Senator EGGLESTON (10:10 PM) —Tonight I would like to say a little about the Pilbara iron ore industry, which is going through a very exciting time. Stimulated by China's voracious appetite for raw materials to feed its industrial rise, the Pilbara iron ore industry is being revitalised and expanded through huge investment. Burgeoning demand for iron ore has translated into higher prices, with increases in prices for the year 2004 of over 18 per cent above what they were a year ago. The boom of the Pilbara iron ore industry is underscored by the fact that BHP Billiton is conducting a feasibility study into further expansion of its operations to more than 145 million tonnes of iron ore exported per annum.

The latest development, announced by BHP Billiton at the beginning of March, is that it will enter into a long-term deal, the Wheelarra Joint Venture, with four of China's leading steel mills. In a 25-year deal, the mills have agreed to purchase 12 million tonnes of iron ore annually in return for taking a 40 per cent interest in a sublease over BHP Billiton's Jimblebar mine, near Newman. This is a historic deal which will deliver substantial additional export earnings to Australia of around $US9 billion over the next 25 years. The joint venture follows on from the expansion that has occurred in BHP Billiton's Pilbara operations over the last few years. In order to cope with the increased demand for iron ore, BHP Billiton's rail facilities and Port Hedland port facilities have been upgraded and expanded in a $US351 million project. The port and rail facilities now have a capacity of 100 million tonnes of export iron ore per annum. On 5 February 2004, the company announced that it will further expand the capacity of its iron ore operations to 110 million tonnes per annum by the end of the year, at a cost of $US111 million. BHP Billiton makes the point that this represents a 64 per cent increase in its capacity since the turn of the century and a virtual doubling of its capacity since 1996, which is just eight years ago.

At the end of October last year, BHP Billiton's new $US213 million Area C mine, with a 15 million tonne annual capacity, was officially opened and the output of its Yandi mine has been expanded by three million tonnes per annum as a result of another multimillion dollar project. It is very good to see Area C opened up because it has always been something that was going to be developed over the last 30 years. To see that finally occur proves that, after all, tomorrow does come in some situations.

BHP Billiton employs some 2,000 people and 1,900 contractors at its iron ore operations and HBI plant in Port Hedland. In the second half of 2003, it achieved record iron ore production of almost 45 million tonnes and record exports of 44 million tonnes. BHP Billiton's Mount Whaleback mine, which is the original Newman mine, is one of the largest open-cut mines in the world. It is 5.5 kilometres long and 1.5 kilometres wide. From its processing and shipping facilities at Nelson Point and Finucane Island in Port Hedland, the iron ore is shipped around the world.

In 2002-03, the port of Port Hedland experienced a total throughput of 81.8 million tonnes of cargo, of which 76.6 million tonnes comprised iron ore exports. By way of contrast, as I am sure Senator Tierney will attest, the port of Newcastle had a total throughput of 76.8 million tonnes, just a bit more than Port Hedland. I am sure the further development of Port Hedland will result in that port eclipsing Newcastle in total tonnage exported through the port.

Of course, BHP Billiton is not the only company with iron ore operations in the Pilbara that is benefiting from the current boom in investment. Hamersley Iron, wholly owned by Rio Tinto, announced in December last year that it will expand its operations at its Dampier port and Yandicoogina mine at a total cost of $US920 million. The Western Australian Department of Industry and Resources describes this as `one of the largest investments in recent years for a mining project anywhere in Australia'. The capacity of the port will rise from 74 million tonnes per annum to 116 million tonnes by the end of 2005 and the mine's output will expand from 20 million tonnes per annum to 36 million tonnes in early 2005. The figures in the Pilbara are always huge and somewhat mind-boggling. The size of the investment and the industry in that region is always mega.

Since 1966, Hamersley has exported more than a billion tonnes of iron ore. In 2003, it exported more than 74 million tonnes of iron ore to China, Japan, Korea, Taiwan and Europe. Robe River Iron Associates, which was one of the early operators in the Pilbara and is now owned by Rio Tinto under the company name of North, last year also expanded its capacity to 25 million tonnes. The cost of achieving that expansion was $US105 million, again a very large sum of money.

Robe River Iron Associates has two mines: Pannawonica and West Angelas. It expects customer demand to be at record levels over the next few years and accordingly is evaluating the potential for further expansion of its operations. Together, these three companies, BHP Billiton, Hamersley Iron and Robe River, have iron ore mining and processing operations that employ around 9,000 people in what used to be regarded as one of the most remote areas of Australia but is now very much just a part of Western Australia.

Western Australia is one of the world's largest producers and exporters of iron ore. In 2002, it accounted for over 16 per cent of global iron ore production and 37 per cent of global iron ore seaborne trade. In 2002-03 there was record production of some 188 million tonnes of iron ore valued at $5.2 billion. Western Australia is the largest exporter of iron ore to China. China has become the world's largest producer of iron and steel, having replaced Japan in that role. Indeed, between 2000 and 2003, Chinese iron ore demand has more than doubled. In 2002-03, China accounted for some 32 per cent of Western Australia's iron ore exports, gaining on Japan, which then took the next largest share. Rio Tinto's Chief Economist, Mr David Humphreys, says:

It must be said that this underscores the growth of the Chinese industrial economy.

China is a country that in the next 25 or 50 years can be expected to undergo a massive industrial expansion, and Western Australia will play a very important role in providing raw materials for that expansion.

Senate adjourned at 10.20 p.m.