INITIAL WORK APPROVED FOR PORT HEDLAND

BHP Billiton today announced approval of US$917 million (BHP Billiton share US$779million) 1 in pre-commitment funding for the construction of a 100 million tonne per year outerharbour facility associated with its Western Australia Iron Ore operations.

The project, which is expected to be reviewed for full approval in the fourth quarter ofcalendar year 2012, has an embedded option to expand by a further 100 million tonnes peryear.

The funds approved today will enable the Company to progress feasibility studies and theprocurement of long lead time items. It will also allow for dredging to begin, subject to thenecessary regulatory approvals. In parallel with this work, engineering studies are underwayto match mine and rail expansions to the expanded port capacity.

The first phase of the Outer Harbour Development would include the proposed constructionof a four kilometre jetty, a four-berth wharf, 32 kilometres of dredged departure channel andlandside infrastructure, including stockyards and a rail spur.

Start-up would be in the first halfof calendar year 2016.

BHP Billiton President Iron Ore, Ian Ashby, said: “This investment is an important first step inproviding the infrastructure to allow us to fully develop our world class resource base in thePilbara. The development of the outer harbour is pivotal for our longer term growth objectivesand this initial funding is rapidly turning those plans into a reality.”

SOUTH HEDLAND UNDERGROUND POWER PROJECT COMMENCING SHORTLY

In December 2011, the Town of Port Hedland and Horizon Power signed an agreement which will see the commencement of Horizon Power’s Pilbara Underground Power Project (PUPP) in South Hedland and Wedgefield.

Horizon Power and the Town of Port Hedland have been working together over the past 12 months in planning and finalising the works program, evaluating KvA data, developing the financial model and finalising funding agreements.

Residents of South Hedland can expect to see works commencing in initial areas in early February 2012. This stage of the project is expected to be completed by mid-2013.

It is anticipated that works in Wedgefield will commence in April/May and residents and business owners will be notified in advance of its commencement.

The $43 million project is a partnership between Town of Port Hedland, Horizon Power, Department of Regional Development and Lands, Royalties for Regions and Pilbara Cities.

“Many residents in South Hedland and Wedgefield lost access to power during Tropcial Cyclone Heidi, which recently hit our coast. This highlights the urgent need for underground power which will assist in preventing this happening again and also reduce the risk of damage to households and property caused by falling power lines,” said Town of Port Hedland Mayor Kelly Howlett.

“The PUPP project is one of many projects identified by Council as key to the transformation of Hedland into Pilbara’s Port City. Providing the best utilities and services is essential to the growth of any town and with State Government we are proud to deliver what will be a milestone achievement for the Town and the community,” said Mayor Howlett.

“Council will be contributing 25 percent of the total cost of the project, amounting to an estimated total of $10.8 million. As with the Port Hedland Underground Power project, the contribution will be funded by South Hedland and Wedgefield ratepayers in the 2012/13 financial year,” said Town of Port Hedland Chief Executive Officer Paul Martin.

The estimated charge for an average household would be approximately $2300 based on the modelling undertaken to date.

“Ratepayers will have the option to pay this amount over a five year period, with interest and instalment charges to be determined at the time of the adoption of Council’s 2012/13 Annual Budget,” said Mr Martin.

In November 2011, Council resolved to investigate providing concessions as part of the 2012/13 budget process for pensioners, not for profits, owner-occupier residentials and owner-occupiers businesses.

More information on the concession rate will be provided in the following weeks.

The project will be staged over approximately 15 months. There will be some disruption whilst the work is being undertaken with Horizon Power needing access to internal and external meter boxes, temporary power outages and in some cases disruption to verges and front gardens may occur.

The undergrounding of power will see a reduction in the likelihood of power outages and electrical faults during cyclone season, as well as improving the visual amenity of South Hedland to bring it on par with Port Hedland, which had their power undergrounded in 2006/07.

Horizon Power’s Engineering and Projects General Manager Peter Jensen is looking forward to the project commencing and the benefits it will bring to the town.

‘The project is not only exciting for the residents of the town but also for Horizon Power who will be able to deliver their vision of safer and more reliable power supplies to the Pilbara,’ said Mr Jensen.

The Pilbara Underground Power Project is a partnership between the government of Western Australia (through Pilbara Cities) and Local Government Authorities, delivered by Horizon Power.

For more information please visit the Horizon Power website (www.horizonpower.com.au) and project information can be found under ‘Projects’.

For queries about PUPP please contact Horizon Power Community Relations Manager, Monika Page on 0428 979 283.

PAUL MARTIN

CHIEF EXECUTIVE OFFICE

FRIDAY 27 JANUARY 2012

‘EXTRAORDINARY’ PORT HEDLAND TOPS MARKET

PORT Hedland has been named Australia’s most remarkable property market, with house prices rising 22 per cent a year over the past decade.

Founder of hotspotting.com.au and author of The Ryder Report, Terry Ryder, believes Port Hedland, one of the world’s biggest export terminals for iron ore, is “extraordinary” and unlike any other market nationwide.

“This continues to be the most extraordinary property market, with house prices rising an average 22 per cent a year for the past 10 years and the median price now $1.04m,” Mr Ryder said.

“Just when you think they can’t go any higher, they do.

“The median price rose 11 per cent in 2011.

“Despite these ridiculously high prices, you can still get 10 per cent yields because typical rents are above $1800 a week. There is no other market like this in Australia.”

Releasing his selection of the best performing markets in 2011 and forecasts for 2012, Mr Ryder identified Murdoch and its surrounding precinct - currently being beefed up with new mixed-use commercial developments and the $2 billion Fiona Stanley Hospital - as the WA market’s rising star for 2012.

“This is a cluster of middle-priced suburbs around a major university-hospital precinct,” he said.

“The $2b Fiona Stanley Hospital is also under construction and the State Government has released the nearby Murdoch Mix site for development.

“This precinct draws 25,000 doctors, nurses, teachers and students every day, creating strong housing demand.”

While mining towns feature prominently in his forecasting, Mr Ryder does not describe the current mining and resources phase as a boom, but rather a long-term change that positions Australia for ongoing economic prosperity.

“The term “boom” implies a short, sharp upturn followed by an inevitable bust,” he said.

“I believe we’re seeing long-term structural change in the world economy, which will see Australia emerge as the world’s major source of the resources for developing nations.

“Western Australia, which achieved the highest-ever quarterly economic growth rate in Australia in the September Quarter, is leading the nation in this long-term future role as one of the world’s greatest resources nations.”

However, he warned that the increasing trend of FIFO (fly-in, fly-out) workers posed growing potential risks for those investing in real estate in mining towns, especially those solely dependent on the fortunes of a single project.

Mr Ryder labelled Newcastle as the nation’s most under-rated market, with some suburbs delivering double-digit growth in 2011.

South Australia’s star performer in 2011 was Ceduna, while Gladstone was the best in Queensland, The Hunter Valley in New South Wales was the State’s most active market last year while Ballarat proved the best in Victoria.

(Source: perthnow.com.au)

BHP BILLITON SEES RECORD IRON ORE RESULT

Mining giant BHP Billiton says iron ore production jumped to record levels in the December quarter from the same time in 2010.

Iron ore output in Western Australia rose 22 per cent to 41 million tonnes in the quarter.

Quarterly oil and gas production rose following acquisitions in the United States although copper output dropped in the quarter compared with the same period in 2010.

Looking ahead, maintenance work and seasonal rains in WA’s Pilbara region were expected to impact on iron ore production in the first six months of 2012.

But BHP says it still anticipates full-year production for the 2012 financial year to surpass expectations of 159 million tonnes.

Yesterday, Rio Tinto and Fortescue Metals both announced new highs in their quarterly iron ore output.

IRON ORE HEAVYWEIGHTS POST RECORD RESULTS

Solid economic growth and strong demand in China have helped mining heavyweights post record iron ore production results in the December quarter.

Rio Tinto produced 63 million tonnes of iron ore in the quarter at its mines in Western Australia’s Pilbara region, the company announced in its 2011 fourth quarter operations review.

That takes output for the calendar year to 231 million tonnes, surpassing analysts’ forecasts.

But copper output was hampered by industrial action at some of its mines in the period.

In a statement, chief executive Tom Albanese said both quarterly and full-year iron ore production and shipments beat previous achievements.

“Across the Group, production has bounced back from the severe weather conditions experienced in the first half, which had the biggest impact on Australian iron ore, coal and uranium,” Mr Albanese said.

Meanwhile, in its latest quarterly production report Fortescue Metals Group says it will triple its iron ore production by mid next year.

The country’s third largest iron ore miner says it shipped 14.8 million tonnes of iron ore in the three months to December.

That was an increase of 19 per cent on the previous quarter and the best result since work began on the company’s first project in 2006.

Chief executive Nev Power says production will reach 155 million tones in 2013, and he is confident it all will be sold.

“It’s somewhere north of 120 or 130 million tonnes that is under contract at the moment, and we’re continually working with our customers to sign new contracts to take us up to the 155 million tonnes,” he said.

Iron ore prices fell sharply in the December quarter, from around $156 to $119 per dry metric tonne, due to volatility on global commodity markets.

But Fortescue is forecasting prices to increase to around $131 per tonne this quarter, and Mr Power says strong demand from China will underpin prices.

Figures released today show China’s economic growth eased in the December quarter, but Mr Power expects demand to remain solid.

“Stocks of iron ore in China are at relatively low levels for this time of year,” Mr Power said.

“And there will be some re-stocking, we expect, as the economy continues to grow once the inflation controls are eased and it’s past Chinese New Year.”

Rio Tinto shares finished 1.3 per cent higher at $65.70 and shares in Fortescue Metals Group closed up 3.9 per cent at $4.80.

(Source: abc.net.au)

Pilbara council rejects BHP bid for workers camp

The Town of Port Hedland has rejected an application by BHP Billiton to build a 6,000 bed, temporary workers camp between Port and South Hedland in the Pilbara.

The company wants to build the camp to house workers for its $20 million expansion in the region but Town of Port Hedland councillors met last night and voted to re-negotiate with BHP instead.

The council wants BHP to reduce the number of workers to be housed at the camp and cut the land lease to a 10 year initial term, with an option for a further five years.

The council also plans to look at building more housing to alleviate the town’s accommodation shortage.

Port Hedland Mayor Kelly Howlett says there has been a lot of community interest in BHP’s proposal with 20 submissions received about the proposal.

“That’s what the whole process is about and it’s fantastic that, as an outcome of these submissions, it clearly demonstrates our commitment to ensuring the needs of the community are given priority,” Ms Howlett said.

Ms Howlett says the council and BHP will now go back to the negotiating table.

“It’ll begin as soon as practically possible as per normal council business,” she said.

BHP Billiton will continue discussions with the Town of Port Hedland.

In a statement, BHP says it will look at other potential locations for temporary accommodation for its construction workforce.

(Source: )

REAL ESTATE IN REGIONAL WESTERN AUSTRALIA CONTINUES TO GROW

Real Estate in Regional Western Australia continues to Grow 

In the latest REIWA market update for the September Quarter shows that the Port Headland Urban Area continues to grow at significant rates while other areas of the state are showing little or no growth.

 To year end September 2011 there has been 358 properties sold, which includes Houses Units and Land at a Median Sales price of $ 764,500 an increase of 7.2% over the same period in 2010 and a staggering 21.7% from 2006.

Port Hedland Results

 51 Houses, 10 Units, 13 blocks of land at a median price of 1,095,000 with the increase in the median  price of 15.3% over 2010 and 21.1% over 2006

South Hedland Results

190 Houses 27 Units and 67 Blocks of land at a median price of $ 740,00 with the increase in the median  price of 10.3 over 2010 and 25.20% over 2006

The market in both areas of Hedland continues to grow both in the Sales and Rentals areas. There continues to be a shortage of properties for Sale and Rent. With the shortage properties for rent and the high demand rentals are continually increasing which in return is pushing up the Sale prices. No one knows how long this will last but as history shows the wonderful area just continues to grow year after year.   

PILBARA CITIES UNDER THREAT FROM FIFO WORKFORCE

The Pilbara Regional Council says a plan to turn Karratha and Port Hedland into bustling cities of 50,000 people will falter, if the fly-in fly-out workforce increases.

The State Government yesterday named Mirvac as its preferred developer for the Pilbara Cities Project which will see more than 1,500 houses built in a bid to attract more residents to Karratha.

The $1.5 billion project will also include a re-vamp of the city centre.

But WA miner Fortescue Metals Group predicts its FIFO workforce will increase by 350 per cent over the next five years.

Lynne Craigie from the Pilbara Regional Council says the reliance on this type of workforce needs to change.

“I think the vision of Pilbara cities is fantastic and we would love to see it come together but FIFO certainly won’t help that dream, because while people can FIFO there wont be a need for a city there,” she said.

“We need to attract residents to come and live in this beautiful part of Australia and work there.”

Ms Craigie also says the government can do more to entice people to the region.

“The things that we could do to bring that about would be like changing the tax zone rebate,” she said.

“While the FIFO worker gets same tax break as someone who is a permanent resident in the North West, there’s no incentive for people to come live there.

“I think the State Government needs to step it up, we need land to be released, we need the utilities to be upgraded so they will cope with the increase in population.”

Ease prices

The State Government says the project will help ease house prices in the Pilbara town.

Yesterday, the Regional Development Minister Brendon Grylls said it was a major step forward.

“By getting the supply side right we put downward pressure on property prices, downward pressure on rents and that starts to normalise the market,” he said.

“And, again in resource projects in the southern part of the state we don’t have people living in camps, we have people living in homes.

“That’s our intention in the Pilbara.”

The Premier Colin Barnett said while FIFO will always exist in the Pilbara, the government is trying to plan for the long term.

“Fly-in fly-out numbers of workers will probably increase in the short term but it will peak and it will start to fall,” he said.

“The mining companies themselves in the longer term want to see more of their employees working and housed in the region on a permanent basis.”

Stage one of the development is expected to be completed by mid 2014.

(Source: abc.net.au)

Development Proposal Could See Council On Track to Becoming Financially Sustainable

The Town of Port Hedland Council has endorsed to release the Business Plan for the Development of Precinct 3 for public comment.

The Business Plan, which was a Confidential Item at last night’s Special Council Meeting, outlines a proposal for BHP Billiton Iron Ore to service and develop 112 hectares of land located near the Port Hedland International Airport.

Based on independent financial and economic modelling, the development is proposed to bring in more than $200 million worth of benefits for the Town of Port Hedland and introduce potential business opportunities for industrial, commercial or bulky goods services.

The document will be publicly available for a 42 day period commencing Saturday 12 November until close of business Wednesday 28 December.

Mayor Kelly Howlett and Chief Executive Officer Paul Martin will be conducting briefings with stakeholders and the community during this period.

Mayor Howlett emphasised the fact that this proposal had not yet been agreed to by Council and they were actively seeking comment and feedback from the community prior to making any decisions.

The core elements of the BHP Billiton Iron Ore proposal includes:

 • The leasing of 60 hectares of land at $12/m² (independently valued at $5/m²) to allow the staged development of a 6000 room transient workers accommodation (TWA) facility for BHP Billiton Iron Ore’s construction workforce only;

 •The servicing of land for four TWA sites specifically for non-resource projects which the Town can lease and raise revenue;

 •An initial payment of up to $31 million for the lease of 60 hectares, which will partially fund the upgrade and redevelopment of the Port Hedland International Airport;

 •The purchase of 10 hectares of land for a BHP Billiton Iron Ore owned warehouse, with an upfront payment of $9 million (land independently valued at $7.5 million);

 •The servicing of 33 lots for industrial, commercial or bulky goods use, which the Town of Port Hedland can sell or lease to small to medium businesses and;

 •Allocation of $200,000 towards the establishment of a Community Integration Committee to facilitate and maximise community and business integration opportunities

The proposal will see Council’s dependence on rates revenue decrease and ease pressure on ratepayers.

Mayor Howlett added that Council had spent more than four months negotiating with BHP Billiton Iron Ore over this proposal to ensure the best outcomes for Port Hedland.

Mr Martin said: “This development proposal is not a question of whether we want another TWA - the main issue is whether we want to build a TWA on Council-owned land and reap the financial benefits of it.”

He added that the 6000 rooms would be available for the construction workforce only, and the lease was for a 10 year period. After the expiration of the lease BHP Billiton Iron Ore would need to prove that the need for a construction workforce camp still existed.

Copies of the Business Plan for the Development of Precinct 3 will be available at the Civic Centre (McGregor Street, Port Hedland), South Hedland Library (Murdoch Drive, South Hedland), Port Hedland Library (Dempster Street, Cooke Point) and the Town of Port Hedland website homepage.

All submissions need to be addressed to Chief Executive Officer, Town of Port Hedland, PO Box 41, Port Hedland, WA, 6721 or email: council@porthedland.wa.gov.au.

For more information, or if you would like to make an appointment to discuss the Business Plan further with Mayor Howlett or Mr Martin, please contact the Town of Port Hedland’s Publicity Officer Nur Halik on 9158 9355 or email: publicityofficer@porthedland.wa.gov.au.

PAUL MARTIN

 CHIEF EXECUTIVE OFFICER

 THURSDAY 10 NOVEMBER 2011