ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014

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ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
WESTBUSINESS • Wednesday, May 21, 2014

ONE FAMILY'S
DESTINY

                               THE ROY HILL IRON ORE PROJECT
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
PROUDLY SUPPORTING THE
                                                                                           Roy Hill Iron Ore Project

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achieving ordinary and extraordinary results. At BGC              us continue to win repeat business with the likes of
Contracting, we pride ourselves on the partnerships               Roy Hill, Atlas Iron, Arrium, Rio Tinto, BHP Billiton &
we have established, cemented and grown with our                  Cliffs Natural Resources to name a few. We put in the
clients over the past 20 years. We believe that we’re             hard yards and go the extra mile to ensure our clients
only as good as our last project and therefore strive             achieve their goals. When your project is ready to go,
to work harder, smarter and safer everyday. It’s this             we’re ready give it 110% to help you achieve yours.

LEADERS IN MINING AND CIVIL CONTRACTING
                                                                                                                                         SHED_BGCC0058

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ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
Making history with Samsung C&T.
  A global leader in construction services – Samsung C&T is the lead contractor
  developing Roy Hill’s iron ore mining, rail and port infrastructure. Samsung C&T
  is a proud partner of the Roy Hill project, committed to developing projects that
  deliver great outcomes for the local economy and communities.

Samsung C&T
2 Bagot Road
Subiaco Western Australia 6008
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
4 The Roy Hill Project                                                                                                                                          Wednesday, May 21, 2014

                                                          A message from the Premier
                                                              he Roy Hill iron ore project is one of the most   that well-planned projects are able to weather

                                                         T    significant projects to be undertaken in
                                                              Western Australia in recent years.
                                                           At an estimated cost of $10 billion, the Roy Hill
                                                                                                                changing economic climates.
                                                                                                                  The iron ore industry is already a major pillar
                                                                                                                of the WA economy, employing thousands of
                                                         project is the largest iron ore project under          workers and contributing around $4.3 billion in
                                                         construction this year globally, with a capacity of    royalties in 2013.
                                                         55 million tonnes at full production.                    By 2020, WA could be exporting 850 to 950
                                                           Construction of this massive project, which          million tonnes of iron ore, some 50 per cent more
                                                         includes new railway and port facilities, will         than current output levels.
                                                         create around 3600 jobs, and ongoing operations          First shipments from Roy Hill are expected by
                                                           will require 2000 workers.                           the end of 2015, further cementing the State’s
                                                               Recently, Roy Hill reached a significant         position as a global leader in the iron ore market.
                                                               milestone with the completion of a                 On behalf of the State Government, I would like
                                                                 US$7.2billion funding package to deliver       to congratulate all those who have been involved
                                                                 the project, involving five international      in this project’s progress so far, including Roy
                                                                 export credit agencies and commercial          Hill’s parent company Hancock Prospecting, and
                                                                banks from across the world.                    joint venture partners Marubeni, Posco, and
                                                                 The finalisation of this funding package       China Steel Corporation.
                                                             represents a vote of confidence in the ongoing       I would also like to congratulate those within
                                                            performance of West Australia’s resources           Government who have worked to facilitate the
                                                           industry from the international finance sector.      development of this major project, including
                                                            At a time when some onlookers are sceptical         through the negotiation and implementation of a
                                                         about future growth in the West Australian             State Agreement, and in progressing native title,
                                                         resources sector, the Roy Hill project is proof that   environmental and other approvals.
                                                         significant projects are still on the horizon, and     Colin Barnett

INSIDE                                                                             From Roy Hill’s chief executive
                                                                                   T
                                                                                         he company we build today will
                                                                                         determine how successful we
                                                                                         are moving forward.
                                                                                     To drive and maximise
                                                                                   efficiencies across the business, we
                                                                                   have integrated our corporate,
                                                                                   marketing and operations functions
                                                                                   through our new corporate head
                                                                                   office and remote operations centre.
THE ROAD TO ROY HILL             P6-8   THE HOUSE OF HANCOCK           P10-11        Because we are constrained at
Getting the $7 billion needed to pay    A chance sighting over the Pilbara in      Port Hedland in regard to how much
for everything was just the start.      the 1950s changed history.                 we can export, we must do things
                                                                                   differently.
                                                                                     It is a business imperative our
                                                                                   people know how to work smarter,
                                                                                   apply fit for purpose thinking and
                                                                                   focus on value to ensure a
                                                                                   maximum return to our
                                                                                   shareholders.
                                                                                     A key driver of success is the
                                                                                   foundation that is set in regards to
                                                                                   how the company operates and the
                                                                                   behaviours people bring to the
HOW IT WORKS                   P12-16   THE NERVE CENTRE                  P22-23
                                                                                   workplace.
Inside the Roy Hill operation — from    The ore body may be in the Pilbara
                                                                                     One of the unique challenges of
mine to port.                           but Roy Hill’s brain is in Perth.
                                                                                   being a greenfields project is
                                                                                   embedding a culture that aligns
                                                                                   employees to our vision and
                                                                                   empowers them to achieve our goals.
                                                                                     Our vision and values of lead,
                                                                                   care, think and perform go to the
                                                                                   heart of who we are, what we stand
                                                                                   for and what each and every one of
                                                                                   us needs to do to achieve success.
                                                                                     Roy Hill is a landmark mining
                                                                                   project which will deliver enormous
                                                                                   benefits to the broader community.
A RICH BENEFACTOR              P26-28   THE END GAME                   P30-31
                                                                                   These are exciting times as we
How wealth created in the Pilbara       Inside the Chinese steel mills which
                                                                                   continue to build one of the world’s
pays for the great Aussie lifestyle.    drive the iron ore industry.
                                                                                   major resource-based projects.
                                                                                   Barry Fitzgerald
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
6   The Roy Hill Project                                                                                                                                  Wednesday, May 21, 2014   For

A new kid
on the red
dusty block
Roy Hill is a project 22 years in the making.
STEPHEN BELL charts its history
                     n a balmy March evening Gina Rinehart

              O      and a host of international financiers
                     signed a thick sheaf of documents in a
              Singapore business room.
                The Hancock Prospecting chairwoman had just
              made history by inking a US$7.2 billion loan
              agreement for her Roy Hill iron ore development
              — the biggest project financing ever completed for
              a mining venture.                                     Groundbreakers: Hancock Prospecting’s John Klepec, Tad Watroba, Gina Rinehart and Roy Hill chief executive
                The backing of the five export credit agencies      Barry Fitzgerald start work at Roy Hill’s corporate headquarters and remote operations centre in June, 2012.      Gr
              and 19 banks was sweet vindication for Australia’s
              richest woman.                                        recent Singapore function to celebrate the debt           The forecast sailing of Roy Hill’s first cargo from     rel
                She’d endured years of speculation that her $10     milestone.                                              Port Hedland late next year will represent the              A
              billion mine, rail and port project would struggle      “So we set up a beautiful sit-down luncheon at        high water mark of a remarkable 23-year journey           Ri
              to secure debt funding as other Pilbara miners        the side of the Fortescue River and I had the           that began in March 1992 with the death of Mr             ge
              slashed expenditure after a fall in iron ore prices   pleasure of being able to personally meet every         Hancock — the man credited with uncovering                dr
              and rising Australian costs.                          participant and discuss the importance of their         much of the Pilbara’s vast iron ore riches in the         scr
                Credit was a scarce commodity and the cautious      support.”                                               1950s.
              bankers eked out their painstaking due diligence        The debt deal ensured the chairwoman would                                                                      Pi
              for 15 months, including site visits to Roy Hill —    achieve a long ambition of owning and running a               oy Hill wasn’t among the deposits identified        wi
              about 270km south of Port Hedland near the
              Chichester Ranges.
                “When the commercial banks came to visit, we
                                                                    Pilbara iron ore mine unrelated to the legacy of
                                                                    her famous father, Lang Hancock. So confident
                                                                    was she of wooing the bankers that Roy Hill was
                                                                                                                            R     by Mrs Rinehart’s father. It is a separate
                                                                                                                                  area to the north of Newman once held by
                                                                                                                            competitor BHP Billiton.
                                                                                                                                                                                      Ch
                                                                                                                                                                                      ar
                                                                                                                                                                                         M

              were determined to give them an experience that       nearly one-third built by the time the bank deal          “Fortunately our competitors’ drill holes were          of
              they would never forget,” Mrs Rinehart said at a      was finalised.                                          not in the best locations and they had                       T

                                                                                                                                                                                      P

                                                                                                                                                                                      w
                                                                                                                                                                                      PM
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
thewest.com.au
014   For all the latest news                                                                                                                                                                               The Roy Hill Project            7

                                                                                                                                                                                           Road to Roy Hill
                                                                                                                                                                                           MARCH 1992         Gina Rinehart assumes chairmanship
                                                                                                                                                                                                              of Hancock Prospecting after the
                                                                                                                                                                                                              death of Lang Hancock
                                                                                                                                                                                           MID 1992           Gina Rinehart and Richard Paquay,
                                                                                                                                                                                                              Hancock Prospecting’s chief
                                                                                                                                                                                                              geologist, conduct their initial
                                                                                                                                                                                                              prospecting trip to Roy Hill
                                                                                                                                                                                           JAN 13, 1993       Hancock Prospecting granted Roy Hill
                                                                                                                                                                                                              exploration licences
                                                                                                                                                                                           JANUARY, 2010      Korean groups POSCO and STX Corp.
                                                                                                                                                                                                              make initial $332 million investment
                                                                                                                                                                                                              in Roy Hill
                                                                                                                                                                                           JUNE 2, 2011       Dredging operations begin at Port
                                                                                                                                                                                                              Hedland’s inner harbour
                                                                                                                                                                                           MARCH 30, 2012     Asian consortium led by Korea’s
                                                                                                                                                                                                              POSCO and Japan’s Marubeni pays
                                                                                                                                                                                                              $3.2 billion to complete 30 per cent
                                                                                                                                                                                                              purchase of Roy Hill
                                                                                                                                                                                           JUNE, 2012         Construction starts on $47 million
                                                                                                                                                                                                              headquarters and remote operations
                                                                                                                                                                                                              centre at Perth airport
                                                                                                                                                                                           MAY 25, 2012       Approval to hire up to 1715 foreign
e                                                                                                                                                                                                             workers under Labor government’s
      Grand scale: An aerial view of the Roy Hill mine site in April. Roy Hill is destined to be the biggest single-pit mine in the Pilbara.                                                                  first Enterprise Migration Agreement
                                                                                                                                                                                                              generates media storm
om    relinquished the tenements,” Mrs Rinehart said.             for the area to be pegged and exploration licences
                                                                                                                                                                                           MARCH, 2013        Signs a $5.6 billion fixed price
        A few months after her father’s death, Mrs                were granted to Hancock Prospecting in 1993.
                                                                                                                                                                                                              construction contract with South
y     Rinehart and Hancock Prospecting’s chief                    However, in those pre-boom days iron ore was an
                                                                                                                                                                                                              Korea’s Samsung Group
      geologist Richard Paquay flew to Newman and                 unloved commodity and Hancock was under
      drove 120km to Roy Hill, an unremarkable patch of           financial stress, according to Mrs Rinehart.                                                                             NOVEMBER, 2013     Workers move into ROC at Perth
      scrub named after one of the early settlers.                  “We could not afford to maintain all the rental                                                                                           Airport
        “It was different from the normal sites in the            and exploration requirements and lost about half                                                                         MARCH 20, 2014     Receives US$7.2bn in debt from five
      Pilbara in that it was a very extensive flat plain          the area we had originally pegged,” she said.                                                                                               export credit agencies and a
d     with just a few small rises,” Mrs Rinehart said.              “Despite this we still managed to implement an                                                                                            consortium of 19 commercial banks
        Mainly hidden under soil and scree near the               exploration drilling program to help prove up the                                                                                           to complete funding of the $10
      Chichester Ranges, many people drove across the             resource that we knew was there.                                                                                                            billion project
      area without suspecting it hosted a treasure trove            “In fact, this drilling program never really
      of iron ore.                                                                                                                                                                         APRIL 30, 2014     Roy Hill mines first ore from Kulbee
                                                                  ......................................................................................................................
        The ground surveys proved encouraging enough             ៑ CONTINUED P8                                                                                                                               Creek location

      Proud to be associated with the Roy Hill Project.

      www.plantman.com.au                                                                                     y                                           s!USTRALIA7IDEs

      PM 16641
                                                                                                                                           1300 857 820
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
8 The Roy Hill Project                                                                                                                                                                                                               Wednesday, May 21, 2014

           Many people drove across
           the area without suspecting
           it hosted a treasure trove of
           iron ore.
            ....................................................................................................................
           ្ FROM P7
           stopped as we did more drilling over the years, to
           the extent that we had completed 13,000 holes by
           the time we had secured the finance.”
             A shortage of ready cash wasn’t the only reason
           that Roy Hill stayed in the ground for so long.
             In the 1990s Hancock Prospecting was pouring
           millions of dollars into the Hope Downs project,                                                                        Early days: Gina Rinehart and chief geologist Richard        Ceremonial: Representatives of commercial banks on
           one of Lang’s original Pilbara discoveries.                                                                             Paquay before the start of Roy Hill in 1992.                 the edge of the Fortescue River in June.
             Then, in the 2000s, Hancock Prospecting ran
           into political roadblocks when land it assumed                                                                          Rinehart said. By late 2009, Hancock Prospecting             acquired 30 per cent of the project at a projected
           was earmarked for Roy Hill’s port space was                                                                             had spent more than $100 million and undertaken              cost of $3.2 billion.
           allocated to other companies.                                                                                           431,147 metres of drilling.                                    The project ownership now stands at Hancock
             It eventually “re-secured” two berths at Port                                                                           This, alongside a partly completed feasibility             Prospecting 70 per cent, with Marubeni, POSCO,
           Hedland at the cost of extra dredging                                                                                   study, was enough to lure South Korea’s POSCO,               and China Steel Corp holding the balance.
           commitments.                                                                                                            which had been looking to secure more iron ore                 With debt and equity funds secured, the race
                                                                                                                                   for its Asian steel mills.                                   was on for Roy Hill to finish construction and
                   eanwhile, drilling continued to turn up                                                                           Alongside STX Corp, POSCO invested an initial              meet its 2015 shipping target.

           M       more premium-grade ore.
                     “Roy Hill is an outstanding iron ore
           project as the last billion-tonne, high grade, low
                                                                                                                                   $332 million to help complete a bankable
                                                                                                                                   feasibility study and bankroll the Port Hedland
                                                                                                                                   dredging.
                                                                                                                                                                                                  Key to that task was South Korean conglomerate
                                                                                                                                                                                                Samsung C&T winning the lead construction role
                                                                                                                                                                                                in March last year under a $5.6 billion contract.
           phosphorus, open cut deposit outside of the                                                                               Two years later, in March 2012, it became clear              The fixed-price deal helped Hancock and its
           majors in the Pilbara, in the world’s best address                                                                      how much offshore investors valued Roy Hill’s                partners bank the project, because the contractor
           for iron ore — near our Asian friends,” Mrs                                                                             high-grade ore when an Asian consortium                      carries the risk of any cost blow-outs and delays.

                                                                                                                                                        GUMA ICRG
                                                                                                                                                        PROUD TO BE INVOLVED IN THE ROY HILL PROJECT

                                                                                                                                                        Guma ICRG is a mining services company owned and operated by Nyiyaparli
                                                                                                                                                        Traditional Owners, servicing the East Pilbara region of Western Australia.
                                                                                                                                                        We provide well-trained and managed onsite teams, supported by our parent
                                                                                                                                                        company ICRG’s experienced management group. Our people are the cornerstone of
                                                                                                                                                        our business and we invest heavily in their development, safety and well-being.
                                                                                                                                                        Guma ICRG has a site services contract at the Roy Hill Project, supporting civil
                                                                                                                                                        maintenance, installations and other ad hoc works across the port landside
                                                                                                                                                        facilities, rail camps, mine site and village.
                                                                                                                                                        This involves earthworks, roadworks, logistics and landscaping, the
                                                                                                                                                        construction of light steel structures, buildings, culverts, drains and fencing,
                                                                                                                                                        as well as electrical, mechanical and concrete works.
                                                                                                                                                        In partnership with NRW, Guma ICRG is also providing plant and labour hire
                                                                                                                                                        across the Roy Hill Project.

                                                                                                                                                        We are proud to be part of the Roy Hill Project, working to achieve objectives
                                                                                                                                                        in a safe, sustainable and cost effective manner, while ensuring
                                                                                                                                                        Aboriginal communities benefit and contribute to the
                                                                                                                                                        success of the mining sector.

                                                                                                                                                        www.guma.com.au (08) 6188 7300
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
www.pbworld.com
ONE FAMILY'S DESTINY - THE ROY HILL IRON ORE PROJECT - WESTBUSINESS Wednesday, May 21, 2014
10 The Roy Hill Project                                                                                                                                       Wednesday, May 21, 2014   For

                The sight-seeing trip that                                                                                                                                              f
                Lang Hancock’s vision for the                           After taking ore samples over 100km in the            Lang and his long-time business partner Peter             pa
                                                                     Hamersley gorges, the self-described “boy from         Wright also wooed the Melbourne office of Rio               Ri
                Pilbara has become part of folklore,                 the bush” was surprised to learn they assayed 2        Tinto. After initial scepticism, the British miner          th
                STEPHEN BELL writes                                  per cent higher in iron than the standard blast        signed a deal with the Hancock-Wright                       in
                                                                     furnace feed used in the US at the time.               partnership to form Hamersley Iron.                         Ri
                   t was a chance few minutes of Pilbara                In essence, he had discovered one of the world’s      In 1966, Hamersley commissioned the Tom                   “h

                I  sight-seeing that changed the course of
                   Australian history.
                  On a late November day in 1952, Lang Hancock,
                                                                     richest deposits overlooked by previous
                                                                     surveyors, possibly because the high iron content
                                                                     had bamboozled remote sensing instruments.
                                                                                                                            Price mine and established Dampier — a key
                                                                                                                            Pilbara port which today exports 150 million
                                                                                                                            tonnes of iron ore each year. The Hancock family
                                                                                                                                                                                        co

                                                                                                                                                                                        on
                navigating his light plane through the Hamersley        It is a remarkable prospecting tale now firmly      and the descendants of Peter Wright still receive           de
                Ranges alongside wife Hope, spotted rusty red        entrenched in mining folklore, but the obstinate       royalties from each tonne shipped.
                rocks in a gorge cut by the Turner River.            visionary still had mountains to climb in order to       Later in life Lang was a dividing figure because          Pr
                  Then a 43-year-old pastoralist and part-time       profit from his find. The deposits were essentially    of his outspoken brand of conservatism. But few             La
                prospector, Lang only flew the unusual route         worthless in the 1950s because Australian exports      dispute his leading role as an iron ore trail-blazer        am
                when heavy storm clouds forced him to drop           of iron ore were banned (a legacy of World War 2       alongside less lauded figures such as prospector            an
                altitude and change direction at the start of a      when, ironically, the commodity was considered         Stan Hilditch who, in 1957, discovered the huge             be
                long trip back to Perth.                             scarce), and the WA Government wouldn’t allow          Mount Whaleback deposit near Newman that’s
                  Flying low, he noticed the gorge walls looked      pegging of tenements.                                                  now mined by BHP Billiton.                  Ha
                like “solid iron” coloured deep ochre red.              Lacking tenure and battling disbelief in                               The ensuing five decades have            he
                  Lang’s keen eye had picked out what many           Canberra, Lang lobbied relentlessly over several                          been equally colourful, if not           Au
                scientific instruments had missed — huge             years, finally bulldozing his way to a partial                              more so, for the House of
                deposits of iron ore that would stoke the fortunes   lifting of the embargo in late 1960. It took another                          Hancock. After Lang died in
                of a famous family empire and eventually become      year for the pegging ban to be removed and                                     March 1992, chairmanship
                Australia’s most valuable export commodity.          Hancock finally had its foot on the rich ore.                                    of the family company
                                                                                                                                                                                        In
                                                                                                                                                                                        ov
                                                                                                                                                                                        ir

 Pioneer: Lang Hancock at
 Mt Nicholas.
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014   For all the latest news                                                                                                                    The Roy Hill Project   11

      for ever changed Australia
      passed to his then 38-year old daughter, Gina        richest and most powerful women in the world.       JUNE 10, 1909    Lang Hancock born in Perth
      Rinehart, who immediately set about rebuilding         Similar to her father, Mrs Rinehart has become
      the brand. While acknowledging her father’s key      a contentious national figure because of her        NOVEMBER 22,     Lang’s iron ore discovery flight with
      influence in Hancock Prospecting’s fortunes, Mrs     forthright views on topics such as the cost of      1952             wife, Hope
      Rinehart dislikes being referred to as an            labour, the mining tax and the development of the   FEBRUARY 9,      Gina born to Hope and Lang
      “heiress”, pointing out the perilous state of the    North.                                              1954
      company’s finances upon Lang’s death.                  She also faced court battles against several
        And the value of the Hamersley royalty really      antagonists over the years.                         1955             Lang establishes family company
      only took off in the mid-2000s as China’s iron ore     Amid the legal stoushes Hancock has                                Hancock Prospecting Pty. Ltd.
      demand ballooned.                                    diversified from its original reliance on           1960             Australian export embargo on iron
        It was in that boom phase that Hancock             Hamersley royalties, reaping billions of dollars                     ore lifted
      Prospecting sold half of Hope Downs — one of         from thermal coal assets in Queensland, mining
                                                                                                               1960-61          Pegging of areas discovered by
      Lang’s key legacy assets — to Rio Tinto, enabling    manganese in the Pilbara and investing in media
                                                                                                                                Lang after WA lifts ban
      a multi-billion dollar development and forging       assets Ten Network and Fairfax.
      another link in the long chain of association          And in 2011 Mrs Rinehart took a definitive step   1961-62          Hamersley Iron formed after
      between the two groups.                              towards her long-cherished ambition of becoming                      development agreements
        When Hope Downs started production,                an iron ore producer in her own right with the                       negotiated between Lang, Peter
      Hancock’s direct share of the iron ore profits       effective start of Roy Hill’s development in the                     Wright and Rio Tinto
      helped propel Mrs Rinehart to the title of           Pilbara.                                            1966             Hamersley’s Tom Price mine
      Australia’s wealthiest person, and one of the          But that’s another story.                                          commissioned, and port and town
                                                                                                                                of Dampier established
                                                                                                               MARCH 27, 1992   Death of Lang Hancock; Gina
      In essence, he had discovered one of the world’s richest deposits                                                         Rinehart assumes chairmanship of
                                                                                                                                Hancock Prospecting
      overlooked by previous surveyors, possibly because the high                                              DECEMBER 1992    Hancock Prospecting pegs Roy Hill
      iron content had bamboozled remote sensing instruments.                                                                   iron ore tenements
                                                                                                               JULY 2005        Hancock Prospecting sells half of
                                                                                                                                Hope Downs project to Rio Tinto
                                                                                                               NOVEMBER 2007 Hope Downs mine begins
                                                                                                                             production
                                                                                                               MARCH 2014       Roy Hill completes funding with
                                                                                                                                US$7.2bn project debt
12     The Roy Hill Project                                                                                                                       Wednesday, May 21, 2014   Fo

                                                         ANATOMY OF ROY HILL
In the Pilbara, most things mining-related are
bigger than Texas, whether it’s massive pits,
monster haul trucks, or 2.5km-long ore trains
snaking their way to the coast.
                                                         The mine
                                                                oy Hill will not be reinventing the wheel to
   Yet Roy Hill will still stand proud in this land of
the giants. The $10 billion development is set to
become one of the world’s biggest mines,
                                                         R      extract its multi-billion tonne deposit over
                                                                the next two decades, according the mine’s
                                                         general manager, Bill Lamb.
                                                           It will rely on tried and tested open cut mining
contained in a mineral tenement that stretches           technology, operated by an on-site workforce of
                                                         1,000.
for 34km.                                                  “Waste, low grade and ore material will be
   It will also boast the Pilbara’s single biggest ore   blasted prior to excavation, allowing it to be dug at
processing facility. Starting from September             a higher rate,” Mr Lamb explained.
                                                           “It will then be loaded into dump trucks and
2015, Roy Hill plans to ramp up its iron ore             hauled to various destinations depending on its
production to 55 million tonnes a year, dwarfing         physical and chemical properties.
                                                           “On average, the mining team will have to
most Pilbara mine sites.                                 remove four tonnes of waste and low-grade
   Nearly all of the other big WA iron ore mines         material for every one tonne of ore mined.
                                                           “At steady state, this equates to over 300 million
have been developed in stages. Rio Tinto’s               tonnes of total primary material mined each year,
Yandicoogina mine has roughly the same                   which in anyone’s terms is a very large amount.”
                                                           As a result of the large total volume mined, Roy      An aerial shot of the Roy Hill mine taken in April.
capacity as Roy Hill. But Rio grew its mine in           Hill’s method of mining will allow for the bulk of
stages spread over 16 years, expanding output            the waste material to be backfilled into depleted       which sit on the surface in the hills, to a
to satisfy rising Chinese demand. Roy Hill, in           pits, therefore minimising the final disturbance        maximum of 110m depth in the southern extents
                                                         footprint at the same time as offering countless        of the deposit,” he said.
contrast, is developing its giant-sized capacity         short haul opportunities for the mining trucks,           “Mined ore will be trucked to remote crushing
from day one to make full use of port space.             Mr Lamb said.                                           stations, then conveyed to a central processing
                                                           “The depth of the ore body varies from outcrops,      facility.”                                                  G
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014   For all the latest news                                                                                                            The Roy Hill Project        13
                                                                                                                           ANATOMY OF ROY HILL

                                                                                                                           Processing
                                                                                                                                  esigned to produce premium-grade lump

                                                                                                                           D      and fines products, the processing plant
                                                                                                                                  incorporates low-risk, proved Pilbara iron
                                                                                                                           ore processing technology.
                                                                                                                             The processing plant will treat ore from both
                                                                                                                           above and below the water table.
                                                                                                                             The amenability of the ore has been extensively
                                                                                                                           tested with a wet scrubbing, screening and
                                                                                                                           desanding process selected as a result.
                                                                                                     Earthmoving             The majority of impurities in the ore body are
                                                                                                     equipment             tied up in clay-rich shale bands which can easily
                                                                                                     preparing the pad     be removed by gravity separation.
                                                                                                     for the mine            The modular facility consists of multiple
                                                                                                     processing plant in   components including three remote crushing
                                                                                                     August.               stations; overland conveying; a crushed ore
                                                                                                                           stockpile; multiple wet scrubbing, classification
                                                                                                                           and dewatering circuits; several stackers and a
                                                                                                                           reclaimer.
                                                                                                                             After final processing, the mine’s lump ore
                                                                                                                           product will range in size from 8mm to 40mm,
                                                                                                                           while fines will be less than 8mm.
                                                                                                                             From the product stockpiles, a reclaimer
                                                                                                                           loads the product on to waiting train cars via a
                                                                                                                           train load-out facility.
                                                                                                                             The processing plant is one of the most
                                                                                                                           technically challenging parts of Roy Hill’s supply
      Grade control drilling at the Roy Hill mine in February.   Processing plant bulk earthworks.                         chain.

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14 The Roy Hill Project                                                                                                                                       Wednesday, May 21, 2014   For

                                                                                                                                                                                          A

                                                                                                                                                                                          T
                                                                                                                                                                                          W
                                                                                                                                                                                          20
                                                                                                                                                                                          de

                                                                                                                                    Piling construction                                   for
                                                                                                                                    for East Turner River                                 re
                                                                                                                                    rail bridge in                                        po
                                                                                                                                    February.
                                                                                                                                                                                          ph
                                                                                                                                                                                          se
                                                                                                                                                                                          va
                                                                                                                                                                                          Mr
Stacked, welded      ANATOMY OF ROY HILL                                   cars with a total payload of 32,062 tonnes, will
rail steel at the                                                          operate each day.                                                                                              ma
flash butt welding
yard in February.
                     Rail                                                     Due to the rugged, undulating terrain to the
                                                                           north of the mine, each train will be assisted by
                                                                           rear-located, manned banker locomotives for the
                                                                           first 30km of the journey.
                                                                                                                                                                                          wh
                                                                                                                                                                                          ar
                                                                                                                                                                                          ar
                                                                                                                                                                                          in
                           oy Hill is building (and will own and              Roy Hill will employ a state-of-the-art automatic

                     R     operate) a 344km heavy-haul railway to
                           transport processed iron ore from the mine
                     to a dedicated port stockyard located south-west of
                                                                           train protection and signalling system to improve
                                                                           safety and efficiency. It will also prepare the
                                                                           network for future autonomous rail operations.
                                                                                                                                                                                          ex
                                                                                                                                                                                          iro
                                                                                                                                                                                          ca
                     Port Hedland.                                            This system will use “full vehicle tracking”,
                       At full production, five ore trains, each           which will be the first of its kind to be used in      Rail construction locomotives ready to commence         ra
                     consisting of three locomotives hauling 232 ore       Australia, Roy Hill says.                              track laying for the 344km railway in April.            ca
014
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      For all the latest news                                                                                                                                             The Roy Hill Project        15
      ANATOMY OF ROY HILL

      The port
               hile Hancock Prospecting had run

      W         exploration camps over many years, it
                was dredging at Port Hedland in June,
      2011, that marked the unofficial start of Roy Hill’s
      development
        The $230 million of dredging, to clear a channel
      for big iron ore ships, was a State Government
      requirement in granting the two-berth lease at the
      port.
        “It was a major risk when we undertook
      physical works of this magnitude without having
      secured the required equity or finance, and with                                                                               The enormous scale of the port construction project is becoming clear.
      various government approvals still to finalise,”
      Mrs Rinehart recalled.
        Some of the 5.6 million cubic metres of dredged
      material was dumped in approved locations at sea,
      while the remainder was pumped to a holding
      area above land — Area G. After construction this
      area will be handed to the port authority for
      industrial usage.                                         First piles in place for the Point Stanley Wharf.
        Roy Hill’s port will receive, stockpile, screen and
      export 55 million tonnes a year of direct shipped           After reclaiming, ore is conveyed to an
      iron ore as lump and fines. The stockyard will be         800m-long wharf and a 12,700 tonnes per hour
      capable of storing over 5Mt of ore.                       ship-loader, which moves the finished product
        Port facilities include an 11,250 tonnes per hour       onto giant ore carriers bound for Asia — the final
      rail car dumper, which removes ore from each rail         link in a long chain that stretches back to the
      car ready for conveying to stockpiles.                    excavators at Roy Hill.                                              Bulldozers move dredged spoil material in 2012.

                   We Deliver in the Pilbara.
                   Brookfield Multiplex has established a strong      What sets us apart is our unique combination
                   presence in the Pilbara having completed the      of contracting expertise, financial strength and
                   Roy Hill Mine Accommodation Village in 2013.      long term collaborative relationships, meaning
                                                                     clients and partners trust us to deliver safely
                   We were also awarded the contract for             and efficiently - on time and on budget.
                   the Roy Hill Non Processing Infrastructure
                                                                     Image: Roy Hill Mine Accommodation Village, Western Australia
                   project, demonstrating our ability to remain
                   competitive on small as well as large projects.

                   CONSTRUCTION DEVELOPMENT ENGINEERING INFRASTRUCTURE
                   brookfieldmultiplex.com
                   SYDNEY PERTH MELBOURNE ADELAIDE BRISBANE
                   For Perth enquiries please call 08 9483 0899
16 The Roy Hill Project                                                                                                                                           Wednesday, May 21, 2014

Hungry work: Roy Hill’s dining hall, one WA’s biggest. Picture: Bill Hatto

                      ANATOMY OF ROY HILL                                    Home away from home: Roy Hill’s main accomodation camp in December, 2013.

                      Housing                                                10km from the mine’s airport, is arguably WA’s
                                                                             most luxurious resources camp.
                                                                               Each air-conditioned room is 4.2m wide —
                                                                             bigger than the standard 3.5m room — and is
                            uilding a town nearly the size of Kalbarri in    furnished with a king-sized single bed and

                      B     the middle of the Pilbara — from scratch —
                            is a daunting task. Building one that is an
                      attractive place to live is even tougher.
                                                                             ensuite. Each unit has internet, a phone and a TV
                                                                             which has its own Roy Hill information service.
                                                                               Employees have access to a tavern, gym, tennis
                        The Roy Hill accommodation village currently         courts, putting green, volleyball and basketball
                      has about 900 residents and at its peak it will have   courts and an indoor cricket facility.
                      2000 people living in it.                                Each week tonnes of supplies are trucked to the
                        The yet-to-be formally named complex, about          village from Perth and Port Hedland.                Amenities: The village’s tavern.
We’re excited to be an integral

Working together                 part of the Roy Hill Project,
                           partnering with Roy Hill to deliver early
                          mining services at the mine, including load

to deliver value          and haul, drill and blast, and mine-related
                                         infrastructure.
                         In operation for over 90 years, we are a leading
                        industry supplier of open cut mining services in
                                        Western Australia.
                         We’re looking forward to working safely and
                          innovatively with Roy Hill, and bringing
                               employment and local business
                                  opportunities to the West
                                     Australian economy.

                             Ph: (08) 6212 9500
                   www.downergroup.com/mining
18 The Roy Hill Project                                                                                                                                                   Wednesday, May 21, 2014

                       THE FACES OF ROY HILL

                       Ian Crawford
                       Chief operating officer
                          an Crawford is the man who has to link

                       I  seamlessly the mine, processing, rail and port
                          operations so that the Roy Hill project is
                       ultimately capable of shifting 340 million tonnes of
                       material every year.
                         That’s 340 million tonnes which need to be
                       blasted with explosives, lifted onto trucks,
                       processed and separated into lump and
                       fines-grade ore, transported by locomotive for
                       hundreds of kilometres and finally dumped into
                       waiting cargo ships at Port Hedland.
                         It is an enormous task but one which the
                       53-year-old father of two relishes.
                         Mr Crawford has had to work to link the various
                       arms of the business in the full glare of the public
                       spotlight — as well as under the watchful eyes of
                       the project’s financial backers.
                         “It’s a once-in-a-lifetime experience being
                       funded from export credit agencies,” he said. “We
                       have had to prove ourselves to the lenders as well
                       as prove the quality of the project.”
                         Mr Crawford has been with Roy Hill for less
                       than three years but mining is in his blood — he
                       was born in Edinburgh and worked in the British                                                                                                   Picture: Iain Gillespie
                       coal industry before moving overseas 20 years ago.

                   A big vision needs the
                       right partners.
                       Securing US$7.2 billion of finance is never easy.                                                           As a leading natural resources bank in
                       Which is why the partners in Roy Hill, one of                                                               Australia we are proud to have supported
                       Australia’s highest quality iron ore projects,                                                              the Roy Hill project.
                       had confidence in ANZ’s support.

           anz.com

 Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. ANZ’s colour blue is a trade mark of ANZ. 05/14   16671-2
Alinta Energy powering the Pilbara and Roy Hill
• Alinta Energy owns and operates the Newman Power Station.
• Alinta Energy will construct a new high-voltage transmission line
  from its Newman Power Station to supply the full power requirements
  of the Roy Hill Mine.
• Construction of the 123km 220kV transmission line has begun.
  The completed line will have capacity to supply additional
  potential customers.
• Alinta Energy will also construct a 33kV distribution system and
  a 6MW diesel-fuelled power station located at the Roy Hill Mine.
• Roy Hill and Alinta Energy have worked closely to take an initial
  supply concept through to a fully-developed solution that ensures
  the long-term power needs of the Roy Hill Mine are secure.
• Alinta Energy’s construction project, which will employ up to 150 people
  through WA-based suppliers at its peak, is scheduled to be operational
  in early in 2015.
• The recent termination of a State Agreement now allows Alinta Energy
  to continue to expand its footprint in the Pilbara through development
  of additional generation capacity and competitive power solutions.
20 The Roy Hill Project                                                                                                                                 Wednesday, May 21, 2014

             THE FACES OF ROY HILL

             Sanjiv
             Manchanda
             Project director
                   roject director Sanjiv Manchanda’s tongue is

             P     firmly in his cheek when he talks about his
                   role.
               “I have a simple job. I just have to build it.”
               The 50-year-old electrical engineer has a
             daunting job.
               He is responsible for overseeing contracts for
             the engineering, construction and commissioning
             of the mine, processing, rail and port
             infrastructure that gets ore to market.
               It is a role which sees him “live and breathe”
             Samsung C&T — the company tasked with                                                                                                      Picture: Lincoln Baker
             delivering much of Roy Hill’s infrastructure,
             which is now more than one-third complete.
               Samsung C&T was “critical to the project”, Mr      procurement and construction contractor                 Australia, Africa, India, Malaysia and Indonesia.
             Manchanda said, for delivering construction of       certainly helped to give a level of confidence to the     He played a considerable role in delivering the
             the project on time and budget to the required       export credit agencies when they were conducting        infrastructure required such as the
             quality.                                             their due diligence on the project,” Mr                 accommodation camps, internal mine roads and
               Samsung C&T’s reputation also gave “comfort        Manchanda said.                                         the Ginbata Airport at the mine, which has
             and certainty” to Roy Hill’s bankers.                  Mr Manchanda brings significant experience to         ensured that the Roy Hill project can keep ticking
               “The appointment of a company of the size and      the project in the design and construction of big       off the milestone’s now the debt finance has been
             stature of Samsung C&T as our engineering,           mining and minerals processing projects in              secured.
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22 The Roy Hill Project                                                                                                                                                                                Wednesday, May 21, 2014   Fo

Inside Roy Hill’s Perth nerve centre
The ore body may be in the Pilbara but, as STEPHEN BELL explains, Roy Hill’s brain is in the city
                              echnology and automation are mining buzz                              It also means that Roy Hill hits the ground                          architect and I had hoped to include. Maybe later

                        T     words and Roy Hill believes it has caught the
                              vibe well before shipping a tonne of iron ore.
                          In November, hundreds of Roy Hill employees
                                                                                                  running thanks to a quick turnaround on
                                                                                                  planning and construction for the new HQ.
                                                                                                    Gina Rinehart joined other key Roy Hill and
                                                                                                                                                                         some can be incorporated, after Roy Hill achieves
                                                                                                                                                                         shipments and revenue.”
                                                                                                                                                                           Mrs Rinehart’s influence is apparent in the
                        started moving into the project’s new                                     Hancock executives in turning the first sods of soil                   sleek, three-storey edifice of stonework, stainless
                        headquarters and remote operations centre, a hub                          at the site in June, 2012, nearly two years before                     steel and glass, which overlooks a commercial
                        that amalgamates operations, marketing and                                the Pilbara mine-rail-port development was                             precinct just a few minutes drive from the
                        corporate services near Perth Airport.                                    ensured by a US$7.2 billion bank funding deal.                         international terminal.
Illuminating: A           “It allows us to manage the operations in an                              Construction of the building took 16 months.                           Roy Hill’s new hub aims to bring high-tech
night-time view         integrated way — identifying challenges,                                    “I’m pleased to say it was built on time and                         savvy to the dusty business of mining but doesn’t
of the operations       solutions and new productivity improvements,”                             within budget,” Mrs Rinehart told Roy Hill’s                           lack in aesthetics.
centre near Perth       Roy Hill’s general manager demand chain Mike                              financiers at a recent Singapore function.                               Inside reception visitors are confronted by the
Airport.                Lomman said.                                                                “Yes, it meant trimming a few things the                             gorge wall — a collection of 137cm Samsung                Re
                                                                                                                                                                         screens adorning a wall like a giant puzzle.
                                                                                                                                                                           Alongside a countdown clock for milestones,             vid
                                                                                                                                                                         such as the date of first exports in late 2015, it        the
                                                                                                                                                                         displays a “virtual” waterfall, though screens can        life
                                                                                                                                                                         be individually tuned to all manner of visual                R
                                                                                                                                                                         popcorn such as Pilbara beauty spots.                     be
                                                                                                                                                                           The building’s interior is punctuated by                vie
                                                                                                                                                                         sandstone features sourced from the Kimberley:            wh
                                                                                                                                                                         the carpet design recalls the red rocky ground of         an
                                                                                                                                                                         the Pilbara and the reception desks and internal          rea
                                                                                                                                                                         elevator bring to mind rusty iron ore.                       T
                                                                                                                                                                           A boardroom with all the latest                         mi

                 Iron awe
                    Something important is happening in the Pilbara region in West Australia, the
                    world’s premier iron ore province: the $10 billion Roy Hill Iron Ore project. One
                                                                                                                 The Roy Hill project is
                                                                                                                 changing the face of Australia.
                                                                                                                 Local, regional and indigenous employment and contracting opportunities
                                                                                                                 Roy Hill will have around 4,000 construction workers at its peak and 2,000
                    of Australia’s largest independent integrated mining, rail and port projects,                operational staff once the mine is operational.
                    and the largest mining project finance deal of its kind in the world, Roy Hill is
                    significantly contributing to the Australian economy.                                        Expanding our trade credentials
                                                                                                                 The project will add even more weight to our exceptional export flow. Roy Hill
                    We’re backing Roy Hill because we’re passionate about projects that                          will deliver export volume greater than our national wheat exports; or double
                    have such vast potential for Australia.                                                      the nation’s annual wine exports; or greater than the total of Australia’s
                                                                                                                 combined wool, seafood and lamb exports.
                    Owned by Hancock Prospecting Pty Ltd (70%), Marubeni Corporation of Japan
                                                                                                                 Creating innovation
                    (15%), POSCO of South Korea (12.5%) and China Steel Corporation (2.5%), the
                    project will also create change across the region, providing a high quality and              Roy Hill is a powerhouse of innovation, using state-of-the-art, high-technology
                    reliable iron ore supply, especially to Asia.                                                systems, automation and processes to deliver reliable, sustained and low cost
                                                                                                                 production of iron ore that’s known for its quality and grade.
                    We’re backing Roy Hill – providing the structuring, expertise and finance that
                    will bring the project to life – because we’re passionate about projects that have           Only the best could make a deal of this scope work – that’s why we invested
                    such vast potential for Australia.                                                           the very best of NAB into the Roy Hill project. As joint debt adviser, mandated
                                                                                                                 lead arranger for the project financing and transactional bank to Roy Hill, we’re
                    Here’s a snapshot of what the project will bring to our economy:                             proud to be involved in this significant project.

                             To find out more call Brad Calleja, Global Head of Resources +61 3 8641 4596

          © 2014 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686 A108315-0514 SBPJ759WA
014
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      For all the latest news                                                                                                                                                                           The Roy Hill Project                   23
                                                                                                                      ‘The port limit means that we always
                                                                                                                      have to maintain a disciplined focus
                                                                                                                      on cost minimisation; it also
                                                                                                                      encourages innovation to introduce
r
 s                                                                                                                    new efficiencies.’
                                                                                                                      Mike Lomman, general manager demand chain
s
                                                                                                                      chain, consisting of one mine, one rail line and
                                                                                                                      one port, as opposed to the multiple sites operated
                                                                                                                      by Rio Tinto, BHP and Fortescue.
                                                                                                                        Roy Hill, however, insists the new ROC is vital.
t                                                                                                                       “Because Roy Hill has a 55mtpa throughput
                                                                                                                      limit, set by its port capacity, the onus is on
                                                                                                                      achieving absolute end-to-end integration and
      Remote control: The centre is designed to achieve ’absolute end-to-end integration’. Picture: Simon Santi       efficiency to support the business model,” Mr
                                                                                                                      Lomman said.
      videoconferencing gadgets is overseen by one of          flat screens. It is impressive, and Roy Hill has the     “The port limit means that we always have to
      the chairwoman’s favourite oil paintings of her          advantage of using proved technology.                  maintain a disciplined focus on cost
n     life in the Pilbara.                                        Rio Tinto launched its remote operations centre     minimisation; it also encourages innovation to
         Roy Hill won’t confirm this but Mrs Rinehart is       near Perth’s Domestic Airport in 2010, and is in       introduce new efficiencies.
      believed to have a dedicated office near the             the process of automating some of its Pilbara            “It is already the thought-centre of the project
      viewing area for the remote operations centre,           operations, including driverless trucks.               with weekly planning sessions to ensure
      where up to 70 Roy Hill personnel will monitor              BHP Billiton Iron Ore opened its integrated         operational readiness for each of the milestones
      and control the giant mine, rail and port project in     remote operations centre, located inside its new       ahead — in doing so, nothing is left to chance.”
      real time.                                               office tower at Brookfield Plaza, mid last year.         When construction winds down next year, the
         The myriad data include 3-D animations of                Some have queried why Roy Hill requires an          ......................................................................................................................
      mining and construction displayed on super-sized         ROC, given that it involves a simpler logistical       ៑ CONTINUED P24
24 The Roy Hill Project                                                                                                                                                                              Wednesday, May 21, 2014       For

                                                                                                                                                                                                                                   TH

                                                                                                                                                                                                                                   S
                                                                                                                                                                                                                                   En

                                                                                                                                                                                                                                   S
                                                                                                                                                                                                                                   div
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                                                                                                                                                                                                                                   en
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                                                                                                                                                                                                                                   sh
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               Team effort: Staff from the remote operations centre at their new office in December.
                                                                                                                                                                                                                                   de
               ......................................................................................................                                                                                                              pr
               ្ FROM P23                                                                                               attempts to “industrialise” the mining,                                                                    ac
                                                                                                                        processing and transport of iron ore.         ‘It is already the thought-                                  leg
               ROC will be front and centre as Roy Hill’s                                                                 As at other mine sites, the holy grail of                                                                co
               demand chain team — responsible for the                                                                  automation is to deliver safer workplaces
                                                                                                                                                                      centre of the project                                        stu
               planning, scheduling and execution of                                                                                                                                                                               re
               production activities — kicks into top
                                                                                                                        for employees, while making production
                                                                                                                        activities cheaper and more reliable.
                                                                                                                                                                      with weekly planning                                         sig
               gear.
                 The technology will be used to ensure
                                                                                                                          Roy Hill also believes it has the jump on
                                                                                                                        competitors by embedding the potential for
                                                                                                                                                                      sessions to ensure                                           wi

               activities conform to the mine plan, while
               instigating continuous improvement to
                                                                                                                        later automation into the design of its
                                                                                                                        operations from day one.
                                                                                                                                                                      operational readiness.’                                      rig
                                                                                                                                                                                                                                   de
               “optimise” production.                                                                                     This should minimise “retrofitting”                                                                      po
                 After start-up, automation of some                                                                     issues encountered by some other              Mike Lomman, general manager                                 so
               activities will be an objective, as Roy Hill                                                             organisations, Mr Lomman said.                demand chain                                                 ma

   SUPPORTING ROY HILL
   FOR THE LONG TERM

                                                                                                                                                                                                                        J000178A
   SKILLED is proud to be supporting the Roy Hill project from our position as Australia’s
   leading provider of workforce solutions to the mining industry. With experience and
   expertise across mining, rail and port we look forward to working with Roy Hill
   throughout construction and operations.

   Our industry leading safety systems, local presence and market leading training,
   apprenticeship and Indigenous employment programs make SKILLED a partner
   of choice for Australia’s mining leaders.

   FOR MORE DETAILS CALL 1300 361 582 OR VISIT WWW.SKILLED.COM.AU

                                                                                                                                                                                                                                   243
014
              thewest.com.au
           For all the latest news                               The Roy Hill Project   25
           THE FACES OF ROY HILL                                                                                         Innovative
                                                                                                                         healthcare
           Susanna Beech                                                                                                 solutions for the
                                                                                                                         Mining sector
           Environment and approvals manager
                usanna Beech, manager environment

           S    and approvals, joined Roy Hill three
                years ago.
             “Roy Hill is being constructed across a
                                                                                                                         • Tailored and Flexible
                                                                                                                           Healthcare Solutions
                                                                                                                         • Environmental and
           diverse range of environmental landscapes
                                                                                                                           Public Health
           and within areas containing significant
           environmental values, such as the                                                                             • Aero-Medical
                                                                                                                           Evacuation (AME)
           development of a port ore-handling and
           ship-loading facility within the intertidal                                                                   • Occupational Health
           zone of the Port Hedland Port,” she said.                                                                     • Training and Consultancy
             “Our success so far has been the early
           development of business systems to identify,
           prioritise, implement and track
           achievement of approval requirements and
           legal obligations. Furthermore,
           comprehensive baseline environmental
           studies along with solid stakeholder                                                                                ISO
                                                                                                                               9001
                                                                                                                                            ISO
                                                                                                                                            14001
                                                                                                                                                            ISO
                                                                                                                                                            18001

           relationships enabled us to achieve a
                                                                                                                               Quality      Environmental   Occupational
                                                                                                                               Management   Management      Health & Safety
                                                                                                                                                            Management

           significant number of project approvals
           within short timeframes.
             “We have undertaken a three-year
           rigorous debt-financing process involving
           detailed assessments of the project risks,
           potential impacts to environmental and
           social values and the development of
           management practices to reduce risk.”

                                WE CONNECT BUSINESS, IDEAS, LIFE.
J000178A

                                Ansaldo STS is proud to be delivering a signalling and communications solution for
                                the Roy Hill Iron Ore Project that sets a new benchmark in operational flexibility and
                                efficiency for heavy haulage mining railways. www.ansaldo-sts.com

           2436504πHSRM210514
26 The Roy Hill Project                                                                                                            Wednesday, May 21, 2014   For

                                           Bankrolling the A                                                                                                 pl
                                           Mining in the Pilbara is fundamental to the national accounts — and
                                           our way of life. Economics editor SHANE WRIGHT reports                                                            —
                                                                                                                                                             ro
                                                he WA Budget lives or dies by how much iron     of recent years — but the WA Government has                  m

                                           T    ore is shipped out of the State.
                                                  And it’s almost as important to the Federal
                                           Budget, as the long-awaited surge in exports
                                                                                                benefited also.
                                                                                                   The WA Government is the ultimate owner of
                                                                                                the iron ore. And it’s the Government that has
                                                                                                                                                             G

                                           pumps cash back into the barren coffers of           grown ever more dependent on the royalties on                lik
                                           Canberra.                                            that iron ore for its day-to-day operation.                  Au
                                             Iron ore now accounts for almost one in every         The State Treasury lives and breathes on the              fin
                                           three export dollars raised by Australian            iron ore spot price.
                                           businesses.                                             Royalties from miners account for 20 per cent of          co
                                             Most of those dollars are funnelled through Port   the revenue that helps pay for the State’s teachers,
                                           Hedland — the world’s biggest iron ore port.         police officers and nurses.                                  pe
                                             Over the past year, exports through Port              A fifth of the State’s teachers, a fifth of the police
                                           Hedland to China have climbed by 50 per cent.        force and a fifth of the State’s roads are paid for          tr
                                           They were up by 7 per cent in April alone.           from the red earth being shipped out to Asia.                gr
                                             While this growth is being pursued by                 The surplus in State Treasurer Mike Nahan’s
                                           companies such as Rio Tinto, BHP Billiton and        first Budget came in no small part from activities
                                           Fortescue, many of the benefits flow back to         in the Pilbara.                                              Of
                                           taxpayers at the State and Federal level.               As that dependence has grown, so to the                   se
                                             The communities of the Pilbara and the             fragility of the State budget.
                                           employees, managers and shareholders of the big         The rule of thumb for the State Budget is that a          co
                          Prime Minister   mining companies are the biggest direct              $US1 dollar movement either way in the price of a            th
                          Tony Abbott      beneficiaries of the mining and construction boom    tonne of iron ore changes WA’s royalties take by             su
thewest.com.au
014   For all the latest news                                                                                                                                                                             The Roy Hill Project   27

e Aussie lifestyle
      plus or minus $45 million. It is a volatile game.        When things go awry for miners, so to for the
d       Mining royalty income has one perverse effect       Federal Budget.
      — for every $100 million increase in iron ore            The most obvious impact occurred in 2009-10.
      royalty revenue, the State will lose about $90           Company tax to Canberra fell by 10 per cent.
      million (over a period of time) through reduced       The tax collected from the mining sector dropped
      GST.                                                  by 50 per cent.
        It’s not just the State that depends on iron ore.      It was a decline that added many billions of
        At a macroeconomic level, iron ore exports are      dollars to that year’s $55 billion Budget deficit.
      likely to add about 0.3 percentage points to             Deloitte Access Economics, in its most recent
      Australia’s total increase in national income this    analysis of the state of the Federal Budget, noted
      financial year.                                       the best proxy for understanding the nation’s
        That would be a threefold increase of the           finances used to be the unemployment rate.
of    contribution made the previous year.                     No longer. The best proxy is now coal and iron
 s,     In terms of GDP, iron ore will add about 0.8        ore prices.
      percentage points to growth.                             According to these respected forecasters, if the
 ce     Given the way the rest of the economy is            price for both commodities follows the trajectory
      tracking, that will amount to a third of total GDP    of past commodity booms and busts, then the hole
      growth.                                               in the Budget would be $36 billion. That’s just shy
        All this feeds into the Federal Budget.             of the annual cost of the age pension.
 s      Recent figures from the Australian Taxation            Both thermal and coking coal prices have
      Office highlighted the importance of the mining       slipped by more than 50 per cent since their high
      sector, and particularly iron ore producers.          point in 2010. Iron ore has fallen, but not by quite
        Miners paid $15 billion of the $64 billion in       as much, while it has been more than offset by an
a     company tax receipts collected in 2011-12. Much of    increase in sales.
 a    that $15 billion came from big iron ore miners        ......................................................................................................................   Premier
      such as Rio, BHP and Fortescue.                       ៑ CONTINUED P28                                                                                                          Colin Barnett

                    Laing O’Rourke
                    Engineering the future
                    Working in partnership to deliver
                    Western Australia’s infrastructure
                    needs for more than 30 years                                                                                                                                                     laingorourke.com
28 The Roy Hill Project                                                                                               Wednesday, May 21, 2014   Fo

CONGRATULATIONS                                      SPOT IRON ORE PRICE

ROY HILL
                                                     $US/t
                                                    200

                                                     140

                              2430642πBLRM210514
                                                       80

                                                        20
                                                               2002-03                                                                                                                 2013-14
                                                     Source: World Bank

                                                   ...............................................................................................
                                                   ្ FROM P27                                                                                          “Second, Australia is the lowest cost
                                                                                                                                                     producer of iron ore, so that even if
                                                      However, there is some good news for                                                           overall demand for iron ore slows, other
                                                   the Budget (both Federal and State) even                                                          producers are likely to see cuts before
                                                   if iron ore prices slip a little further.                                                         there is a reduction in demand for
                                                      HSBC chief economist Paul Bloxham                                                              Australian iron ore.”
                                                   argues that though there has been a                                                                 All of which is positive for both Dr
    RED is proud to be                             slowdown in the overall Chinese
                                                   economy, the bit that keeps buying
                                                                                                                                                     Nahan, Federal Treasurer Joe Hockey
                                                                                                                                                     and their respective budgets.
  delivering construction                          Australian iron ore is still strong.                                                                And it has been good for the nation’s
                                                      “While China’s growth has weakened,                                                            standard of living: Australia has moved
services to the world class                        much of the slowdown has been in                                                                  from the 13th richest nation in the world
                                                   manufacturing, while growth in                                                                    (as measured by exchange rate adjusted
 Roy Hill iron ore project.                        infrastructure investment — which is                                                              per capita GDP) to about 6th.
                                                   the key driver of demand for steel — has                                                            Once Australia rode the sheep’s back.
                                                   remained strong and is expected to                                                                Now we’re all passengers on a bulk
www.redengineers.com.au                            continue,” he said.                                                                               carrier headed to Asia.
thewest.com.au
014   For all the latest news                                                            The Roy Hill Project         29
                                THE FACES OF ROY HILL
                                                                                       WORKFORCE SNAPSHOT

                                Colyn Louw                                             ᔡ Peak construction workforce:
                                                                                         3800
                                                                                       ᔡ Operations phase: approximately
                                                                                         1800 employees at full
                                Human resources general manager                          production, consisting of 1500
                                                                                         FIFO employees and a number of
                                       olyn Louw, general manager for human

                                C      resources, says Roy Hill is a chance to work
                                       on a tier-one project and be part of
                                something special.
                                                                                         employees living in Port Hedland.
                                                                                         The balance is based at the
                                                                                         corporate head office and remote
                                                                                         operations centre in Perth.
                                   “We are building a major mining project that        ᔡ Operational employee numbers
4
                                will be a market differentiator,” he said. “Roy Hill     will increase by 320 in 2014, 530
                                is a truly WA-based company, with 95 per cent of         in 2015, 250 in 2016 and the
                                our operations workforce to date hired from              remainder over the period 2017 to
                                within the State. We want people who are skilled         2020.
                                and business savvy, think and act like business
 r                              owners, understand and apply effective use of cost
                                drivers and embrace productivity as a way of
                                doing business. It is these qualities which will
                                deliver sustainable value to all our stakeholders.”
                                   According to Mr Louw, innovation lays the
                                foundation for long-term business growth and
                                positions companies for future success.
                                   “We aim to evolve our business by adopting the
d                               processes, technologies, and mindsets necessary
ld                              to strengthen our long-term operation,” he said.
d                                  “We want to be a high-performing business
                                where people realise their potential. Our values,
k.                              supported by defined capabilities and behaviours,
                                are a constant reminder of what we are working                         Picture: Iain Gillespie
                                towards and forms the basis of our culture.”
30 The Roy Hill Project                                                                                                                                               Wednesday, May 21, 2014   Fo

Iron ore end game: Inside the m
                                                                                     hina’s premier steel factory, Baosteel, is the   been because it is a dangerous part of the facility.
                     China’s Baosteel complex is
                     one-third bigger than Rottnest.
                     KIM MACDONALD describes life
                                                                               C     quintessential expression of Chinese toil.
                                                                                       It is a groaning, steaming behemoth that
                                                                               produces 43 million tonnes of steel a year in a
                                                                                                                                         Just over a year ago two people were killed and
                                                                                                                                      13 injured, one with third-degree burns to 99 per
                                                                                                                                      cent of his body, when molten steel spilled from a
                                                                                                                                                                                                 fr

                                                                                                                                                                                                 in
                                                                               relentless, round-the-clock operation.                 refining furnace.                                          th
                     inside the final destination for                            The West Australian gained an insight into the
                                                                               30sq km area of land in Shanghai to which WA
                                                                                                                                         The workers had been cleaning molten slag from
                                                                                                                                      the furnace when a hook lifting the furnace failed,
                                                                                                                                                                                                 co

                     much of WA’s iron ore                                     owes much of its current standard of living during     toppling the 270-tonne structure.                          m
                                                                               a guided tour organised by the Australian                 As we passed we saw sparks fire out of the top in       al
                                                                               Institute of Management WA.                            a reminder of its ferocious force.                         al
                                                                                 Baosteel, China’s biggest listed steelmaker, is         The scene soon disappeared from sight when the          an
                                                                               one of WA iron ore’s biggest customers, and its        tour bus veered back into tree-lined streets.
                                                                               orders not only create mining jobs but help               Baosteel’s green belt sprawls for more than 40          50
                                                                               finance the schools, hospitals and infrastructure      per cent of the facility, which is the size of Macau       sl
                                                                               that rely on mining royalties.                         and a third bigger than Rottnest Island.
                                                                                 That thought was top of mind on that drizzly            Baosteel’s official website claims its air quality      th
                                                                               winter’s morning in February as we watched             is on par with a State-level scenic spot and it is the
                                                                               ships come into the Yangtze River and deliver the      first metallurgical company to meet new                    tr
                                                                               rocks all the way from the dust bowl of the            environmental standards.                                   an
                                                                               Pilbara.                                                  Visitors tend to walk away impressed by its
                                                                                 The ships were unloaded at Baosteel’s port and       greenery, even though the heart of the operation —         w
                                                                               the ore taken directly to the blast furnace a few      the heat strip mill — looks like a post-apocalyptic        —
                                                                               kilometres away within the same facility.              scene.                                                     do
                                                                                 Our tour bus did not stop at the blast furnace,         The cavernous mill is dark and loud — you have
                                                                               much to our disappointment.                            to shout to be heard above the clanging sounds of          ap
End product: Workers walk past rolls of steel at a Baosteel production line.     No explanation was given, though it could have       industry.                                                  w

         Leading
         The Way.
         Centrals are proud of our ongoing contribution to the
         Roy Hill Iron Ore Project. Our involvement includes the
         construction of eleven Rail Bridges, civil and in-ground services
         for the Mine Non Process Infrastructure Buildings and provision of
         civil resources for the construction of the Main Processing Plant.
         Successfully delivering multi-disciplined construction services for the
         Mining, Oil & Gas and Infrastructure sectors across Australia.

         www.centralsystems.com.au

         Preserving Today. Constructing Tomorrow.
         Perth | Port Hedland | Newman | Brisbane | Townsville
         46 Edward Street, Osborne Park, WA 6017 t: 08 9443 2928 e: info@centralsystems.com.au
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