THE iron ore miner Fortescue Metals Group would save $33 million each year if it switched its 330 residential workers in Port Hedland to fly-in fly-out workers, a federal FIFO inquiry heard yesterday.

FMG's external relations manager, Deirdre Willmott, said slow and expensive release of land for residential development in the Pilbara was hampering resources expansion and forcing miners into heavier FIFO reliance.

''On average it costs Fortescue $100,000 more to employ a person who lives in the Pilbara than to employ a person FIFO,'' she said, referring to the rent and living allowances paid because of exorbitant property prices in mining regions.

''The lack of available land for housing has been our biggest barrier. Restrictions on supply … have increased the cost of new and existing housing, seriously reducing the affordability for those people who might otherwise have looked to settle in the Pilbara.''

The AngloGold Ashanti president, Michael Erickson, giving evidence, said the goldminer also favoured using residential workers, but limited skilled labour had made FIFO a more viable prospect.

Other submissions to the inquiry gave evidence about the detrimental social and economic effects of FIFO on regional development and on the mental health of workers and families. But the Chamber of Commerce and Industry Western Australia said the practice was a necessity and would become only more prevalent as big projects continued to come online.

By 2015 the WA resources industry is expected to employ about 110,000 people, with about 57 per cent of these - or 63,500 - on FIFO rosters.

The Chamber of Minerals and Energy's chief executive, Reg Howard-Smith, said it was unrealistic to expect resource companies to develop new towns in remote areas or to expect all workers to take up permanent residence in regional towns for short-term construction-phase jobs.

"Attraction and retention of employees would be severely impacted if companies attempted to force residential employment on their employees,'' he said. "Further, if FIFO was highly restricted or residential employment mandated, local communities and government would experience severe pressures on infrastructure and services.

''At the same time, valuable resource projects would not find a skilled local workforce and may not even proceed.''

In contrast, Rio Tinto announced yesterday it would spend $300 million expanding accommodation in the Pilbara town of Wickham as part of its plan to expand iron ore production by more than 50 per cent by 2015.