Growth of the iron giant
As the facilitator of more than 20 per cent of global seaborne iron ore trade, Port Hedland could be called the rust-red beating heart of Western Australia’s resource-rich Pilbara region. Just last month it managed to ship 1 million tonnes of iron ore in one tide, setting it in good stead for hitting its 500 million tonnes per year target. Juliet Langton asks port authority chief executive Roger Johnston what’s next for Australia’s highest-tonnage port
Roger Johnston, chief executive of the Port Hedland Port Authority (PHPA), is feeling confident. Pushing out more than a million tonnes of iron ore in one tide –a period of three hours and 15 minutes – is no mean feat, even when you’re the world’s largest iron-ore export port. “In a small window of opportunity we pushed out 1,040,000 tonnes – and you don’t achieve that without a lot of very careful logistics planning and management,” he says, explaining why the PHPA team has been extremely busy over the past few weeks. “I think we must be the first port to do that.”
“Two weeks prior to that we managed 947,000 tonnes, so the progression shows we’re improving our performance,” Johnston adds. “We have a very vibrant organisation and do a lot of very hard work.” This much is evident from the PHPA’s targets and expansion plans.
Currently the port is tracking towards achieving an annual throughput of more than 246 million tonnes per annum (Mtpa), representing a 23 per cent increase from the last financial year’s record throughput of 199Mtpa. The PHPA is expecting throughput to reach 300Mtpa next year and anticipates reaching the port’s design capacity of 500Mtpa eventually.
“We’re growing at a rate of around 20 per cent at the moment, quite comfortably, and the amount of prospecting going on – at potential mines for iron ore in particular – seems to be pretty much endless,” Johnston says. “I don’t believe there’s a constraint in Australia’s ability to provide iron ore and other materials; it’s simply driven by demand.”
Where external companies build their own infrastructure at Port Hedland – such as BHP Billiton’s proposed outer harbour – it is up to the trading company to work out how much infrastructure it needs to meet demand. For common user ports, it’s the PHPA’s responsibility to plan expansion appropriately. Both external companies and the PHPA track demand by monitoring iron ore forecasts. The PHPA also needs to build small, non-tidally constrained berths for port users such as oil and gas companies, who use them to transport engineering supplies and general cargo to the offshore rigs. These companies, too, are “growing and growing”.
“There is huge pressure on all ports in Western Australia to increase capacity,” Johnston says. “It’s well acknowledged that there needs to be extra ports to meet the high demand – there are even a number of greenfield ports springing up to meet it – so we’ll continue to grow as long as we need to.
“When demand finally tops out in maybe 20 years, I expect the infrastructure we’ve built will be maintained to keep pace with that constant level of demand,” he adds.
Lumsden Point Hub
The PHPA has a substantial list of planned or in-progress developments that will expand the port to accommodate growth, including a multi-purpose cargo terminal, new berths, a larger tug pen and BHP’s outer harbour.
The Lumsden Point Hub concept is for a multi-purpose, common-user general cargo terminal, utilising berths designed for shallower draft, non-tidally constrained Handymax vessels – a type of bulk carrier ship for smaller cargoes. The eventual 240-hectare site would have 1,600m2 of wharves and enable the PHPA to cater for port growth in general cargo. “Such a facility would allow the separation of activities that place different demands on berth and channel infrastructure – in particular, facilitating major bulk trades such as ore and salt through dedicated facilities at existing berths one, two and three,” Johnston explains.
“We’ve also identified new value-add trades that have the potential to establish a base of operations through Lumsden Point, including mineral concentrate exports, ammonium nitrate imports and rock exports,” he continues. Other materials traded at the terminal could include containers, construction components, mining and earthmoving equipment, oil and gas supplies, cement imports and molybdenum and manganese processed product exports.
Utah Point berth
The PHPA opened the first stage of Utah Point berth in September 2010 and its performance has not disappointed. All customers are getting allocation, there are 360 trucks hauling to the facility each day during peak times and in October 2011 it shipped a total of 1,123,397 tonnes.
Utah Point berth is currently operating at stockyard one only – so at less than its final capacity – because stockyard two hasn’t been built yet. “Stockyard one was technically built to manage 6 million tonnes (Mt) but we’re managing around 12Mt; so if you look at what it was designed to do and what we’re doing now, of course we’re pleased,” Johnston begins. “However, as I’m a relatively new chief executive, just six months into the role, I review everything. So we’re looking for any potential improvements and strategies to increase Utah Point’s performance – especially its environmental and safety performance, because handling double the initial anticipated tonnage will have several impacts.”
Stockyard two was planned to handle higher tonnages than stockyard one, adding up to a combined design capacity of 17.9Mt. “We’re delighted with the performance of the Utah facility to date,” Johnston adds.
Utah Point is also notable for being one of the first ports in the world to utilise Cavotec – an innovative yet surprisingly simple vessel-mooring system. It comprises suction cups along the berth that stick to ship hulls, holding the vessels in place. For something so simple, the benefits are astonishing. “It takes a matter of seconds to attach and release the ship, so we save turnaround time because mooring lines take hours to tie on and release from the berth,” Johnston reveals. “So it’s given us huge efficiency gains. You have more time to load the ship, meaning you can get them fuller, as well as the ability to fit much longer ships onto the berth.
“I’ve noticed that since we’ve been using this technology, Geraldton port has started using a similar Cavotec system called Moormaster. So there seems to be some national acceptance that this is the way to go. It generates much better productivity in every way, shape and form,” he adds.
Johnston says the PHPA is looking at extending Cavotec technology to Port Hedland’s other berths, but explains that there would be issues in doing so.
“Cavotec needs a really flat piece of metal on the ship hull to hold onto,” he says. “The coastal traders that usually use our berths one, two and three tend to have lots of dents and bumps in their ship hulls, so these don’t form the best surface on which to get suction.”
Not to be overlooked is the port’s new tug pen, scheduled for construction from mid-2012 to mid-2014. This will be located at the harbour entrance and function as a self-contained maintenance and fuel supply facility for 22 new tug boats, which will be larger, more powerful and more manoeuvrable than the 12 used currently. These high-performance tugs are required to mitigate the “increasing risk” of ships being grounded in the channel or harbour entrance as ship number and average size increase.
“Currently we have a tug pen that will hold about 12 relatively small tugs,” Johnston says. “Because our ships are getting bigger and we have a very high tidal rise and fall, we need stronger tugs to manage the ships. So we’re upgrading from a 60-tonne tug to an 85-tonne tug; and we need more of them as our volumes increase. Thus we need a new pen to fit the 22 larger tugs.”
The new tugs’ manoeuvrability is down to the rotational propellers they have underneath, which allow the craft to move sideways as well as forwards or backwards. This provides a high level of control that is vital for guiding increasingly large ships through the tight turning basins created by the port’s swelling infrastructure.
BHP’s outer harbour
Looming large on the horizon, but not due to begin construction until 2016, the BHP-built outer harbour promises to ensure the growth of mineral exports from the East Pilbara. The proposal is scheduled to take eight years to construct over four phases. When finished, the outer harbour will allow more than 200Mt of iron ore to be exported annually.
BHP has announced the approval of US$917m pre-commitment funding to begin dredging, progress studies and the procurement of long-lead items for the first phase of construction. Phase one includes the construction of a 4km jetty, a four-berth wharf, 32km of dredged departure channel and landside infrastructure, including stockyards and a rail spur. The Environment Protection Authority (EPA) has recommended conditional approval of the project.
“We always planned that there could be an outer harbour, but needed someone to come forward with sufficient interest and a big-enough financial capacity to build these things,” Johnston reveals. “These things are very costly pieces of infrastructure and BHP is building to support its own needs.
“The PHPA is working closely with BHP and other key stakeholders, such as government departments, to progress the various approvals, licences and agreements required for this project,” he adds.
Infrastructure within the port is created and managed by various parties. Major traders such as BHP and Fortescue Metals Group (FMG) plan, build and operate their own inner-harbour berths, while the PHPA plans, builds and operates common-user berths.
Transport links are an important element for all port users. A capacity upgrade of BHP’s rail infrastructure is nearing completion, as is FMG’s new train unloader just outside the port’s land. Both initiatives will allow the proponents to realise their capacity allocations. The PHPA, meanwhile, is continuing to work with the Department of State Development (DSD) and the Department of Transport (DoT) to develop the Western Corridor into the Boodarie area.
Port Hedland’s largest transport project is the Great Northern Highway Realignment. The Western Australian government awarded the $220m design and construct contract for this project to Macmahon in June. Scheduled for completion mid-2014, this upgrade will include 8km of new road; a major interchange at the Broome turn off; a road bridge over the BHP rail line; a level bridge at South Creek; and new intersections.
WA transport minister Troy Buswell says: “This project will improve access to the port areas, improve safety for local commuters between Port Hedland and South Hedland, and enable the road network to cope with future growth in both the town and the region.”
It is already the thirteenth largest port in the world but clearly there is far more to come for Port Hedland. At this point the adjoining town has around 4,500 dwellings, yet the port’s expansion seems endless. With so many things under construction and many more developments planned over the next few years, you may wonder whether the port will ever stop growing – and indeed, whether it has the space to continue expanding.
“The port is expanding in line with demand and I don’t know how big it will grow, but no-one’s indicated to us any slowing down on the horizon,” Johnston affirms. “We predict the port’s rate of growth to accelerate, because, in addition to the natural growth of existing majors FMG and BHP, we are working with additional miners such as Roy Hill and other junior miners, all of whom want to start exporting.”
However, Johnston rejects the idea that growth will ever be restricted by space. “I don’t believe we fully understand yet all the things we can do to reach ultimate productivity,” he says.
“We managed to get 1Mt out in a three-hour and 15-minute time period; so theoretically, provided we can load the ships fast enough and have enough berths, we could ship 1Mt every high tide. So this has to challenge our idea of what is possible.
“We’ve modelled the port on achieving 495Mtpa but it is theoretically possible to achieve much more through increasing efficiency,” Johnston continues. “On top of that, we still have capacity at Lumsden and Anderson Point for more general cargo berths, and soon there will be the outer harbour development for additional bulk berths.
“So if you think about it, there’s still room for an awful lot of development,” he concludes. With the utmost of effort and pertinacity, Port Hedland is striking while the iron is hot – and nothing is going to prevent it reaping the maximum rewards.