Port the money maker

A LANDMARK study has shown just how important the Port Hedland port supply chain is to the town, the state and the nation.
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Port Hedland has been proved to be an economic powerhouse with even greater potential.

Karma Barndon

According to ACIL Allen Consulting’s report, an Economic Study of Port Hedland Port, the world’s largest bulk export port supported about 5000 local jobs and contributed $418.4 million in direct economic output and $585.9 million in indirect economic output for the town in 2015-16.

The study shows much of WA’s growth in the past decade has come from rich resource base and investment hot-spot the Pilbara and its various major projects that came on line or are nearing completion; such as Hancock’s US$10 billion Roy Hill, BHP’s $US7.4 billion Jimblebar, Fortescue’s Chichester and Solomon Hub’s, and Port Hedland’s  port expansion.

In 2016-17 total export tonnage from the port was 495.6 million tonnes worth about $49.3 billion, up from 454.1Mt and $29.1 billion in 2015-16.

This jump is attributed to a mid-year increase in iron ore’s spot price to about US$90 per tonne, an appreciation of the Australian dollar and a 9.1% rise in total volumes exported.

Since 2006-07 iron ore exports from the port have gone up almost five-fold, from 106.2Mt to this year’s 495.6Mt, and total state iron ore exports also grew from 259Mt in 2006-07 to 748.1Mt in 2015-16.

Gross regional product estimates for 2014-15 also show the Pilbara is WA’s largest regional economy and responsible for 23% of the state’s gross state product, although since that period growth has been tempered by a  weaker jobs market and a falling population plus a rapid decline in property.

However, the study says there are now signs this slowdown may have run its course as state-wide full-time employment has risen each month since the beginning of 2017 in-line with a drop in the unemployment rate, from 6.4% in March to 5.4% in July.

On a national level about $30 billion was directed into federal government coffers and 86,240 jobs supported; and from this around $26.4 billion went back to Western Australia in support of 59,000 full time jobs.

Taxation receipts also handed the WA government $2.2 billion and the federal government a further $2.4 billion.

Much of this was through royalties to the state ($1.9 billion) and company tax ($1.8 billion) and personal income tax ($606 million) to the crown.

ACIL Allen Consulting executive director John Nicolaou said the study was the first of the kind to be undertaken on the port and will demonstrate the economic value of the port’s infrastructure and the trade it facilitates.

He said Port Hedland’s port was one of Australia’s most important pieces of economic infrastructure, as it delivered substantial flow-on benefits locally, regionally and to the rest of Australia.

Nicolaou said the study expected a 4.4% rise in exports from 495.6Mt in 2016-17 to 613.7Mt in 2021-22, which equates to annual average growth of 4.4%.

He said the study also forecast that if the port continued to grow and did in fact reach its full potential over the next 10 years and hit ultimate capacity of 700 million tonnes per annum an additional $37 billion would be generated for the national economy, of which $11billion would go back to the Pilbara.

Nicolaou said to put it all in context, the future economic growth from the Port of Port Hedland was equal to 1.5 times the export earnings of Tasmania, the equivalent of a new South Australian mining industry every year or 2.5 months of jobs growth in the state every year for 10 years.