The corporate tax profile of Roy Hill is common, especially in the mining industry due to the nature of operations, where a significant amount of upfront investment and debt repayment is required prior to generating any meaningful production income, while at the same time its employees pay income tax, and the company pays state royalties, licence fees and other charges.
Article by Daniel Wild courtesy of the West Australian
Momentum is building for bi-partisan reform between the WA State Labor Government and the Federal Coalition Government to cut red tape and boost economic growth.
As reported in these pages on November 27, the McGowan Government has reached out to the Federal Government to establish a “one-stop shop” for environment approvals.
This means that WA would be able to conduct the environmental assessment on major projects in the State, such as gas, gold, and iron ore developments, removing the need for assessment at the Federal level as well.
This is a very important development which could reduce the approval time of major projects by up to six months. The fast-tracking would not alter environmental standards because it is the duplication between State and Federal regulations that is to be removed, rather than reducing underlying regulatory obligations.
In announcing the initiative, Premier Mark McGowan said “industry has been crying out for bilateral approvals and we are responding to these calls.
This plan ensures we maintain the highest environmental standards, but don’t get bogged down in bureaucracy.” This is an example of Team WA working across party lines to achieve sensible economic reform. At the Federal level, red tape reduction is being led by the highly capable Ben Morton, who is the Assistant Minister to the Prime Minister and the Federal Liberal member for Tangney.
The bipartisan initiative comes at an important time. Across the nation business investment is just 10.9 per cent of GDP, which is lower than it was during the Whitlam years and is slightly above the recessionary lows of the early 1990s.
New private sector business investment in WA is 54 per cent below the 2013 peak which is holding back productivity, employment, and wages growth.
While there are non-policy reasons for this decline, it is red tape which has caused the decline to business investment to be deeper, wider, and more protracted than it otherwise would be.
Recent research by the Institute of Public Affairs estimated there are 107,817 regulatory restrictions contained in WA legislation alone.
To put this in context, New South Wales has a population around three times that of WA, yet has slightly fewer regulatory restrictions on the books.
Regulatory restrictions refer to instances in legislation which restrict or compel behaviour, including words such as “should”, “must”, and “shall not”. Importantly, IPA research found that the Department of Mines, Industry Regulation and Safety was responsible for imposing the most regulation on the West Australian economy with 17,097.
This was followed by the Department of Jobs, Tourism, Science and Innovation with 16,272 regulatory restrictions, and the Department of Justice with 15,226 restrictions.
It is a big problem that the two departments which have primary oversight of the WA resources sector and job creation, respectively, are also responsible for imposing the most regulation. This will undermine the ability of the McGowan Government to achieve its ambitious objective of overseeing the creation of 150,000 new jobs in WA over the next five years, which includes some 30,000 new regional jobs.
To understand the problem of red tape in the resource sector, consider the Roy Hill iron ore project in the Pilbara. The Roy Hill project required some 4967 licences, permits, and approvals for the pre-construction phase alone, approximately 79 per cent of which were imposed by the State Government.
And while Roy Hill has been able to successfully navigate the reams of red tape, many other projects, particularly those being undertaken by smaller businesses, cannot.
To further build on the encouraging bipartisan effort to cut red tape, the WA and Federal Governments should also introduce a one-in, two-out approach where two regulations must be repealed for every new one introduced.
This will place a binding constraint on bureaucracy to ensure there is a steady decline in regulation.
Daniel Wild is Director of Research with the Institute of Public Affairs
Article by Salomae Haselgrove courtesy of Australian Mining
Gina Rinehart has praised Prime Minister Scott Morrison’s plan to cut green tape for mining projects.
The Hancock Prospecting chairperson, speaking at the National Mining and Related Industries Day (NMRID), urged the industry to pressure the Western Australian Government to follow the Australian Government’s lead.
Rinehart said she had been “actively waiting a long time” to hear an Australian Prime Minister make an announcement of this sort.
“If high-cost Australia wants to remain internationally competitive and encourage investment to grow its exports, we need our government to cut its onerous, investment deterring burdens of government tape and taxes,” Rinehart said. “Let’s encourage the West Australian Government’s ‘Streamline WA’ initiative to emulate this Commonwealth drive by reducing duplication and regulation at a state level.
“Let’s help our government to focus on and progress significant tax and tape cutting.”
Morrison last week outlined a government plans to create a digital environmental approvals process, pushing a large pipeline of major projects forward during the next decade.
The nationwide digital platform will help projects to start faster and make it easier for businesses to interact with the government directly. Rinehart believes that cutting government tape and taxes is essential to create jobs for Australia’s growing population and bring revenue via exports to the nation’s economy.
She noted the industry’s importance not only to those directly involved with it, but the many other industries that reap the positive benefits of a strong mining industry. “Mining contributes more to our nation than any other industry and in turn, it is the foundations of the many related industries which rely on our industry,” Rinehart said.
“I could list things for hours, there’s very little that doesn’t contain minerals or is fabricated by steel equipment, made from minerals and coking coal.” She applauded the NMRID’s guests for the “massive contribution” they make to the industry and therefore Australia as a whole, providing it with essential resources used every day.
Article by Vanessa Zhou courtesy of Australian Mining
Roy Hill is on the verge of commissioning a processing plant that will help boost shipping of iron ore from the Pilbara site to 60 million tonnes a year.
The bright pink wet high intensity magnetic separator (WHIMS) plant will be a key contributor to Roy Hill’s production target once it is operational.
Roy Hill received approval last year to increase its shipping capacity.
The plant will use two types of magnets to capture the high-grade ultrafine iron ore that is not captured when it travels through Roy Hill’s current process plant.
This ultrafine ore will no longer end up in Roy Hill’s tailings dam, but instead be redirected via its existing processing plant to the fines stockpile.
Roy Hill chief executive Barry Fitzgerald said the project was the first of its kind to be used in a hematite environment by an Australian iron ore company the size and scale of Roy Hill.
“The WHIMS plant will reduce our environmental impacts by decreasing our tailings waste by approximately four million tonnes a year, as well as provide that four million tonnes a year as additional iron ore without increasing the amount of material mined (because it’s already part of the material that has been mined,” Fitzgerald said.
The plant is painted pink in accordance with Roy Hill chairman Gina Rinehart’s desire to raise breast cancer awareness among the staff.
“(It is) Mrs Gina Rinehart’s desire to encourage our staff to be supportive of breast cancer patients, and in honour of our many female staff on the Roy Hill team,” Fitzgerald said.
“Our staff continue to raise money to help breast cancer patients and or research. It is the first pink WHIMS plant in the world.”
Roy Hill expects to start commissioning this month and deliver first ore by December.
Article by Nick Evans courtesy of the Australian
The biggest privately owned mine in Australia is about to pull the trigger on a significant expansion as Gina Rinehart’s Roy Hill iron ore operations prepare to switch on a magnetic separation plant.
Roy Hill has spent the past 14 months building a high-intensity magnetic separation plant at the back end of its processing facility, designed to strip the last and smallest particles of iron from the wet tailings it deposits at the mine’s dam.
When fully built, the wet high-intensity magnetic separation plant (WHIMS) will deliver another four to five million tonnes of high-grade iron ore to Roy Hill, taking the mine’s export capacity to about 60 million tonnes.
It is understood the new product will grade between 61 per cent and 64 per cent iron, and will be used as a blending stock to upgrade product from lower-grade parts of the 22km-long deposit, and extend the life of the mine.
Before the WHIMS plant was built, the ultrafine iron ore particles it separates from waste were deposited in Roy Hill’s tailings dams and it is understood the company is considering feasibility studies to test the viability of reprocessing some of that material to recover iron ore previously lost into the dams.
Roy Hill says the WHIMS plant is the first of its type in the Pilbara’s iron ore industry.
It is believed the success of the plant is being closely watched by other miners in the area, particularly Fortescue Metals Group, which operates a similar wet beneficiation plant to Roy Hill at its nearby Christmas Creek and Cloudbreak mines.
Commissioning of the first stage of Roy Hill’s WHIMS plant is due to begin this month, and the plant is not expected to be fully operational until about the middle of next year.
The plant will help hold up the profitability of Roy Hill amid an expected softening of iron ore prices next year, as Vale’s Brazilian mines — curtailed after tailings dam disasters early this year — slowly return to full capacity.
Roy Hill chief executive Barry Fitzgerald said the WHIMS facility, painted bright pink as part of Mrs Rinehart’s “desire to encourage our staff to be supportive of breast cancer patients”, was the first separation plant to be used by a large-scale Australian iron ore miner at a hematite iron ore operation.
“The WHIMS plant will reduce our environmental impacts by decreasing our tailings waste by approximately four million tonnes per annum, as well as provide that four million tonnes per annum as additional iron ore without increasing the amount of material mined (because it’s already part of the material that has been mined),” he said.
“Commissioning began this month and we are targeting first ore in December.”
Despite teething troubles early in its life, Roy Hill is expected to hit 55 million tonnes a year nameplate exports in the 2019-20 financial year.
Spurred by surging iron ore prices early this year, Roy Hill booked a $1.4bn after-tax profit in 2018-19 — only its third full financial year of operations after shipments from the mine first began in December 2015.
Roy Hill is 70 per cent-owned by Mrs Rinehart’s Hancock Prospecting, with Japanese trading giant Marubeni holding 15 per cent, Korea’s POSCO 12.5 per cent and China Steel Corporation owning 2.5 per cent.
The reporter travelled to the Pilbara as a guest of the Chamber of Minerals and Energy.
Well thank you very much Tad and thank you ladies and gentlemen for being here this evening.
How good is our mining industry? How good is the Australian mining industry? Give it a round of applause! How good is the mining industry in this country? It is great to see so many of you out here this evening – a beautiful west Australian evening. It is very appropriate that we are celebrating National Mining day here in Perth because Perth is our nation’s biggest mining town. More people employed in the mining industry here in Perth than any other town in our country. And so can I thank Mrs Gina Rinehart, BHP, Atlas Iron, others here representing or sponsoring this fantastic day because we should remind all Australians of how much our great mining industry does for our country.
I live on the other side of the country over in Rockhampton and we’re a bit of a mining town as well, not as large as Perth, but mining is very, very important to my part of the world, and the reason I spend so much time and effort in trying to defend the industry and fight for the jobs it provides, is because it provides a future for our communities.
I’ve got five children, and I’d love for them to have an opportunity to stay and live and work in central QLD, and not to be forced to go off to Brisbane, or Melbourne, or Sydney, or somewhere else. And our mining industry offers me the hope that maybe one day my grandkids will be in Rockhampton as well because my kids will have gained full employment in or around the region.
So we’ve got to keep defending and fighting for it because of what it provides to families. There’s a constant role for us to do that. Because I don’t know what it is – I don’t know exactly why sometimes the mining industry doesn’t get the accolades it does. It can’t be because people can’t see you, because when I go to an airport terminal the brightest people in the terminal are those in the fluro yellow, the fluro orange, sometimes fluro pink. I know Mrs Rinehart does that a bit to support great causes. You’re in very bright colours, but for some reason sometimes the workers in this industry are invisible to our political leaders.
We need days like this to keep reminding people of how important this industry is. Reminding how much it does for our country today and how much it will for our future. I want to finish by saying it’s great to see how many kids are running around enjoying themselves, because one thing I don’t like about modern life is how much time my kids spend on phones, tablets and what have you, but we must always remember, even the modern technology like phones and tablets, they all come from the mining industry. The modern world truly does start with a shovel, because without a shovel, you don’t get lithium, you don’t have rare earths, and you don’t have the stuff that goes into phones, into computers, into renewable energy as well.
This is such a great industry. It does so much for our country, and for the world. I’m proud to be the Federal Resources Minister. I’m very proud to join Mrs Rinehart and others here tonight to celebrate the industry. I hope you have a fantastic evening. Great to open the evening, enjoy the night and God bless.
Speech by Mrs Gina Rinehart
Patron and Founder National Mining & Related Industries Day
Executive Chairman of the Hancock Prospecting Group and Roy Hill
National Mining and Related Industries Day
Friday 22 November 2019, Perth
Welcome Minister Canavan, distinguished guests, friends, mining colleagues and your families.
Happy National Mining and Related Industries Day!
It’s wonderful to celebrate with you the seventh annual National Mining and Related Industries Day – an industry that is an essential part of Australian life.
And wow – I haven’t spoken to so many thousands of Australians since I was on the back of that flat bed truck yelling out ‘axe the tax!’ – lost my voice over that one! Great to see you all here.
Our mining sector has delivered for the whole of Australia over many decades, opening up remote and rugged areas that wouldn’t be productive otherwise – providing employment, opportunities and revenue in Australia’s north.
The importance of mining to the Australian economy should not be underestimated.
Last year, Australia’s then Governor General invited us to his Canberra residence to celebrate our National Day. His Excellency General, the Honerable Sir Peter Cosgrove AK MC (Retd), one of the finest Australians our country has ever produced.
Superbly said in his own fine words. Please join me in applause.
Please see more of the then Governor General’s speech on our National Mining and Related Industries Day website.
Many of you would have heard me say before, albeit less eloquently – if high cost Australia wants to remain internationally competitive and encourage investment to grow its exports, which exports bring massive revenue into Australia, and future jobs for our growing population – we need our Government to cut its onerous, investment deterring burdens of government tape and taxes.
Let’s help our Government to focus on and progress significant tax and tape cutting.
Our Prime Minister gave a positive address just recently in Queensland.
Again, more of the Prime Minister’s address can be found on our National Day website.
Those who know me, know I’ve been actively waiting a long time to hear words like this from one of our Prime Ministers!
Let’s encourage the West Australian Government’s ‘Streamline WA’ initiative to emulate this Commonwealth drive by reducing duplication and regulation at a State level.
At its very core, mining is nation building.
Mining in Australia is an industry we can be proud of, and proud of our contribution to it. And it in turn, it is the foundation of the many related industries which rely on our industry.
Thank you to each and every one of those in the mining industry. Please join me in an exceptionally huge applause.
Thank you to each of you for the massive contribution you help to make to our State.
And thank you too for the massive contribution you make to our country. Mining contributes more to our nation than any other industry. Please join me again in massive enthusiastic applause.
Indeed, thank you for the essential contribution you make to civilisation. Everywhere you look, from the homes or offices you’ve left to come here, to the hospitals you may have family or friends in, to the vehicles you arrived in tonight, to your mobile phones, to the band’s instruments we’ll be enjoying tonight – and I could list things for hours – there’s very little that doesn’t contain minerals, or is fabricated by steel equipment, made from minerals and coking coal. Indeed, technological advances in our industry, spread to others.
Let’s hear it for our essential mining industry!
It now gives me great pleasure to show you a brief film that we at Hancock and Roy and with the help of Atlas too, have put together especially for National Mining and Related Industries Day.
It’s had three writers and co producers, thank you Julian and Tim – you’ve been fantastic, and a great production team – we all hope you love this film too. Please bring along your singing voices and sing with gusto for at least the last chorus.
18.44: National Mining Day video
Great singing! This is your night, please have a terrific night.
November the 22nd signifies National Mining and Related Industries Day 2019, an important annual day that will be celebrated this year at Kings Park in Perth, Western Australia.
A time to reflect, consider, appreciate & champion the mining community and the myriad of benefits to all Australians that result.
Co-sponsored by Roy Hill, Rio Tinto and BHP, this year, as prior years events, will be truly remarkable.
Aside from enjoying world-class entertainment throughout, this year’s 3,000 strong audiences will have the opportunity to listen to National Mining and Related Industries Day Patrons Tad Watroba, Hancock Prospecting’s Executive Director and the pinnacle of the mining industry, Gina Rinehart, Hancock Prospecting’s Executive Chairman.
Special guests at the event include the Federal Resources Minister, the Hon Senator Matthew Canavan as well as leaders from BHP, Rio Tinto and Roy Hill whom will each speak in contribution and in celebration of our industry. Each of which acknowledging just how significant mining and its related industries are to investment, job creation and ongoing significantly enhanced Australian living standards.
This annual celebration presents a brilliant opportunity for us all to show genuine appreciation for Australia’s mining and related industries – as they remain ultimately, one of our country’s most significant and necessary sectors, essential to the ongoing quality of life experienced by every Australian.
Interview with Roy Hill CEO Barry Fitzgerald, courtesy of Mining Technology.
Maptek recently collaborated with Roy Hill as part of a project to find new ways to accelerate orebody knowledge and inform mine planning. One outcome of the collaboration was the delivery of a new machine learning approach to grade estimation.
We spoke to Roy Hill CEO Barry Fitzgerald to understand Roy Hill’s approach to technology partnerships, and how to get the most out of an innovation partnership.
Could you tell me what the partnership between Maptek and Roy Hill looked like?
We’d been looking to make sure our mine planning and understanding of our orebody is at the highest level possible, and were open to leveraging emerging technologies to realise this. We had people within our own team working towards a solution who had worked with people from Maptek previously. By talking with Maptek we identified that we had some common outcomes that we could work towards.
From a Roy Hill perspective we saw that by working with Maptek collaboratively, and in particular by not trying to own all the IP, we could move the product forward in a way which achieved much better outcomes for both of us. We had the operational knowledge and knew where we were trying to drive the product to – adding value – and obviously Maptek had the technology and the smarts and understanding of their system to bring the product to life.
So we had some really clear outcomes together, we had a collaborative environment which wasn’t driven by IP knowledge or ownership or anything like that. We managed it in a very professional way by having key governance meetings where we made sure we resolved issues in a timely manner and had weekly progress conversations both on a technical and at thinking level.
Fundamentally I think it was a really good combination of shared purpose and understanding of what was really going to add value to us and obviously the understanding from a technical point of view about how we could best do that.
Was there anything that surprised you during the partnership?
We knew that there was a lot of value to be unleashed, but if someone asked us to define what that value was, it probably would have been difficult for both of us to put a figure on it. We worked out if we worked together we could probably achieve something significant – and that’s what we did.
We leveraged automation and disruptive technology, to make the geologists the masters of their processes and systems, and that freed them up and that’s where we got the value. It freed our geologists so they now have time to critically think about the world rather than be process driven; and Maptek developed each program to drive that. The outcome we got was a really enhanced process in terms of what we could achieve as a business and I think the other outcome which probably surprised us was the level which we could bring technology and new thinking into the final outcome.
It’s interesting you talk about the critical thinking rather than process drive for the staff and the people. How important is this change of thinking?
If you think about the past, what we did was we spent a lot of time bringing the data together, collating it and putting it into a form which you could understand. We had quite long timeframes to do that, which were quite intensive on people.
Through this partnership with Maptek, we ended up developing a virtual reality model of the Roy Hill project and we used some machine learning technology for the geological modelling. We have been able to automate a lot of the processes and we can then generate a means of virtually looking and walking through the orebody and understanding it. That allows you to understand the complexity and the scale of the project.
I think that is something which is unique because it means the people who are doing the work are changing from grinding out the numbers to saying ‘I’ve now got the model, let’s walk through it and understand it.’ It allows you to visualise it in depth and in cross section so it allows you to work through it in three dimensions. It’s not a big step from there to then add the time dimension as well as the mine develops. There’s a huge amount of opportunity to look at the way things work.
How satisfying is it to see the mine presented in this whole new way?
It’s added a lot for our own staff in terms of what we’re doing with the orebody and it makes it much more accessible to a whole range of other people. You no longer need someone who’s looked at the plans that you get from the normal process to familiarise themselves. Not everyone has the capacity to understand or visualise things, and so what you can do is you can make it much more accessible to a whole range of people by saying ‘Hey, come have a look at this!’ and they can suddenly walk through it and they’re immersed in it.
We have what we call a ROC Ed program where we have school children visiting our office and we allow them to use this technology and walk through the orebody using VR headsets.
It works so well because many young people just get the technology and that allows us to bridge both the knowledge and age gap.
Was there a specific outcome from the project involving Maptek that was the most important or rewarding for the company, and what did that mean for Roy hill?
AI algorithms were included in the project and one of the things we did was compare the algorithms’ outcome with what we would do through a manual process. In the manual process, you had a very time-intensive, human resource-intensive process against the very short AI process. When we did an assessment of the accuracy of both of those we found a very high correlation. This demonstrated its benefits and gave us the confidence that AI was not only time-saving but it was accurate. We’ve moved on from that original one to use it for other challenges and it’s given us confidence to further explore using AI.
The second point relates to the comment I made about it providing an immersive experience. This project has made understanding our orebody much more available to a broader range of people; and given the people who have to use it on a day-to-day basis a whole new perspective, as it allows them to see it differently. It’s really taking our business forward to understand Industry 4.0 and disruptive technologies.
My view is that all of these technologies are becoming consumerised. What I mean by that is that 20 years ago, research used to be very specific, and you had to have a detailed program and then go off and pursue it. But these days, you’ve got technologies and techniques, and it’s very much like going into a supermarket where you can buy them and place them together to make yourself a great cake. What we’re seeing is that we’ve got various technologies around, such as machine learning, where we can apply them to solve problems which in the past would have been too time consuming or too difficult to do using conventional methods.
Another outcome is that it creates an awareness that as we move forward in our professional development, both individually and as a business, we need to change our understanding about the impact of digital transformation. We need to be prepared and challenge the way we work, to look for new ways, and as we develop our skills and workforce, we can change and empower them to be more receptive to using these other, emerging technologies.
What were some other positive outcomes for Roy Hill and its people?
I think the point about ROC Ed is really important. What we’ve got the ability to do now is to demystify mining, which has traditionally been very much a mechanical and physical thing, to a certain extent. To be able to immerse students in an orebody, gives them the insight that there is this huge amount of technology involved in mining and shows them the applicability of STEM in the mining industry. It gives them a really good sense of awareness, and I think in our society the need to encourage people into STEM is really important.
From a Roy Hill perspective it’s given us the ability to give all the people in the organisation who are not very involved in the mine planning – an understanding of our orebody. For people associated with the mining itself but not the mine planning, it gives them a better way to recognise what we do, and to put what they do on a day-to-day physical context into a more holistic picture. It’s enriched the opportunity for a lot of people to understand things in a broader way.
So this new visualisation is powerful for more than just geologists?
I’d agree with that. It does mean that you can you can really make it much more accessible to people, but still in a detailed way. It it shows the complexity but still allows people to understand the complexity whether that be through the visualisation or the AI.
Can you tell me a bit about what’s next?
What we have identified is that there are lots of ways we can leverage the technology. We’ve seen it work for our current orebody which we’ve been mining and it gives us the confidence to look at other orebodies. It gives us the ability to look at orebodies which haven’t been mined because we now have a much better understanding of how we can do it. I think it really does change the way that we start off mine planning – the value adding of orebodies – because we can look at them in a more holistic manner.
Having the confidence with the machine learning and AI means there is now a range of problems, which in the past we would have thought were too hard, too expensive or too time consuming, that are now viable.
Is there anything else you’d like to add?
One of the driving principles at Roy Hill is that we see ourselves as a relatively small and agile company. From our perspective, working closely with suppliers and technology companies is a great way of leveraging that. It’s important that we as a company have an operating environment and approach to collaboration, partnerships and innovation that meets the needs of both parties, and this reduces some of the more traditional constraints that people have operated under – about who owns what – and all those other issues. I think what we’re showing is that the speed of delivery and the benefit of delivery outweighs some of those other traditional constraints which others impose on innovation relationships.