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One non-FIFO costs $100k extra, FMG


Rania Spooner

On average it costs Fortescue $100,000 more to employ someone who lives in the Pilbara that to employ the same person ...

On average it costs Fortescue $100,000 more to employ someone who lives in the Pilbara that to employ the same person fly-in, fly-out.

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 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 rental and living allowances paid because of exorbitant property prices mining regions.

"The lack of available land for housing has been our biggest barrier," she said.

"Restrictions on supply and demand and 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."

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

Other inquiry submissions gave evidence about the detrimental social and economic impacts of FIFO on regional development and on the mental health of workers and families.

But the WA Chamber of Commerce and Industry said the practice was a necessity and would only become more prevalent as major projects continue 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 workers – on FIFO rosters.

CME 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.

"While at the same time valuable resource projects would not find a skilled local workforce and may not even proceed."

In contrast Rio Tinto yesterday announced approval had been secured to spend $300 million growing 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.

The inquiry continues today.

11 comments so far

  • Does this sound like the local councils are bleeding the mining companies dry? Not working because all of our mining billionaires are loaded.

    Bill Gated
    Date and time
    April 18, 2012, 10:04AM
    • The rents in towns in the north of the state are nothing but criminal and it just shows the Governments (State,Federal & Local) are not doing their job job . They have to free up more land ,make more accommodation available ,and bring in Fair rent Laws up there and here in Perth and Fly in Fly out is not the answer we are going to pay dearly for the social damage that does.

      Cockburn Centrral
      Date and time
      April 18, 2012, 10:35AM
      • so the goverment wont slash red tape and release the land.i wonder how many politicians own investment properties in the pilbara.if they release land like they should .there would be a major drop in house prices in the theres no shortage of i can only assume the greedy have their snouts in the trough. catch 22.

        john edwards
        southern river
        Date and time
        April 18, 2012, 10:39AM
        • Australia is the size of the Europe, with only the population of Paris. There is no shortage of land, merely an abundance of incompetent bureaucrats, politicians and rapacious property speculators.

          Free-thinking Aussie
          Date and time
          April 18, 2012, 11:30AM
          • 1. Australia is actually 50% bigger than Europe, its nearly as large as USA (this is by landmass) **source-
            2. The population of Australia is 22,880,638 (or little under 23 million) **source- Population of Paris, as of 2009 census estimation is 2,234,105 (or little over 2 million) **source-
            2. You are correct that there is no shortage of land, but the land release needs to be checked, and there will also need to be reserved land for forestation (I believe it has been recommended that 25-35% of a town be natural vegetation- trees, plants etc to maintain quality of air)
            3. 100% agree with the comment of abundance of incompetent politicians and property sharks.

            Date and time
            April 18, 2012, 12:58PM
        • Stupid thing is, it was the mining companies that started offering the huge rents to secure rentals up here.

          Date and time
          April 18, 2012, 12:35PM
          • FIFO should only be used in very isolated locations and also to fly in specialist workers.

            Otherwise themine workers should live in the nearby towns(eg Minara mine near Leonora) or towns created(ala Roxby Downs in SA).

            The NEGATIVE social impacts of FIFO are enormous.

            Also there is a growing number of FIFO workers not living in WA or even Australia. So the exhorbitant wages that are earned are not necessarliy benefitting WA or Australia.

            Date and time
            April 18, 2012, 1:30PM
            • I don't understand the issue. From what I hear from Gina R, Clive P and Andrew F there will be no mining industry in Australia in a few years any way. Their suggestions that the carbon pricing and resource tax will end mining in Australia should mean that this doesn't matter.

              Adam F
              Date and time
              April 18, 2012, 1:56PM
              • the last line of the article proves the point - Rio paying out $300M to supply less than 300 houses in Wickham - and only 212 for their staff (plus 168 hotel units for FIFO) - the rest(less than 50) for government staff... I think I'd be able to do a lot for $300M elsewhere, but this is the price of living/building in the pilbara - high land prices, high construction costs, and even after the cash, the .gov still has it's hand out for a bit more in the form of houses, or parks, or offices. Big business (BHP and Rio, etc) - you know, the ones the MRRT is trying to bleed, build a LOT of infrastructure up in the pilbara, and a reasonable portion ISN"T for THEMSELVES - It's things the .gov should provide (parks, offices, homes fo rpolice, nurses, teachers, etc) - yes there is money up there, but how much of it is greed of builders, .gov, etc?
                If the land was released, the only "losers" would be the investors, gov and realestate markets - workers would win, and stability would be the reward...I don't think BHP/Rio/FMG/etc would complain... but I know other who would.

                Bender's forge
                Date and time
                April 18, 2012, 1:59PM
                • Umm... many of you need to understand the facts completely, before you start pointing fingers left right and center! Yes, the people who have been given land to deal with are being greedy, but they have to pay high amounts for the land etc also! Yes, the mining companies have accepted the high rentals cost and pay it... but what other choice do they have, loose $billions in profits?
                  The land is all caught up in native titles issues with the government, there is nothing the local government can do about any of it, so leave them alone! I know first hand the CEO of the Shire of Roebourne does not own ANY property in the Pilbara. The state government is busy trying to get the land of the "original inhabitants to the land" who want massive amounts for it... it is one vicious circle... Leave it to the government to fix the best way they see fit with the input from all the invovled parties, including the community.
                  There is no way you can have "no FIFO" some people acutally enjoy it??? Also, FIFO is necessary for construction, but really there is no need for operational.

                  Date and time
                  April 18, 2012, 6:05PM

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