Iron Man: Move over Murdoch - Australia has a new super-tycoon
For Andrew 'Twiggy' Forrest, it's the boom that has rocketed him to the top of Australia's rich list. For droves of former teachers, tradesmen and nurses, it's a once-in-a-lifetime chance to make their own fortunes. In the desolate iron mines of the Outback, Kathy Marks joins the new – and surreal – gold rush
Tuesday 09 September 2008
Kylie Piggott used to stack shelves in a supermarket in Busselton, a seaside town in Western Australia where she grew up. Now she drives 250-ton dumper trucks on a mine site in the remote and wild Pilbara region, earning nearly triple her previous salary.
Piggott is one of a new breed of miners, lured west by a spectacular boom that is transforming the industry. No longer hardbitten desperadoes on the run from the law or child support agency, as was once the stereotype, Australian miners nowadays resemble Piggott, a diminutive 24-year-old, or Tony Dekuyer, who used to be a maths teacher at a private Catholic boys' school in Perth.
The boom is being fuelled by China's rush to industrialise, and its hunger for the minerals that lie beneath the Pilbara's harsh red earth, in far north-western Australia. This is one of the most inhospitable spots on the planet, where summer temperatures reach 45C and the handful of towns lie hundreds of miles apart, in an ancient landscape of sandhills and spinifex grass.
But it also the source of a modern-day gold rush, and the principal commodity that is bringing undreamed-of wealth to thousands of people and creating a new class of billionaire is that most seemingly unprecious of commodities: iron ore.
Nowhere is the boom more apparent than in Western Australia, where mining companies cannot dig the iron ore out of the ground fast enough to meet the demand. Nor can they find enough workers, which accounts for the generous salaries and perks on offer.
China is now Australia's biggest trading partner – Australian materials, for instance, built the Olympic Bird's Nest Stadium in Beijing. Iron ore, along with other minerals, including coal, uranium and copper, is underpinning unprecedented economic growth and cushioning Australia from global turmoil. The main Pilbara port, Port Hedland, where the skyline is dominated by stockpiles of iron ore and everything is coated in red dust, is known as the engine room of the Australian economy.
But not everyone is pleased by the frenzy of activity. Western Australia's infrastructure is under strain, and locals who are not employed in mining are struggling to afford rising rents and property prices. Aborigines, the traditional owners of the land, have been largely excluded from the financial bonanza, while the breakneck pace of expansion is prompting concerns about the industry's environmental impact.
Across Australia, there is an acute shortage of labour, as tradesmen, in particular, are sucked west. But it is not just builders and electricians who are suddenly in short supply; teachers, nurses and policemen are swapping their uniforms for overalls and hard hats. Farm workers and sheep shearers are abandoning the land; shops and restaurants are bleeding staff. Universities are losing funding as young people bypass higher education. The Australian navy recently admitted that only half its submarine fleet is operational; crew members have departed for better paid jobs in the mines.
Those who head to the Pilbara face formidable challenges. As well as the heat and the dust, there is the isolation to contend with. On the few sealed highways, you can drive for hours without seeing another car, passing only an occasional roadhouse or cattle property.
All mining employees sign up for a punishing schedule: typically, a week of 12-hour day shifts, followed by a week of 12-hour nights shifts, followed by one week off. Many work on a "fly in, fly out" basis, catching a flight into the area, where they are housed in remote mining camps, then flying home for their time off. Some commute from as far away as Sydney, which means a round trip of more than 6,000 miles. One couple have rented out their house in Port Hedland, and spend their time off on the resort island of Bali.
For single workers, it can be a lonely life. Internet dating services such as MeetAMiningMan try to help. But the salaries are handsome: truck drivers can earn up to 120,000 Australian dollars (£55,000); train drivers A$150,000. The company also pays their airfares, and gives them free accommodation and meals.
Many miners have a specific goal: to pay off their mortgage and retire early, for instance, or to buy themselves a new car, or a yacht. The new money washing around Western Australia is evident in the state capital, Perth, where Tiffany's has just opened a store, following Louis Vuitton, Bally and Gucci.
The two mining giants, BHP Billiton and Rio Tinto, have traditionally controlled the iron ore market in the Pilbara. But their stranglehold is starting to break up, and there are a host of newcomers such as Fortescue Metals, whose chief executive, Andrew Forrest, recently became Australia's richest man.
Five years ago, Forrest barely figured on the radar, with his stake in Fortescue worth a relatively modest A$36m. Last May, it was valued at A$9.4bn – and this just a fortnight after the 47-year-old had shipped his first cargo of ore to China. Forrest supplanted James Packer, the media and gambling magnate, at the top of the rich list, which meant that, for the first time in 20 years, neither James nor his late father, Kerry, occupied that spot. James Packer was valued at A$6.1bn.
Australia's richest woman, meanwhile, is Gina Rinehart, whose father, Lang Hancock, discovered the Pilbara deposits in 1952, when bad weather forced his plane to fly low over the area and he saw deep, rust-coloured veins of iron in the gorges. Hancock eventually sold his rights to the big mining companies, and the rivers of royalties mean his daughter is worth A$4.3bn.
Kylie Piggott joined the industry two and a half years ago, following her then boyfriend up to the Pilbara. She found work as a truck driver at Rio Tinto's West Angeles mine. "I just gave it a go, and it just so happened that I really liked it," she says.
For 12 and a half hours a day, starting at 5.30am or 5.30pm, Piggott drives back and forth to the pit, where rock that has been drilled and blasted out of the ground is shovelled on to her truck by an excavator. Then, following instructions on a computer screen, transmitted by pit control in Perth, she transports it to the crusher or stockpile, or, if it's low-grade ore, to the dump.
She has half an hour off for lunch, and two 10-minute tea breaks. Some might find the work tedious or tough, but she loves it. "I grew up on a farm and I always liked driving farm machinery," she says. "The cabs are air-conditioned and you can play your own music. It's like a little world of your own up there, it's pretty relaxing, although it can be lonely, too. You've got too much time for thinking."
These are no ordinary trucks. Piggott must climb three metal staircases to reach her cab, in which she perches about 25ft up. The tyres alone are twice her height, and cost A$100,000 to replace – which is why, at some Rio Tinto mines, 30 per cent of trucks are now operated by women. "It was costing us a bomb in tyres," says Gervase Greene, the company spokesman. "The women are much better drivers."
Dekuyer, the former maths teacher, also works at West Angeles. The 49-year-old started off driving trucks, and is now a grade controller. His wife, Janette, 46, is employed by Rio Tinto, too; in fact, she was the one who went up to the Pilbara first. They live in adjacent huts at the mining camp.
"I wasn't necessarily sick of teaching, but the pay's certainly better up here," says Dekuyer. "I earn pretty close to double what I earned as a teacher. And it's very raw, because it's a primary industry. You're sitting out there on big lumps of iron ore and blasting away. It's like a one-man Tonka toy set-up."
Dekuyer has bought himself a Ducati motorbike, and his wife now drives a convertible sports car. But it is not just the pay that they appreciate. "Teaching was very rewarding in many ways, but mentally it was quite exhausting," he says. "Here, when the day finishes, it finishes, and when we fly out, we've got a week off and don't have to think about the job at all."
The camp where they live for much of the year is 80 miles from the nearest town, Newman. There is nothing there except the mine and the camp, and unbroken vistas of low scrub and spindly trees stretching to the horizon. The accommodation huts have double beds, wardrobes, televisions, fridges and ensuite bathrooms. There is a gym and swimming pool, tennis and basketball courts, even a walking track. A wet mess serves alcohol. Telephone calls and internet access are free, as are healthcare and laundry services. "I don't like to use the word resort, but it's something along those lines," says Dekuyer.
With competition for labour so intense, companies are trying to outdo each other in the facilities they offer. Fortescue is reportedly contemplating putting in a three-hole golf course at its far-flung camp. By contrast, miners based in places such as Newman and Tom Price, which started out as company towns, enjoy a relatively urban lifestyle. In the visitors' centre at Tom Price, the souvenirs on sale include flip-flops decorated with tiny dumper trucks.
At the mine site, situated in the shadow of Mount Nameless, a 1.5-mile-long train leaves for the port of Dampier four times a day, carrying 24,000 tons of iron ore. Last year Rio Tinto exported 161 million tons from Tom Price and other Pilbara mines, and it plans to double production to 320 million by 2012.
The railway is privately owned, as are most railways and roads in the region. In fact, it is hard not to think that the mining companies own the Pilbara. To book a room in Tom Price, you must go through Rio Tinto's reservation service. There are, of course, no rooms available, since the motels and lodges are full of Rio Tinto's employees. Indeed, so scarce are beds in the Pilbara that miners are sleeping in tents and caravans, and locals complain that a once-healthy tourism industry has withered because of the accommodation squeeze.
Even natural features of the landscape have been appropriated. Tourists – those lucky enough to find somewhere to stay – can go bush walking and bird watching in Rio Tinto Gorge. In Port Hedland, there is a pleasant patch of grass from which you can watch the huge barges being loaded up. It is called the BHP Billiton Marapikurrinya Park. The use of an Aboriginal word (meaning five creeks) seems ironic, considering what the country's Indigenous Affairs Minister, Jenny Macklin, calls "the great Australian paradox – that the traditional owners of the land are the poorest people living on it".
Simon Hawkins, chief executive of the Yamatji Marlpa Barna Baba Maaja Aboriginal Corporation, says royalty payments to Aboriginal title-holders represent less than one-quarter of one per cent of total mining profits. Moreover, royalties are only paid in relation to mines that have opened since legislation was passed in 1993. "Iron ore mining in the Pilbara had been going on for 30 years [before that], without any compensation for the impact on Aboriginal country and culture," Hawkins says.
Doris Eaton, a Njamal elder and chair of the Pilbara Native Title Service, says: "The mining boom that is ripping up our land is making the rest of Australia rich. Mining companies need to respect our culture; we are protecting our sites and have been for thousands of years."
Stung, perhaps, by such criticism, the big mining companies have established indigenous training and recruitment programmes, and set Aboriginal employment targets. Fortescue's Forrest has gone even further. This month he announced a plan to create 50,000 jobs for Aboriginal people.
On the almost equally sensitive subject of the environment, mining companies are attempting to polish their image. They claim to be committed to looking after the land – although organisations such as the Conservation Council of Western Australia are not so sure. It says the expansion of mining, which involves draining aquifers and flooding normally seasonal creeks and wetlands, is threatening scarce water resources and the vegetation they support.
Another reproach made of the industry is that the wealth it generates is spent elsewhere, thanks to the fly in, fly out lifestyle. But that is not entirely true. On a Sunday afternoon, the beer garden of the Tom Price Hotel Motel is crowded with miners intent on drinking their way through the week's wages.
These are not the new breed of miners. I meet Ross, for instance, who sports a long, shaggy beard, grey ponytail, beer belly and impressive tattoos. Another man, who tells me his name is "Pirate", is from a similar mould, while "Digger" is a small, voluble man who disappears to buy a round of drinks and returns with a blowsy girl on his arm.
The men, all chain smokers, refuse to give their real names, and are cagey about their backgrounds. Ross says of the lifestyle: "It's stinking hot in summer and freezing cold in winter. It's a good way to make a lot of money very quickly, but it can be really hard on your relationship. It's not something I would recommend to someone married with children, not for long periods."
Digger has been a miner since the 1970s. He says the industry has changed beyond recognition. "It was rough back then. It was all single men, and the wet mess was open 24 hours, and there were fights breaking out the whole time."
The boom shows no sign of abating, with the big companies recently negotiating a record 85 per cent increase in the contract price of iron ore. Analysts are making increasingly wild forecasts, some claiming that Western Australia's population will grow by nearly 50 per cent in the next decade, others predicting that its economy could become Australia's biggest, overtaking New South Wales, which has triple the population.
Graham Rowley, Fortescue's executive director, says: "What is happening in China is the biggest industrialisation ever, bigger than Europe's Industrial Revolution. Iron ore is the most prolific mineral in the world, but suddenly it's much more valuable than oil or gas, and we have billions and billions of tons of the stuff in the Pilbara."
Rowley believes that Australia will continue to reap the rewards for many years, because India will follow China's example. "It's another enormously poor country where the people have the same desires as the people of China. Why should industrialisation not happen there too?"
Digging it: the mining boom
The area in square miles covered by the Pilbara region (that's 25 times the size of Wales)
The figure recorded for 161 consecutive days in the Pilbara town of Marble Bar in 1924
(£55,000) The yearly income which mining truck drivers can earn
The personal fortune of Fortescue Metals chief executive Andrew Forrest at its peak this year – that's £6bn, or £1.3bn more than Rupert Murdoch
Andrew "Twiggy" Forrest's personal fortune five years ago (that's £16.7m)
The cost for a single tyre for an iron ore truck (that's £46,500)
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