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Western Australia - Australia's resource State

 

Flag of WA

bulletInvestment projects
bulletDetails by region
bulletOil and gas in WA
bulletIron in WA
bulletDescribed by region.
bullet Chemical industry performance
bulletInsights from leaders (CIP)

Industry in WA

Western Australia's centres of chemical activities:
bullet Kwinana industrial belt 30 km south of Perth. It was seeded by the BP Oil refinery in the 1950's and now has a nickel refinery, a superphosphate fertiliser and ammonium nitrate producer, a titanium dioxide pigment plant, a sodium cyanide plant, an alumina refinery and smaller industry. It is well served with rail, road and sea transport.
bullet Kemerton industrial park some 150 km south near the regional town of Bunbury with a titanium dioxide manufacturer and a silicon smelter. In the Vasse region there is potential for gas exploitation and is near major titanium mineral deposits.
bullet Kalgoorlie has gold and nickel activities.
bullet Port Hedland with a Direct Reduced Iron (DRI) project by BHP, electrolytic grade of manganese dioxide and vanadium pentoxide.
bullet Geraldton with a synthetic rutile plant and a potential DRI project.

Trade profile 

bulletSee also national chemical industry and trade performance.
A state by state comparison (five digit resolution available on request) .
bulletWestern Australia
bulletSouth Australia
bulletNew South Wales
bulletQueensland

Overview

With its extensive mineral and oil and gas reserves, Western Australia has the fundamentals to become the largest commodity chemical manufacturing state in Australia (even more so if aluminium oxide ie. alumina is included [as is already titanium dioxide pigment]).

The state is gas-rich supplying about 10 per cent of world LNG. Ethane is available in increasing amounts from domestic gas and the state is one of the largest importers of caustic soda (at some 700 000 tpa) which could help support a chloralkali venture in the north of the state. Much of the potential ethane production in the north west is presently bound up in exports of LNG with contracts precluding its extraction (though few if any projects around the world extract ethane from LNG). Expansion of domestic gas use from around 550 terajoules per day to 1100 terajoules by year 2000 provides the basis for adequate ethane. 

See also gas in WA

Other new ventures in the north west could include ammonia, methanol and polyethylene.

Iron projects

bulletA Direct Reduced Iron project has already begun in the state with another under consideration.
bulletIn April 2002, Rio Tinto Confirmed the construction of the HiSmelt project at Kwinana.

Other excellent sources of information
bulletMinerals Links - Australia
bulletAustralian Institute Of Petroleum

Natural resources

Western Australia is well endowed with resources exporting (2000) A$14 billion in minerals and oil and gas. The state has a population of 1.8m growing at 1.4 per cent p.a. 

Broadly the economy is divided into services (57%), mining (17%), manufacturing (13%), construction (10%) and agriculture (4%). The state produces, as per cent of world production, ....:

bullet tantalum 37%
bullet titanium minerals 27%
bullet lithium 19%
bullet alumina 18%
bullet iron ore 12%
bullet LNG gas 9 %
bullet salt 4%
The state has particular expertise in resource development and is a world leader in many areas. For example, Alcoa has its international research facilities located in the State and the CSIRO's (the pre-eminent government research organisation) division of minerals has relocated from Melbourne. There are many international-class research facilities and co-operative research centres while the Kwinana industrial region could be described as the only not contracting chemical industry cluster in Australia.

The West Australian government has assisted with the provision of general purpose infrastructure to industry including the upgrading of railway lines, the provision of roads, identification of opportunities and other measures to facilitate investment. As a general principle, investments may be supported to the net benefit of the project to the State (see also government assistance - nb. failure rate!!).

Energy 

Gas 

 

Gas in WA press for details

Australia produces 9 per cent of the world production of LNG gas of 82 million tonnes. By year 2005, Western Australia could be producing one-quarter. World wide there are 8 producers of LNG which is the fastest growing energy sector. 

  

View of the Burrup Peninsula gas processing plant

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Detailed information about petroleum and gas in WA.

bullet

See also the Northern Territory.

Pipeline related costs increase the cost of gas in the Kwinana region by A$1 per gigajoule.See Pipeline section.

For some products backloading rates (imbalance of interstate freight movement reflected in freight differences) enables West Australian companies to competitively supply regional markets in eastern Australia.

Coal

The state has a coal deposit south of Perth atCollie being exploited with exploitable reserves of 600 Million tonnes. The coal has a high moisture content (25 per cent), with a low energy content of 20Mj/kg and is prone to spontaneous combustion. However it has a low ash content (5 per cent) and is particularly reactive and valuable for use in rutile reduction (Becher process). A process is being establish to briquette the coal to enable its safe transport and reduce the moisture content.

There are substantial deposits of lignite (billions of tonnes) in the Esperance region in the extreme south of the state. A prefeasibility study (March 2000) by Texaco has shown it can produce diesel (and gas) on competitive terms even at oil prices down to US$12 per bbl. The partners are Texaco (that owns the technology) and Australian Power and Energy and are considering a A$1 billion project to produce 12 500 bbls of diesel per day (State consumes around 8 000 bbls per day). See also Syntroleum project. A Goldfields railway passes through the lignite deposits.

Investment projects

North West

The Burrup Peninsula (graphic from the West Australian)

Synthetic hydrocarbons  

1. Gas to liquids

bullet Gas to liquids report
bulletMethanol
bullet Northern Territory

Shell (withdrawn)

Shell has developed GTL technology at Bintalu in the Malaysian state of Sarawak. In May 2002, Shell announced that while it included Australia as one of five sites being investigated worldwide to commercialise its process, it had now ranked it third or fourth after Qatar. 

Syntroleum (withdrawn)

In February 2000, US-based Syntroleum Corporation announced a 10,000 barrel per day (500 000 tonnes per year; requiring 130 terajoules/day or 800 000 tonne per year of gas) natural gas-to-liquids plant that will produce synthetic specialty hydrocarbons (polyalphaolefins - lubricating oils), naphtha, normal paraffins and drilling fluids. It will be owned by a subsidiary called Syntroleum Sweetwater in which Enron Corporation and at one time, Methanex Corporation were equity participants, and will be located approximately 4 kilometres from the North West Shelf Joint Venture LNG Plant. In May 2000, Methanex announced it would withdraw from the partnership with Syntroleum citing inability to agree on terms. (Note their interest in the Northern Territory).

Note that Canadian Methanex is the world's largest producer of methanol supplying 40 million tonnes per year. It once expressed interest in a methanol project for the Northern Territory. Since then this has been abandoned in favour of WA. 

It will cost A$600 (US$400-plus) million and employ 200 permanent related jobs. Syntroleum estimates the plant will generate revenues of approximately A$7.4 billion (US$4.7 billion) over 20 years (say A$350 million per year) at constant prices.  

Syntroleum Corporation licenses its proprietary process for converting natural gas into synthetic crude oil and transportation fuels. The process is designed for application in plant sizes ranging from 2,000 barrels per day to more than 100,000 barrels per day (note the WA plant is one-tenth of largest scale technology). Current licensees include ARCO, Enron, Kerr-McGee, Marathon, Texaco, Repsol-YPF and now the Commonwealth of Australia. The company has advised that it is "working on development plans" for gas-to-liquids specialty chemicals plant and is working with DaimlerChrysler to develop super-clean synthetic transportation fuels. 

The project is helped by A$100 million funding. 

bulletThe Western Australian State Government will provide A$30 million in a general infrastructure package including roadways and a desalinisation plant (to provide the cooling water). 
bulletThe Commonwealth Government has acquired a license for A$30 million plus lending the company A$40 million 25 year loan to support R&D in Australia. Under the terms of the $40 million, Syntroleum has agreed to work with approved Australian Universities and research institutions towards advancing GTL technologies. This arrangement provides a reduced royalty structure for this technology and is therefore a sophisticated form of assistance tied to success.
bulletAlso see the potential shale to oil project in Queensland.
bulletMore information about Syntroleum under GTL

November 2001. Syntroleum announced that it had signed an option with the State of Western Australia to lease a 180-acre site for the project. Syntroleum also announced that it had finalised an agreement with the Water Corporation of WA for the 20-year agreement for the supply of water to the project for desalination and cooling purposes.

Syntroleum has since withdrawn late 2002 and expected to relinquish its land on the Burrup.

Sasol Chevron (withdrawn)

Sasol Chevron is expressing interest in a 30 000 to 45 000 bbl/day plant planned for expansion to 90 000 bbl/d and ultimately 200 000 bbl/day within ten years. For that target to be achieved, it would require access to 20 tcf of gas using as much gas as the NWS Shelf partners use in three trains on the Burrup Peninsula.

Note: Shell has declared its intention to invest US$6 billion in gas to liquids technologies over 10 years with four plants. It announced in October 2000, agreement with the Egyptian government for a 75 000 bbl per day (3.8 million tpa) facility and a similar plant for Trinidad & Tobago. Shell operates a 12 000 barrel per day (570 000 tonnes per year) GTL in Bintulu in Malaysia. (The Syntroleum Project proposed for WA is 10 000 bbl/day.)

Aromatics project (deferred).  

Projects to produce mixed xylenes at the Pilbara, and in South East Asia, has been abandoned by Woodside Petroleum. The economic crisis in Asia resulted in plans for joint ventures with Asian partners failing. The units were due to have capacities of 350,000 tonne pa each. 

Methanol projects

According to Societe Generale, Australia is the lowest cost location for the production of methanol. There have been two investors.

Methanex  (withdrawn)

Methanex had until late 2001 been planning  a project in the NT.  On 1 November 2001 Methanex plans to construct a A$2bn project with state and federal government assistance (the State Government announced funding of $136 million worth of multi-use infrastructure and a Commonwealth investment incentive of $85 million (10 per of project cost) to produce two million tonnes of methanol. Construction would start in 2003, subject to a final investment decision in late 2002 . Production would be in two stages first completed 2005, second 2010 costing A$1billion per stage. Production would be for the Asian markets.

This agreement was in the form of a detailed Memorandum of Understanding with the North West Shelf gas participants, which was converted into a gas sales agreement in mid December. Under the agreement gas (108 TJ/day for stage 1) would be provided by the NW Shelf partners for over 25 years, from 2005, with the contract costing Methanex about $2 billion over the life of the contract.  

Methanex is planning, in the first phase of the project, to build the world's largest methanol plant with a capacity of about 2 million tonnes of methanol per year to supply its customers in the Asia Pacific region. This phase of the project will employ more than 1000 people during construction, about 150 people when it is operational and will generate export revenues of about $1.2 billion per annum in export earnings. Subject to the opening of new markets and contracts, a second $1billion expansion of the project could start in 2008 .

In March 2003, the company announced it had deferred the project seeking more government assistance to overcome labour and related costs. It had been offered  A$85 million in addition to A$134million in common user infrastructure assistance.

In June 2003, the company announced it has signed an agreement with the NWS gas venturers to supply natural gas at a base rate of 100 terajoules a day (tj/d) for 20 years for the company's planned methanol production facility.

In September 2003, the company formally announced it was withdrawing from any investment in Australia.
 

Comment. Methanol is a portable source of energy. Some 34 per cent of the input gas (energy) is lost in its synthesis so its production away from markets requires very cheap gas to be viable. Transport costs impact heavily on its viability and hence its :deferment comes as no surprise. More details on methanol.

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Details on WA www.methanex.com/corporateinformation/globalfacilities.htm

bulletCorporate web site: www.methanex.com.

GTL Resources (withdrawn

London based GTL Resources proposes to develop a 1 million tonnes per annum (3000 tonne per day)  methanol plant on the Burrup Peninsula. It has been allocated 35 ha of land for the project next to the Woodside Petroleum LPG facility. It is seeking a 15 year loan for US$275 million plus $US25 million for a cost overrun facility for the US$385million project.

GTL have signed a MOU with Apache/Santos/Globex for the sale and purchase of 37 petajoules of gas per gas for a 15-year period and for 10 years with Swiss-based Vitol to supply its product to Asia.

It will use Lurgi Technology  who has commissioned a 900 000 tonne per year methanol facility in Trinidad.

The company aims to be in production by 2004.

In March 2002, funding for 70 per cent of the development cost by three banks was announced. The state government will provide A$135 million (20 per cent of the project cost) for "infrastructure assistance". Federal government assistance for A$85million being sought for piping gas and water to the site. The company has left room for expansion to occupy one-half of their 35 hectare site. 

In October 2003, the federal government has offered A$35.4million of which $8 million will be applied by the WA government for common user infrastructure (roads and sewerage) while the balance will be applied to GTL to build a desalination plant and upgrade electricity supplies.

The GTL project was confirmed March 2003.

Site: www.gtlresources.com

Coogee Chemicals owns and operates methanol technology and owns a suitable gas field.

Ammonia/Urea projects

Another site.

Ammonia is expensive to transport and having considered investment in the north of the state, in May 2000, Wesfarmers CSBP commissioned a A$150m 214 000 tpa ammonia plant at Kwinana Western Australia (to replace their small 30 year-old production facility). With evaluations by Wesfarmers and Incitec, there have been expressions of interest in investing in ammonia/urea plants for export (ie. limited access to the Australian market against established producers). Two companies with Indian interests, are presently interested.

1. Burrup Fertilisers - ammonia project

In April 2006, the world's largest greenfield ammonia plant, costing US$575 million located at Karratha in the Burrup was opened in April 2006. It employs about 100 people at full production with an annual production capacity of 760,000 tonnes of liquid ammonia. 

The plant is owned by Burrup Holdings Pty Ltd. which is 30 percent owned by Yara with the balance owned by the Oswal and Rambal families. Yara will sell 100 per cent of production.

The company has entered into a take-or-pay agreement for the take-up of natural gas from the Harriet JV over the 25-year life of the plant.

 Yara added two new 60,000 cubic meter vessels to its shipping capacity in 2004.

 

In June 2001, the Indian Oswal Group (supplies one-sixth of India's urea and DAP fertilisers) announced it would invest in the world largest ammonia plant producing 700 000 tonnes per year. It will be located on the Burrup Peninsula adjoining the NWSJV gas processing facilities.

Known as Burrup Fertilisers and costing US$350m (A$700m) it will require 73tj/day (27petajoules pa) of gas to be supplied by the Harriet joint venture. Notwithstanding its significant supplier position in the Indian market (a market which is anticipated to grow 50 per cent by 2010) it has undertaken a supply agreement with Norks-Hydro to take 100 per cent of its production.

In Feb 2002, having received EPA approval, Burrup said major siteworks could begin in the third quarter of 2002 according to Oswal executive director Vikas Rambal. Around 600 people would be employed on site at the height of construction and about 60 people full-time when the plant was operational. When commissioned, the plant will produce 2,200 tonnes of liquid ammonia a day.

Construction commenced in April 2003 and is due for operation late 2005. It will have a production capacity of 760 000 tonnes per annum as one of the world’s largest and will operate for a minimum of 25 years.

The Western Australian Government has provided a A$134 million multiuse infrastructure package to upgrade the Dampier Port, establish multiuser infrastructure corridors, establish and realign roads, including Hearson Cove Road, and for inlet and outlet pipes for water desalination. The Water Corporation also will establish a A$20 million seawater desalination plant to support the project.

 Gas for the Burrup Fertilisers project will be supplied by the Harriet Joint Venture from the Varanus Island production hub. The Joint Venture comprises the Apache Energy Limited, Kufpec Australia Pty Ltd and Tap Oil Limited with agreement for the supply of 82 terajoules of natural gas per day for the plant over 25 years, starting in 2004.

Burrup Fertilisers have entered into an off take arrangement with Norsk Hydro for 100 per cent purchase of all ammonia produced. Norsk Hydro is Norway’s largest energy company and the world’s largest trader and shipper of ammonia. In 2005, Yarra International, a Norwegian fertiliser company purchased a 30 per cent shareholding.

2. Dampier Nitrogen (abandoned)

Dampier Nitrogen was begun by Plenty River Corporation who had promoted a ammonia/urea project in partnership with Indian Chambal fertiliser company. It is to be located on the Burrup  Peninsula. In September 2000, The North West Shelf Gas and Plenty River announced an MoU for the supply of 70 Tj/day (500 000 tonnes pa) of gas per year. The US$500m project aimed to commence in 2004 at 650 000 tpa of ammonia and 800 000 tpa of urea with one-third or 200 000 tonnes pa of the ammonia for export. See also ammonia.

In May 2002, 60 per cent of the project was sold by Plenty River to a consortium of Australian and international companies that have agreed to complete a feasibility study for a facility to now produce around 1.2 million tonnes of granular urea annually and about 100,000 tonnes of ammonia making it one of the largest facilities of its type) in the world. While a significant quantity of urea would go to the domestic market, the ammonia was likely to be exported since the Australian market is already well served.

The consortium is called Dampier Nitrogen, comprises Canadian firm Agrium Inc, Australia's Plenty River Corp Ltd and Thiess Pty Ltd, and Germany's Krupp Uhde GmbH. Leighton Holdings subsidiary Thiess and Krupp Uhde are expected to be joint engineering and construction contractors and Agrium will be the plant operator and product marketer and will assume 50 per cent of the project with Thiess taking 10 per cent. Agrium has significant operating experience in the nitrogen market, Thiess had a strong track record on major engineering projects and a long association with the Burrup Peninsula, and Krupp Uhde was a world-class technology provider.

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Agrium Inc. is a global producer and marketer of fertiliser and a major retail supplier of agricultural products in North America and Argentina.

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Thiess Pty Ltd is one of Australia's largest engineering firms, also operating in South East Asia, the Pacific and South America.

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Krupp Uhde is a German company in the technologies segment of the Thyssen Krupp group focused on the design and construction of chemical processing and other industrial plants.

3. Agrium Australia.

Evaluating a A$900 million ammonia and urea plant at the Burrup West industrial plant. The company plans to produce 1.2million tpa of urea and 100,000 tpa of ammonia requiring 100Tj/d of natural gas.

4. Deepak Fertilisers

 Evaluating a 300,000 tpa ammonium nitrate plant requiring 150,000 tonne of ammonia.

 

Dimethyl Ether (DME) (abandoned)

Details of technologies

In June 2001, a project for the NW to produce DME was announced. The venturers would be Mitsubishi Gas Chemicals, Itochu, JGC amd Mitsubishi Heavy Industries. The plant is expected to produce 1.4 to 2.4 million tonnes of DME per year from a plant expected to cost US$600 million with production beginning 2006. 

DME would be produced from methanol and used as aerosol propellant and fuel as substitute for LPG and diesel. Mitsubishi produces 6000 tonnes of DME per year at its Japanese plant. It also operates two methanol plants in Venezuela and Saudi Arabia with a combined capacity of 3.6Mtpa.

The proposed plant will produce methanol for conversion into 1.7Mt/a of DME from around 220TJ/d natural gas. Detailed feasibility studies are underway. A commitment to proceed is expected in mid-2002. If a go-ahead is given the plant could be operating in late 2006.

Comment: Does this project have an international comparative advantage?? Should it not be a spin-off from a world-scale (2 MTPA) methanol project?

1. Chloralkali

See also extract report

The WA government has expectations for a petrochemical venture costing around A$2bn by year 2003 at the source of NW gas in the north west either at Hearson Cove on the Burrup Peninsula, or nearer Karratha at the Maitland Industrial Estate. Some 500 000 tpa of ethane would be used with salt supplied from Dampier Salt 20 km away. Caustic soda, EDC/VCM and caustic soda would be produced.

In July 2001, one of the venturers announced its withdrawal. Details.

Rare Earths

See Rare Earths

Zeolites (see also aluminium chemicals) 

Eaglehawk Kaolin owns a 36Mt deposit of kaolin about 100 km south of Broome which is suitable for manufacture of synthetic zeolites. The company has patented a process for the zeolites to be applied to the wine production. Development would cost around A$90 million. Kaolin is also produced at Greebbushes by Gwalia Consolidated (producing 2000 tonnes in 1999.

Magnesium hydroxide/oxide

A feasibility study.

Magnesium in Australia

Regional guide

Click on the name of State or the region to obtain information of activities in the region

  Map of Australia showing described regions

Regions of Western Australian on map

Port Hedland/Dampier

Geraldton

Perth

Kwinana

Bunbury

Kalgoorlie

General information about Western Australia

Activities guide The table links to information about chemical-related activities and those which we consider could be reviewed as to their potential.
Current Potential
acrylic polymers
alumina acrylic acid
ammonium chloride
aluminium chemicals carbon - activated
ammonia silicon chemicals
ammonium nitrate soda ash - sodium carbonate)
carbon dioxide surfactant chemicals
caustic soda
chlorine
direct reduced iron zeolites
formaldehyde
gallium chloride
hydrochloric acid
lime (calcium oxide)
lithium chemicals
metham sodium
phosphates inc. phosphate fertilisers
salt (natural sodium chloride)
silicon (metallic)
sodium cyanide
sulfuric acid
synthetic rutile
titanium dioxide pigment
urea formaldehyde
vanadium pentoxide
xanthates
zirconium chemicals
other chemicals


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