Contractors rush to Roy Hill as projects dwindle – by Andrew Burrell (The Australian – June 10, 2013)

GINA Rinehart’s $9.5 billion Roy Hill iron ore project has emerged as the potential saviour for scores of contractors and suppliers hit hard by the mining slowdown, with almost 2000 of them set to attend briefings this week to discuss opportunities from the huge development in Western Australia’s Pilbara region.

The turnout expected at meetings in Perth, Port Hedland and Newman starting today dwarfs the 800 who attended similar briefings just 10 months ago, before the deep anxiety over weaker commodity prices infected the sector.

The slump has forced mining companies to slash costs and defer or abandon some projects, leading to a string of profit downgrades by contractors including Transfield, WorleyParsons, Ausdrill, Calibre and Emeco.

Amid talk in WA that the state’s once-booming economy is headed for a recession, mining contractors desperate to fill their order books will clamour for work on Roy Hill, which is shaping up as one of the biggest mining projects in the west for several decades.

It is believed the main construction contractor, South Korean giant Samsung, will deliver contracts worth at least $4bn to local companies, providing a crucial injection into the economy.

However, Roy Hill still needs to secure $7bn in debt funding from international banks and export credit agencies before the project can go ahead. The financing has taken Mrs Rinehart far longer than expected to bed down, leading to speculation she may be struggling to find backers in a climate of lower iron ore prices and rising costs.

The project involves a new mine capable of producing 55 million tonnes of iron ore a year, a 344km railway and a new port at Port Hedland.

A briefing for contractors and suppliers in Perth planned for Wednesday night has already attracted more than 1400 registrations.

A further 230 have registered in Port Hedland and about 100 in Newman.

The strong interest from local contractors highlights how Roy Hill is now unlikely to need the controversial Enterprise Migration Agreement to import up to 1500 foreign workers that it signed last year with the Gillard government.

The agreement has still not been ratified.

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