland’s LNG sector to leave burgeoning LNG sector and, properly implemented, will Fragomen works with local contractors to prepare leave a legacy of positive economic multipliers includingstrong economic legacy. the up-skilling of locals. workforce plans, often identifying skills shortfalls at the operator level in project planning. For example, with Queensland has three mega-LNG projects underway large LNG projects, it is often the case that no previousBen Willis with a combined value of more than $70 billion (AUD). Australian project will have dealt with the size of pipePr actice Le ader and Special Counsel, These are part of a solid pipeline of work in Australia’s nor the scale of pipe-laying required. Training and up-Fr agomen LNG sector including $80 billion (AUD) worth of skilling of Australian operators for these kinds of projects projects in Western Australia and $25 billion (AUD) in can only be done safely in an environment where there the Northern Territory. Many of these projects have are a number of skilled operators present. Accordingly, offtake agreements in place with Asian stakeholders contractors source and recruit overseas skilled operators and will continue to contribute significantly to economic while employing and training. In this way, foreign skilled activity regardless of speculation over mining boom or operators build the critical mass of skills necessary bust. In addition the Bureau of Resources and Energy to move projects forward quickly and also ensure the Economics reports there are currently 98 mining projects success of local training and up-skilling programs. with a combined value of over $260 billion (AUD) under It is interesting to note the role of Australia’s construction in Australia. Department of Immigration and Citizenship (DIAC) in With the Australian industry still in its infancy and this the process of obtaining foreign-skilled workers for scale of competing projects requiring niche skill sets, Queensland LNG mega-projects. For new skill sets, companies have little or no alternative but to source such as those discussed above, it may well be that14 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  15. 15. their occupation cannot be found on the current DIAC There are only a handful of EMAlist of approved occupations. In such circumstances, qualifying projects in Australiacontractors will need to seek a company-specific LabourAgreement, to be negotiated with DIAC. These labour whereas a company-specific labouragreements should not be confused with the ‘Roy Hill’ agreement is available to anytype Enterprise Migration Agreements (EMAs) as anEMA is project specific and the terms are not negotiated contractor where the need requires.by the contractor. There are only a handful of EMAqualifying projects in Australia whereas a company-specific labour agreement is available to any contractorwhere the need requires. Before DIAC will agree to a labour agreement thenegotiating company must address a number of keyrequirements which include demonstrating - As to future hiring practices in Queensland, including providers and equipment hire businesses where • That the company is a good corporate citizen and for LNG mega-projects, a recent Hudson report shows: significant long-term benefits can be had from servicing is financially sound • Professional services is the sector with the strongest over the entire lifespan of some the LNG mega-projects. • A commitment to training Australians and in positive hiring expectations (56.3%), followed by Most importantly, growth in numbers of our skilled particular training mechanisms to assist in construction/property/engineering (40.2%). occupations and professions in Queensland will have reducing the reliance on foreign labour • Industries that intend to keep a stable headcount flow-on effects for the training and up-skilling of all • That the labour market analysis indicates an actual include manufacturing (66.7%), followed by Australians. shortage of the required skills financial services/insurance (63.9%), resources The key is to have sufficient numbers of skilled • That foreign workers will have a minimum standard (63.4%) and government (61.7%). operators and professionals to permit the right balance of English and qualifications and work experience at • The sector with the strongest negative hiring between experienced and trainee operators. This skills a particular level expectations is government (31.7%), followed by transition is fundamental to the proper management and transport (15.2%) and manufacturing (13.6%). deployment of overseas skilled workers in our resources { • That the foreign worker will be remunerated and and mining sectors. treated no less favourably than an Australian No doubt the strong growth in demand anticipated worker in the white collar professional services highlighted • That the company has undertaken a consultation above will continue to have strong and positive economic Ben Willis is the Practice Leader and Special Counsel in process with the relevant stakeholders including flow-on for Queensland, especially for the state’s major the firm’s Brisbane office. Ben is an Accredited Immigration unions and employer groups. operational resource hub of Brisbane Law Specialist and has practised exclusively in the area of immigration law since 2004, largely specialising in corporate It should be noted that the above list is not exhaustive However, these types of positions are also required in immigration. Ben has a wealth of experience in dealing withas there are many other terms and conditions that DIAC construction and servicing projects in the regions where clients operating in all industries and sectors. In addition to the employment of these professionals, sometimes working with clients on temporary and permanent businessmay impose in a typical labour agreement. For example, entry programs, Ben also provides strategic and commercialDIAC requires an independent skills assessment process foreign workers, will also provide local businesses with advice on workforce resourcing and planning oftenwhich is satisfied if the foreign worker holds an Australian additional income. culminating in various types of Agreements including Labour Agreements, Work Agreements, Enterprise Migrationqualification (typically a Certificate III) awarded by an The obvious candidates in these locations range Agreements between industry and the CommonwealthAustralian Registered Training Organisation (RTO). from accommodation providers through to the training Government.15 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS
  16. 16. acknowledgmentsSPECIA L THANKSBrisbane Marketing is indebted to our special contributors for their generous involvement with the Brisbane Economic Series, namely:Mark Ingham, Partner, Deloitte Access EconomicsBen Hensman, Analyst, Deloitte Access EconomicsDr Geoff Dickie, Chairman, Queensland Exploration CouncilKeira Brennan, Partner, Clayton UtzBen Willis, Practice Leader and Special Counsel, FragomenIMAGE CREDITS© The State of Queensland. Photographer: Michael Marston. Courtesy of Queensland Government.© The State of Queensland. Photographer: Aaron Tait. Courtesy of Queensland Government.© Ray Cash Photography. Courtesy of Queensland Government.New Hope GroupQueensland Resources CouncilCSIROCONTACTBrisbane Marketing’s Investment Attraction division is the city’s inward investment agency. With an international reputation forsuccess, we work with a diverse group of clients across a range of sectors to help attract new business to Brisbane. By connectingleaders of industry and providing the critical information and introductions, we’re strategically shaping the future of Brisbane’sbusiness environment and helping deliver long-term economic growth for the city.www.investbrisbane.com.auLevel 8, Roy Harvey House, 157 Ann Street, Brisbane, Queensland, Australia, 4000PO Box 12260, George Street, Brisbane, Queensland, Australia, 4003Phone: +61 7 3006 6200 Fax: + 61 7 3006 6250 Email: invest@brisbanemarketing.com.auAs a wholly owned subsidiary of Brisbane City Council and the city’s economic development agency, Brisbane Marketing plays a key role in the ongoing evolution andsuccess of our city. We drive economic and social benefits to residents and business by profiling Brisbane globally as Australia’s new world city and as a destinationfor business investment, export, international students, conventions, tourism, major events, and CBD retail.PUBLISHED BYwww.investbrisbane.com.au16 BRISBANE ECONOMIC SERIES – ISSUE 5: ENERGY AND RESOURCES CONTENTS

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