The spirit of Mark Twain’s famous words has been used to reassure global investors and vanadium producers that Western Australia’s iron ore industry is very much alive and is expected to continue flourishing.
 
WA Department of Mines and Petroleum director general Richard Sellers told the first global meeting in Perth of the world’s vanadium players – collectively termed Vanitec (the Vanadium International Technical Committee) – that his recent trip to China and Japan revealed a bullish sentiment among those consumers.
 
The Vanitec meeting was full of producers of the steel-strengthening commodity from Russia, China, the US, Austria, Finland and South Africa.
 
“On our trip through Japan, Hong Kong and mainland China, we spoke to steel makers and trading houses about what their view of steel production was over next few years,” Sellers told the vanadium players this week.
 
“Without variation – whether talking to the Japanese, Chinese or even the Koreans lately – they’re all still talking about modest increases.
 
“But when you talk about modest increase in China, it’s on such a very large base that over time it’s a very large increase.
 
“When we were talking to the Chinese only last week, they were saying that to get there they might actually be shutting down some of the older dirtier steel mills and moving into more modern larger ones and there’s a timeframe involved in that.”
 
That said, he noted that there was certainly a bullishness, which was reflected in the fact that there were companies lining up to take part in the recently announced multi-billion dollar Roy Hill deal – and at a time when capital was hard to come by.
 
He referred to mining magnate Gina Rinehart’s announcement last month that she had secured backing from a group of lenders including US, Japanese and Australian banks to stump up $US7.2 billion ($A7.8 billion) in debt to build the $10 billion Roy Hill mine.
 
“The overall picture I came back with is that not all the stories you read in the media about ‘the end of the iron ore business’ are real, there is in fact a lot of upside in iron ore,” he said.
 
“The price certainly is going to vary, with some pundits saying it will settle a lot lower than it is now, some say a bit higher but they all have the same story – that the urbanisation we’re seeing in China is also emerging in India.
 
“[Also] watching the urbanisation and economic growth in Indonesia, these massive north Asian markets that we’re very proximal to are going to help the iron ore production that comes out of here.
 
“When you look at the competitive advantage in WA in terms of shipping time etcetera, it is still a very good future.”
 
He notes that the Pilbara, where Roy Hill is being developed, has about another $150 billion worth of construction going on across ports, gas and iron ore projects.
 
“So this is an exciting part of the world,” he said.
 
He also noted that in 2013 WA generated mineral, oil and gas exports of $A114 billion. Of that, iron ore was the lion’s share.
 
Last year there was about 570 million tonnes of iron ore exported from WA, the vast majority out of the Pilbara region, which he said was only about 45 years old as a mining region – starting off with mines at about an 8 million tonne per annum capacity and meant to last only eight years.
 
“We’re now expecting it to top around 600Mtpa if all the mines reach their maximum nameplate and their commitments,” he said.
 
“While history will tell whether that’s a real target, what is very pleasing about the iron ore industry is that it is in expansion and production phase at the same time.
 
“[Regarding] the expansion potential to go from that 500-600Mtpa capacity … the prediction is that it will get up to the 900Mtpa to 1 billion tonne a year mark.”
 
He said part of this success was due to his department streamlining WA’s approvals processes, which ranked lower than other states with not many commodities when he started the job in 2009 after undertaking a similar role in the Northern Territory.
 
“We’ve been working on increasing transparency of the approvals processes and reducing the time lines,” he said.
 
“When I turned up it was five years from application to production, it’s now 28 months.
 
“Sandfire Resources was nine months from application to mining.
 
“So you can get your bureaucracy to line up and still cover off all the safety and environment things you need so long as you can streamline the processes.
 
“The transparency means companies know which department’s desk their application is sitting on.
 
“We’ve all had moments where you’ve ended up with bureaucracy knocking you around – it’s one of the most frustrating things in the world.
 
“I spent a fair bit of my life in various parts of industry and I hated it [the bureaucracy], so now I’m back into the government side and am very keen that the bureaucracy is not the thing that stops a project.”