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When billionaire Gina Rinehart
secured a US$7.2 billion funding
deal for a mammoth mining
project in Western Australia earlier this
year, she wasn’t the only person thrilled
about the decision.
Hundreds, and potentially thousands, of
investors who took a gamble and snapped
up property in the remote mining region
of the Pilbara are now keeping their
fingers and toes crossed that the mega-
deal will bring life back to a township
where tenants currently have the upper
hand. A little more than a year ago,
Australia’s mining heartbeat was giving
some investors up to $2000 per week for
Fast-forward to today and rents have
plummeted by a massive 22 per cent,
while properties listed for sale have
increased by 34 per cent, according
to the Real Estate Institute of Western
Australia (REIWA). The median house
price has also dropped by 18 per cent,
although it should be noted it’s still
incredibly high at $900,000 .
It might sound like scary stuff, but the
massive rental yields being achieved
were never sustainable, according to First
National Real Estate Hedland principal
“ We have to bear in mind that we came
from an unsustainable high,” she says.
“ We’ve a bit of normality now and
the rental market has actually held
quite well. People are still getting solid
returns from blue-chip companies, with
good leases. ”
Crawford Property Group director Ryan
Crawford adds the market normalisation
was always going to happen after an
incredible high – and it needed to.
“Local homebuyers were being priced
out of the market, which isn’t a great
situation for sustaining a permanent
residential population,” he says.
“T he capital growth opportunity that’s
now presenting itself is to be able to
secure some very high quality property
at these low market prices, ahead of the
“W hat’s always a challenge for investors
is to pinpoint when the next upswing
will occur, but I’m confident that with
industrial activity around Roy Hill gearing
up in the town, we’ll see good growth
once again, albeit not at the levels we saw
prior to 2012.”
However, the falls in rental prices have
been enough to create jitters and those
who bought at the peak have reason to
feel nervous about their investment. Will
Roy Hill create more leases and housing
demand? API investigates.
¿ ABOUT THE PROJECT
The Roy Hill project is located in the
Chichester Range in the Pilbara region,
115 kilometres north of Newman and 277
kilometres south of Port Hedland.
In a statement in March, Rinehart
said the Hancock Prospecting project is
expected to create thousands of jobs and
will be one of the biggest construction
projects in the country.
“Today we already have 2500 people
working on the construction of the
project. This will peak at 3600 later this
year before we employ 2000 permanent
staff through operations,” she says.
“Roy Hill is a crucible of opportunity
during a period of global uncertainty –
it’s already shown it’ll create new jobs
and benefit the greater mining and
construction-related industries. It will add
to Australia’s exports and significantly
benefit our West Australian and
national economy. ”
They’re wasting no time either – in
May, the Roy Hill project mined its first
iron ore. About $10 million is being spent
every day to build the mine, along with
the associated rail and port development.
That’s a whole lot of cash, even for a
billionaire like Rinehart to fork out.
It’s not just about the mine, there’s
associated rail and offices. In total, the
operations will consist of:
> The mine, processing plant, Ginbata
airport and an accommodation village.
> A 344-kilometre heavy-haul railway,
linking the mine and port.
> Port stockyard and a two-berth export
facility southwest of Port Hedland.
> Corporate headquarters and a remote
operations centre based in Perth.
While it’s obviously a remote location,
the real opportunity is the fact everything
from Roy Hill will be exported to
In fact, about 150,000 tonnes of ore
is expected to be transported to Port
Hedland every day and the port stockyard
will have the capacity to store over five
million tonnes of ore.
Crawford says Hancock Prospecting,
together with its major contractor
Samsung C&T and other subcontractors,
will bring a large number of workers
into town to develop the port and
“ Dredging has been completed and
construction will commence this year,
with completion expected in 2015,”
“ T he project estimates up to 8500
temporary jobs will be created during the
construction phase ... This covers the
mine works, 344-kilometre rail and the
infrastructure at Port Hedland.”
Can a multibillion-dollar mining project bring
life back to Port Hedland? API investigates.
MINING UPDATE // ROY HILL
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