It has been a bumper year for the Pilbara Ports Authority (PPA). which has served as an engine room for the WA economy, achieving a record annual throughput of 717.2mt despite the pandemic.
The record volume of imports and exports through the PPA ports of Port Hedland, Ashburton and Dampier was an increase of 3% on the previous year and equivalent to 13,583 Sydney Harbour Bridges.
This was largely driven by an increase in iron ore exports off the back of robust demand from China, where about 80% of Australia’s iron ore is sent.
Supply disruptions in Brazil, the world’s second biggest iron ore exporter after Australia, also helped to drive the price of the commodity to a six-year high of almost US$130/t in August.
The Port of Port Hedland, the world’s largest bulk export port, achieved a record annual throughput of 538.2mt in 2019-2020, a 5% increase on the previous year.
PPA CEO Roger Johnston said the Authority had continued to focus on operating safely and reliably in 2019-20.
“In what has been a challenging and uncertain time during the COVID-19 pandemic, PPA’s results underpin the critical role of the Pilbara region to the State and national economies, and the importance placed on PPA to facilitate the ports’ supply chains,” Mr Johnston said.
“The ports are critical to WA’s economic recovery from the pandemic.
“A recent economic study has found the Port of Port Hedland and its supply chain contributed 20% of WA’s Gross State Product in 2018-19 and underpinned one in every 12 jobs across the state.”
An $81.7m program of works to support critical port and road repairs, announced as part of the WA Recovery Plan in August, will help underpin the State’s recovery from the pandemic.
The program includes:
- $10.5m to upgrade the entrance road to Boodarie Strategic Industrial Area in Hedland
- $20m for Port Hedland’s Inner Harbour for upgrading retaining and sea walls
- $51.2m to Nelson Point Tug Haven, one of the original tug havens at the port, for upgrading retaining and sheet pile walls.
Work has already started on some of the projects, including the critical planning and design work for the tug haven and revetment work under Berth 3.
The tug haven works will be tendered in early December and Berth 3 has been put to tender, with a successful tenderer expected to be announced in December or January.
“The upgrades are essential – we need to ensure there is continuing functionality of this facility for the foreseeable future,” Mr Johnston said.
The higher than expected iron ore price this year has propped up the Australian economy and it also became the first commodity to earn the country more than $100b in a single year.
But the Department of Industry has forecasted it will fall to about US$80/t by the end of 2021.
So what does that mean for the Ports of Dampier and Port Hedland, which are responsible for about 77% of Australia’s, and 42% of the world’s, seaborne iron ore exports?
“Iron ore exporters from Port Hedland are some of the lowest cost producers in the world,” Mr Johnston said.
“Export volumes from the Pilbara remained strong in 2015-16 when iron ore prices fell below $US60/t and it is not foreseen that exports will reduce significantly if the price of iron ore drops to around $US90/t next year.”
In fact, Mr Johnston said forecasts indicate a 2% increase in trade for PPA in 2020-21 to 732.82mt.
Exports of iron ore, LNG and salt through privately operated berths are forecast to increase by 12.5mt (2%), while trade across PPA operated multiuser berths is estimated to increase by 12.5%, from 25.3mt in 2019-20 to 28.4mt in 2020-21.
LNG Bunkering Hub
The PPA has issued Australia’s first ship-to-ship LNG bunkering service licences to Woodside Energy for the ports of Dampier and Port Hedland.
Mr Johnston said this was a significant step towards the establishment of an LNG fuelling hub for bulk vessels in the Pilbara.
Transitioning iron ore exports shipped from the Pilbara from heavy fuel oil vessels to LNG fuelled vessels could reduce carbon emissions by up to 6mt a year.
“The LNG bunkering hub not only captures the benefits of changing fuels to be more environmentally friendly, but also creates up to 125 jobs in the Pilbara, including mariners and support administration,” Mr Johnston said.
“Initial demand for ship-to-ship LNG bunkering services in the Pilbara will come from five new LNG fuelled iron ore carriers being chartered by BHP and which are due to commence operation in 2022.
“The Pilbara is well placed to supply LNG to these ships given its proximity to LNG supplies and BHP’s iron export terminals at Port Hedland.
“BHP is however yet to announce which company or companies will supply LNG fuel to the five ships it plans to use to transport iron ore between Western Australia and China.”
The McGowan Government is offering a 50% discount in port dues to bulk vessels bunkering with LNG at Pilbara Ports, saving each vessel about $20,000.
It is one of the carrots being used to entice ship operators to the Pilbara in the face of competition from other countries such as China, which is building its first LNG bunkering centre for international vessels in Shenzhen.
Ports Minister Alannah MacTiernan said major resources companies have already tendered for LNG-fuelled bulk vessels to carry iron ore from the Pilbara, and are beginning negotiations about where to bunker those ships.
“We’ve moved quickly to capitalise on this opportunity before our competitors in South East Asia claim the mantle,” she said.
“Importantly, a Pilbara LNG Bunkering Hub provides the platform for WA to become the region’s major renewable hydrogen producer and fuelling stop – driving down carbon emissions from shipping and creating a whole new industry for the Pilbara.”
The Year Ahead
Mr Johnston said the PPA’s primary function of facilitating trade in the Pilbara would continue.
“Our highest priority continues to be the safety and health of all personnel across our operations and the communities in which we operate,” he said.
“With the COVID-19 threat continuing, we are working with relevant government agencies and our shipping community to ensure stringent measures are in place to minimise the risk of the virus entering through our ports.
“PPA will also work to deliver the WA Government’s Spoilbank Marina development and administer the Port Hedland Voluntary Buy-Back Scheme while planning the development of a Maritime Precinct, as well as grow freight links and capability to service direct shipping into the Pilbara.”
Mr Johnston said PPA would continue to work with industry to establish the bunkering hub, thus supporting the Government’s climate policy.