During November 23-30 a group of Mongolian government officials, private sector representatives and World Bank officials travelled to Australia in connection with the Southern Mongolia Infrastructure Strategy (www.worldbank.org/southgobi). The study tour addressed a range of issues including railways for the mining industry; environmental management of the mining industry; township and accommodation options for the mining industry; social impacts of mining development; and the effects of a construction industry boom associated with mining development. The study tour participants and itinerary are attached here. The Mongolian government's report of the study tour is attached here. All of the study tour participants were delighted with the warm welcome and assistance they received from their hosts in Australia. Hunter Valley In the Hunter Valley, 3 hours north of Sydney, the group visited a coal mine (Mount Thorley Warkworth), a coal-fired power plant (Bayswater), and the port facilities at Newcastle (Port Waratah) - the biggest coal-exporting port in the world. The Hunter Valley includes multiple coal mines which, in order to keep transport costs down, have been developed sequentially further and further from the coast, over more than a century.  |
Transporting coal from multiple mines to the port, and blending coal types to achieve Newcastle's 80 brand specifications for coal, is a major logistic task. In recent years, export potential has been constrained by the logistics system. An optimal queue would be about 15 ships waiting off the coast to be loaded - when the group visited there were about 35 ships. (Ship rental runs at about $200,000/day). A couple of years ago, the constraint was the port, but new loading facilities and berths have recently been constructed. Now, the constraint is the capacity of the rail network,. Part of the difficulty in expanding the rail network has been the complication of coordinating multiple industry participants. There was much discussion of the complication of coordinating private rail operators, with the state-owned track owner, and in turn with the mines and the port. A special logistics committee of industry representatives has been set up to deal with the daily sequencing issues. The more difficult issue is ensuring synchronized investment across the system. A feature of the Hunter Valley was the care taken to manage environmental impacts. The group visited rehabilitated areas close to mines; and were also told about the use of fly-ash from the power plant as land-fill for old mines.
Presentation by Port Waratah Coal Service
Sydney In Sydney the group met with the head of Public-Private Partnership projects for New South Wales (NSW) Treasury, and the Deputy of the Office of Coordinator General, from the Department of Premier and Cabinet. The Coordinator-General is responsible for ensuring coordination between different line ministries to ensure delivery of major infrastructure projects. The Office of Coordinator-General has the power to "step-in" (ie take control of line ministries projects) when they become unreasonably delayed. So far, this power has not been used, though its threat is seen as an effective tool. The Coordinator-General's office monitors compliance with a hierarchy of plans, to deliver the desired outcomes for the State, and for particular development regions. The NSW Treasury gave an overview of the coal industry in NSW, as well as the regulatory issues surrounding rail access. The NSW Government has sold its railway tracks to the national government owned Australian Rail Track Corporation, and private operators run their own trains and carriages over this network, with prices for use of the tracks regulated by the Independent Pricing and Regulatory Tribunal. Presentation by NSW Coordinator General Peter Duncan
Presentation by NSW Head of Treasury Danny Graham
Perth The Director of the Western Australia (WA) Geological Survey, provided an overview of the mining industry in WA, including taxation, royalties, Government approvals, and geological information provided by the Government. The Director of the National Competition Commission gave a presentation addressing the regulatory regime governing access to rail facilities operated by BHP Billiton and Rio Tinto in the Pilbara region.
o BHPB and Rio Tinto privately financed and built these railways, starting in the 1960s. Small iron ore mines have recently been developed near the iron ore mines of BHPB and Rio Tinto, and these small miners have sought access to the two large companies' private railways.
o In a decision made by the national government just a few weeks before the study tour, the Pilbara railways were "declared" to be subject to the national access regime, meaning that third parties can now seek access to the railways and if they are not able to reach agreement with the owners, the price and other terms and conditions of access will be determined by the Australian Competition and Consumer Commission. BHPB and Rio Tinto have challenged this decision in the courts. The Chair of the North West Iron Ore Alliance, representing a group of small iron ore miners, gave a presentation supporting the NCC's economic justifications for the provision of regulated access to the Pilbara railways. The Economic Regulation Authority of Western Australia is responsible for regulating railways in the mid-West region of WA, where new iron ore rail and port facilities are being developed. Staff of the Authority gave presentations setting out the role of the regulator, and the process for developing the new regulatory approaches. One of the aims is to ensure that from the outset, investors know what will be the rules concerning access, so that the sort of litigation seen in the Pilbara can be avoided. A representative of Leighton Asia, which is the chief contractor for Energy Resources Rail's project in South Gobi, gave a presentation on the company's activities around Asia, and also discussed the impact of Western Australia's mining boom in the construction sector, as well as giving thoughts on options for development of townships in Southern Mongolia. The group watched a video dealing with the social impacts of the mining boom in Western Australia. The video can be seen at: http://www.abc.net.au/4corners/content/2008/20080818_boom/interviews.htm
Presentation by Mr John Feil of the National Competition Council Presentation by WA Department of Industry and Resources
Presentation by National Competition Council
Presentation by North-West Iron Ore Alliance
Presentation by WA Economic Regulation Authority - Rowe
Presentation by WA Economic Regulation Authority - Dumas & Threlfall
Presentation by Leighton Asia Pilbara The group flew to the Pilbara, and inspected an iron ore mine at West Angelas, flew over mining towns (including Tom Price, where iron ore was first discovered in the region), and inspected the rail and port operations at Karratha and Dampier. The group inspected the fly-in fly-out facilities at West Angelas, and also gained an impression of the more permanent settlements on the coast. Rio Tinto Iron Ore's chief legal counsel addressed the group, arguing that it was inefficient to permit third parties to access Rio Tinto's rail facilities, but that third party access might be efficient in other contexts. Presentation of West Angelas Iron Ore Mine
Presentation of Rio Tinto Iron Ore Railway
West Angelas Iron Ore Mine
Rio Tinto iron ore railway operations control |
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