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China trade fuels Australian boom
Last Updated(Beijing Time):2012-01-13 07:46

A train loaded with iron ore for export arrives at the Port Hedland facility in the Pilbara region of Western Australia. Port Hedland, the Pilbara's biggest harbor, plans to add 390 million tons of annual capacity by 2016 to support demand. Carla Gottgens / Bloomberg

Infrastructure investment of $115 billion aims to support Asian appetite for ore

Australia is set for an A$112 billion ($115 billion) infrastructure boom as the nation adds ports and railways to feed China and India's appetite for coal and iron ore.

The largest exporter of the key steelmaking materials will build enough railroads to stretch from Washington DC to Los Angeles over the next decade, as well as a new port on the Great Barrier Reef coast that will dwarf the world's biggest bulk harbor. The projects will near-double global coal trade and add 57 percent to the market for seaborne iron ore.

"There is so much opportunity here," said Philippe Bouquet, Australia construction head at French builder Bouygues SA. "People in Paris are very impressed. They say: '23 million people? How can they do so much?'"

Leighton Holdings Ltd, Australia's biggest builder, Bechtel Group Inc and trainmaker General Electric Co are among companies winning deals as Australia adds transport links to support A$232 billion of mineral and energy projects. The demand, coupled with economic slowdowns in the United States and Europe, has helped make Australia the developed world's fastest-growing construction market.

"This isn't a short-term phenomenon," said Hamish Tyrwhitt, chief executive officer of Sydney-based Leighton. "This is about the urbanization of India and China and the economic prosperity of the region."

Australian plans include building port terminals with capacity of almost 1.5 billion tons a year by 2022, and laying as much as 3,700 kilometers of rail track, according to data compiled by Bloomberg.

One of the main sites is Abbot Point, a small coal port sandwiched between a salt marsh and the lagoon of the Great Barrier Reef. Queensland's state government wants to boost capacity 26-fold from 15 million tons to 385 million tons under a construction plan due to begin in 2014. That would surpass by almost 40 percent the 2011 volumes at China's Qinhuangdao port, the world's biggest dry-bulk harbor.

In the Pilbara iron ore-producing region on Australia's northwest coast, BHP Billiton Ltd and Rio Tinto Group are leading plans to raise ore exports by 538 million tons over the next five years. That will more than double output from an area that already accounts for about 40 percent of the iron ore shipped by sea each year.

Port Hedland, the Pilbara's biggest harbor, plans to add 390 million tons of annual capacity by 2016 to support the expansion push. It exported 199 million tons of cargo in the year ended June.

General Electric Co, which supplies 70 percent of the locomotives for mines in the Pilbara and Queensland's Bowen Basin coal district, plans to double its total business in Australia by 2014, spokeswoman Joanne Woo said by e-mail.

Bouygues, Europe's second-largest listed builder, aims to win two to three new construction deals in Australia each year, Bouquet said. The company has only undertaken three projects in the country since 1995, he said.

Bechtel is building a $2.5 billion expanded coal port for BHP on the Barrier Reef coast and extending four BHP mines in the Bowen Basin.

"These companies have certainly got expertise that would put them above what would otherwise be available here," said Phillip Greenham, a construction lawyer at Minter Ellison in Melbourne.

Still, overseas companies can meet difficulties establishing reliable workforces and setting up supply chains, which may cause them to focus on partnerships with local contractors, according to Steve Gatt, KPMG's Sydney-based lead construction partner.

"There's not a large number of companies that know the geography, the markets and the customers and have a demonstrated ability to build these things," said Mike Carter, head the network division of the coal-train operator QR National Ltd.

The railroad last month completed an A$1.1 billion link to Abbot Point. It expects to spend A$1.6 billion on its network this year.

Australia, with a population 40 percent smaller than California's, spent $176.5 billion on construction in the 12 months to September 2011. Spending has surged 50 percent since June 2006, giving it the fastest-growing building market of any advanced economy.

Source:China Daily 
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