1. Infrastructure Challenges for
the South Australian
Resources Sector
Presentation by
John Roberts, President
SA Chamber of Mines & Energy
September 2007

2. Who is SACOME?
• An industry representative body
• Funded by industry for industry
• The peak body for Government/Industry
interaction/collaboration
September 2007

3. What does SACOME do?
• Influence Government policy
• Promote the industry
• Assist industry
• A Resources Industry Strategic Plan
September 2007

4. In 2000…..
• Four mines
• Exploration average ~ $30m p.a.
• Employment, 2600 people
• Industry not considered very important to SA
September 2007

5. Snapshot 2012
• 20 major mines
• Employment, 10,910
• Exploration, ~AU$250m p.a.
• Export Revenues, 38% AU$4.2 bn
• Over 30 exciting Mineral and Energy Projects
September 2007

6. South Australian Mineral Exports
Mineral Exports are the largest single sector contributing to South
Australian exports, at over a third (38%) of total state exports of $11.2bn
Minerals - $4,225 mil
Petroleum - $111 mil
Minerals, Agri & Food - $3,113 mil
38% Wine - $1,223 mil
Machinery - $445 mil
Road Vehicles - $334 mil
Other - $1,668 mil
(All figures in Millions; 10/11 Data)
September 2007

7. Project pipeline
(Courtesy of DMITRE)
September 2007

8. International Partnerships
• India
• Tata Group / Geodynamics
• Reliance Group / UXA Resources
• Japan
• JOGMEC / Minotaur
• Mitsui Corp / Uranium One
• South Korea
• LG Internaional / Scimitar Resources
September 2007

9. Chinese Partnerships
• CITIC Group / Southern Gold & Marathon Resources
• Sinosteel / PepinNini
• Baotou Iron & Steel Group / Centrex Metals
• Heilongjiang Resources Limited / Havilah Resources
• Focus Investment and Tangshan Xingye Industry and Trade Group / WPG
• Jilin Tonghua Iron & Steel (Group) Mining Co / IMX Resources
• Taifeng Yuanchuang International Development Company / IMX Resources
• Tongjiang International Energy Co. Ltd / Altona Resources
• CNOOC (Beijing) Energy Investment Co. Ltd / Altona Resources
• Rizhao Steel /OneSteel Shanxi Haixin Iron & Steel Group Co. / OneSteel
• Hebei Jinxi Iron & Steel Co. / OneSteel
• Wuhan Iron and Steel Corp. (WISCO) / IronClad Mining
• Liuzhou Iron and Steel Co Ltd / IronClad Mining
• OM Materials / IronClad Mining
• Jianqyin Huaxi Steel Co. / Lincoln Minerals Ltd
• Chengdu Di’ao Mining Industry Energy Resources Co Ltd / Panda Mining
• China Non-Ferrous Metal Industry’s Foreign Engineering & Construction Co. /
Terramin Australia
• South Australia Ludi Mining Pty Ltd.
September 2007

10. Mines and Resource Value
50 $20
Billions
Projected
45 Number of Mines (LHS) Mines, & $18
Resource Value
Projected No. of Mines
40 Resource Value (RHS) $16
35 $14
30 $12
Olympic Dam Expansion
25 $10
Global Financial
Crisis
20 $8
15 $6
Record Commodity
10 Prices $4
5 $2
0 $0
2011
2012
1980
1985
1990
1995
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2015
2020
Years 1980-2020
September 2007

11. Exploration Licence Coverage
South Australia’s Mineral Exploration Upswing
March 2011

12. The Future…..
• 23 Mines by 2015
• 40 Mines by 2020
• +14000 new jobs
• Infrastructure Spend, > $59bn by 2020
• Upstream petroleum & geothermal expenditure to reach $800+
million by 2020
• Revenues, est. $7bn+ p.a. within 5+ years
September 2007

13. Fraser Mining Survey
Report 2012
• South Australia ranked 19th in the Policy Potential
Index
• Ranked 3rd behind NT & WA, down from 1st last year
• Ranks first in quality and accessibility of its
Geological database
• SA ranks 31st on Infrastructure access and
availability, and mid-ranked in Australia, up from last
position last year (compared to other States).
(McMahon, F., & Cervantes, M., ‘Survey of Mining Companies 2010/2011’, Fraser Institute, Canada, 2011)

14. Infrastructure Demand Studies
• 2007 - SACOME commissioned high level resources
industry infrastructure study through Connell Wagner, SCM &
Prof Dick Blandy
• 2009 – RESIC commissioned resources infrastructure
demand study through Aurecon (final report recommended that more
detailed work was needed)
• 2011 – RESIC commissioned Parsons Brinkerhoff to build on
the work done in 2009 with a more detailed study which
allowed data to be used in SARIG and also offered
recommendations to Government.

15. SACOME Infrastructure Study
– Key Findings (2007)
• Mining Sector demand for:
• Power will increase 5 fold
• Water and Gas will treble
• Road, rail & port usage will treble
• Own staff will double
• GSP growth rate to reach 5.5% (2.75% historic)
• Major planning and coordination required (RESIC
established)

16. Infrastructure Study 2007
• SACOME study in 2007 made the following
recommendations:
-Facilitation needed to improve coordination and processes;
(RESIC formed in 2007 as a result of this recommendation)
- Need to facilitate development of shared infrastructure;
- Provide investor certainty and facilitate assistance
- Migration, off-shoring and investor strategies developed
- Greater Government and industry participation to focus and
improve investor certainty;
- Clear pathways - leverage off BHP Billiton’s requirements
- Set effective infrastructure finance framework

17. Infrastructure Study 2009
• RESIC study - through Aurecon:
Power demand - (installed load) will increase, needing
approx: 1,480 MW by 2019;
-SA is likely to require additional baseload generation capacity
within 2-3 years to deal with future demand.
Water demand - across the South Australian Resource
industry will increase from approximately 43,000 ML in 2010 to
approximately 130,000 ML in 2019.
Road transport - the next 10 years is forecasted at
approximately 24 million tonnes inbound and approximately
100 million tonnes of finished product outbound across SA.

18. Infrastructure Study 2009
• RESIC study - through Aurecon:
Rail demand - forecasted rail freight inbound and
outbound movements will increase, reaching over 365 million
tonnes in total over the next ten years, an average of
approximately 35 million tonnes per annum.
Ports – a number of resource companies indicated the
requirement of deep sea Port facilities at Port
Bonython for the export of bulk materials

20. Infrastructure Study 2009
Aurecon was not required to undertake any analysis or interpretation of the
data and only reported on the survey information captured. Aurecon
undertook a limited review of the data provided prior to compiling it into five
GIS maps (power, water, gas, road, rail) representing four different time
periods.
Recommendation – that a more detailed study of the
infrastructure demands, capacities and the potential clustering
and network opportunities for these input and output
infrastructure types is required to allow a more detailed analysis
of commercial opportunities to develop and share
infrastructure.
Data from this analysis will assist RESIC in determining and
prioritising their activities in planning future infrastructure.

21. Infrastructure Demand Study 2011
RESIC – through Parsons Brinkerhoff:
• $59 billion worth of projects (best case) or $39
billion if project probability factored in;
• Report made recommendations that were
presented to Government;
• Recommendations currently under public
consultation process.

22. Infrastructure Demand Study 2011
- Recommendations
1) Infrastructure corridors & Utility Hubs
• The South Australian government to facilitate development of infrastructure
corridors and utility hubs through a master planning process known as a
Infrastructure Demand Study (IDS)
2) Development of deep-sea ports, rail and road logistics
• The South Australian government of three new deep sea ports that are able to
be served by appropriate rail and road infrastructure, sufficient to support the
future minerals and energy projects in SA.
3) Electricity infrastructure
• A nominated case manager to be appointed to work with local mineral resource
companies, the Australian Energy Regulator, and with ElectraNet.
• Assist in accelerating a 275kV augmentation on Eyre Peninsula by the end of
2016 or earlier to meet industry needs.

23. Infrastructure Demand Study 2011
- Recommendations
4) Water resources
• The Department for Water undertake detailed mapping to identify groundwater
resources and potential extractable volumes at key identified areas in SA. As a
priority the key area of the Eyre Peninsula, is to be finalised by 2012.
5) Government facilitation of investment in resources infrastructure
• The Department for Manufacturing, Innovation, Trade, Resources and Energy
work with geographically grouped resource and energy proponents to:
• assist with making companies’ infrastructure projects investor-ready;
• assist in packaging investment ready information for prospective investors;
and
• assist in connecting investment ready packages and resources and energy
project proponents with likely infrastructure investors.

24. Infrastructure Demand Study 2011
• Electricity - uncertainty over available capacity remaining on
existing transmission networks and timing on augmentation plans for
new network infrastructure (est 1,200MW peak demand by 2017)
• Water - uncertainty over water supply quality, availability and
sources (est. 170 GL pa required by 2017);
• Logistics – concerns about rail gauge inconsistencies, capacities
and uncertainty over interconnectivity bet. Proposed projects and import
/ export developments;
• Ports – lack of deep-water bulk commodity port facilities to meet
forecast capacity (highlighted as major issue) expected 120 mtpa
outbound by 2017 and beyond.

25. National Demand & Supply
Challenges
• Economic modelling firm Econtech estimates that the
national ‘gap’ between infrastructure demand and supply in
2005 amounted to $1.15 billion for electricity, $10 billion for
roads, $8.06 billion for rail, $2.6 billion for gas, and $3 billion
for water.
• The Australian Energy Market Operator has found that NSW
may face an electricity supply deficit of 182 MW by 2015-16;
Queensland of 34 MW by 2014-15; and Victoria and South
Australia will face a combined deficit of 17 MW by 2013-14.
• PwC report claims that by 2050 Australia will require an
additional 173,348 kilometres of roads needing investment to
increase by $2.5 billion every year until then.
Source: Infrastructure Finance Reform – Issues paper July 2011 – Infrastructure Australia

26. CHALLENGE:
Finding the appropriate role for
government and the private sector and
how the risks of infrastructure projects
can be efficiently shared.

27. CASE STUDY:
Need for development of a bulk
commodities port in the Upper Spencer
Gulf

28. Iron Ore
NORTH
Export
Plan
EYRE
Iron Ore Mine, Project, BRAEMAR
Prospect, Occurrence
Potential Utilities Hub
Estimated Resource
EYRE = 2,400 Mt
NORTH = 1,000 Mt
BRAEMAR = 2,000-4,000 Mt

29. Iron Ore on the Eyre
Pt. Bonython
Pt. Spencer
Iron Ore Mine, Project,
Prospect, Occurrence
Potential Utilities Hub

30. Ports Timing
• Port Spencer to be fully funded privately
• Upper Spencer Gulf port needed - Port
Bonython identified.
• Yorke Peninsula - last of ports required.
• Recognise that other solutions are being used
or developed (eg IMX & Pt Adelaide, IronClad &
Lucky Bay, Pt Pirie). Sub-optimal solutions ?

31. Port Bonython scenario
• Approx. $600m CAPEX
• Requires approx. 15mtpa of iron ore throughput
over 30 years
• Assumes port charges of approx. $10/tonne

32. Port Bonython : Status
• The Flinders Ports-led consortium won preferred bidder
status to develop the project in late 2008;
• The feasibility study confirmed that a harbour could
viably built; the long term tonnage required to justify a
deep water port, but initial throughput is problematic;
• In March 2012, SA Government awarded major project
status to the project (deems the project to be of major environmental,
social and economic importance to the State under section 46 of the
Development Act 1993);
• If approved, construction would take about 2.5 years to complete,
employ about 400 workers, ready for export in about 4 to 4.5 years
from now.

33. Hypothetical….
What if the bankable tonnages were estimated
(in the short to medium term) to be
considerably lower that the 15mtpa required ?
• Project would be unlikely to be funded by
private financing without proven bankable
tonnages
• Unlikely to be any Infrastructure Australia
funding
• SA Govt does not have spare $ in budget over
at least next 2-3 years

34. A case for Govt intervention ?
• Should the government intervene to correct a market failure, to
stimulate development and increase production ?
• Regulatory Intervention
- Minimise bureaucracy in relation to infrastructure
projects.
- Facilitate land re-zoning.
• Financial Intervention
- Cash upfront
- Equity position
- Underwriting
• Facilitation
- Collate information on projects.
- Facilitate or co-ordinate discussion by industry and
infrastructure providers.

35. Financial Intervention ?
• Equity Position
- Enter into a Public-Private-Partnership to develop
critical infrastructure projects.
Case Example: Oakajee Port and Rail Project
• WA government to contribute $279 million (additional
$399 million from Federal Gov. fund) for government
owned port infrastructure.
• Recover funding via. user charges.
• After a 50 year lease Oakajee Port & Rail (OPR) will
cease control of the private infrastructure and revert to
the State.

36. Financial Intervention ?
• Underwriting
- Underwrite a part of the financial or operating risk
to ensure feasibility of the project.
If needed..................
The State Govt could underwrite a percentage of unsecured
throughput at a discounted rate of, say, $7/tonne (there are
no operating fees without throughput)
Max. $35m p.a. ?

37. The Benefits of Investment
• Provide certainty to Resource projects of accessibility and
availability of critical export infrastructure.
• Through certainty, stimulate project growth and
development.
• Minimise cost of transportation through efficient systems,
capacity, and availability.
• Through assisting further development, the levels of royalty,
tax revenue, and Gross State Product will increase.

38. It’s the ‘chicken & egg’ scenario...
• Many companies are unable to finalise their mine without a
port to get to market, but infrastructure providers are unable
to fund a port without the mines already being in place.
• SACOME expects the role of government will need to go
beyond a coordination and facilitation role and include the
provision of seed funding or underwriting to break the
‘chicken and egg’ cycle with market failure infrastructure.

39. State Infrastructure Plan Discussion
Paper 2010: Priorities – Mining
• Facilitate the expansion of Olympic Dam.
• Develop transport, energy, communications and water
infrastructure to support growth and development of the
minerals and resources sector.
• Develop infrastructure to support the expansion of industry in
Upper Spencer Gulf cities to support the mining sector.
• Upgrade the electricity transmission network to
accommodate investment in renewable energy generation.
• Establish a deep water bulk commodity export port on Eyre
Peninsula for the export of bulk minerals.
• Facilitate market driven approaches to common user
infrastructure development.

40. Community Engagement

41. Community Engagement
• Resource sector more visible as exploration and mining
activities occur closer to regional communities
• Not just mining, but the infrastructure that comes with it
e.g. transport, ports, desalination etc
• SACOME has taken the lead in recognising community
expectations by developing and launching the “Code of
Practice for Community Engagement”

42. Community Engagement
SACOME has increased role in community engagement,
e.g. liaising with SAFF, attending regional events and
actively assisting in managing issues
The challenge is this:
How do we develop a successful mining
industry which enhances and compliments
regional South Australia ?

43. Community Engagement:
Working together !

44. “I think if you look back over the last 30 to 40
years, many developed countries have under-
invested in infrastructure, whether it’s water
infrastructure or power infrastructure or
transport infrastructure, and there’s a price to
pay for that and we’re beginning to see some
of the outcomes.
A lot of the existing infrastructure is under
pressure: power blackouts or near blackouts,
our transport system’s groaning at the seams.
These are the sort of challenges we face
globally.”
Sir Rod Eddington, Chairman, Infrastructure Australia
(Sinclair Knight Mertz Interview)

45. Port Bonython? (Govt presentation 2006)

46. “I think if you look back over the last 30 to 40 years,
many developed countries have under-invested in
infrastructure, whether it’s water infrastructure or power
infrastructure or transport infrastructure, and there’s a
price to pay for that and we’re beginning to see some of
the outcomes.
SURE HOPE SO !
A lot of the existing infrastructure is under pressure:
power blackouts or near blackouts, our transport
system’s groaning at the seams. These are the sort of
challenges we face globally.” Sir Rod Eddington,
Chairman, Infrastructure Australia (Sinclair Knight Mertz Interview)

47. Thank you......
Presentation by
John Roberts, President
SACOME