The boom in the Western Australian construction industry shows no sign of abating as the state’s economy grows at the strongest pace on record for any Australian state.
Thanks largely to work associated with huge resource projects, the seasonally adjusted value of construction work done grew by a whopping 12.5% in the September quarter.
Not surprisingly, the vast majority of the increase came from engineering. At $10.798 billion (not seasonally adjusted), the value of engineering work done in the state was up by no less than 58.0% in the quarter. With activity now starting up on Chevron’s $29 billion Wheatstone LNG project, activity is expected to remain very strong in the near term.
The benefits of the mining boom extend to other areas as well, as evidenced by the $1.5 billion Karratha City of the North project for which Mirvac was recently announced the preferred bidder.
And the good news keeps rolling in. In the past week alone, the Western Australian government has given approval to not one but two multi-billion dollar resource projects: Aquila Resources’ $5.77bn West Pilbara iron-ore project and INPEX’s $30 billion Ichthys LNG Project in the Browse Basin. A final investment decision on Ichthys is expected early in the new year.
Large infrastructure projects, however, are not confined to mining. In transport construction, for instance, there is plenty happening as a result of the Perth City Link Project and the recent approval of a $500 million expansion of Terminal 1 (International Terminal) at Perth Airport. Energy projects, too, are seeing plenty of momentum. BHP has recently announced its intention to proceed with the $579 million Yarnima Power station. Work has begun on the Greenough River Solar Farm, Australia’s first utility scale photovoltaic solar farm. The sector was given a further boost by news that Horizon Power will build a hybrid diesel power plant to supply renewable energy and boost Australia’s bid for the $2.5 billion Square Kilometer Array telescope project.
The states building sector, too, is going reasonably well. In the September quarter, the value of building work done in the state rose by 4.5% (not seasonally adjusted) – though at $3.106 billion, building activity in the quarter was down on the same period last year ($3.219 billion). Moreover, new building work is coming in faster than before. In the three months to October, the total value of buildings approved (seasonally adjusted) was up 8.2% from the previous three months and 11.69% when compared with the same period last year.
Having been through a slump over the past year, the residential sector is now picking up, with seasonally adjusted residential building approvals up 5.5% in the three months to October.
Non-residential building, too, has picked up. Non-residential building approvals were up 12.3% in the three months to October, and the sector stands to benefit from work associated with a new children’s hospital in Nedlands to replace the Princess Margaret Hospital for Children.
More broadly, largely thanks to the huge expansion in resource construction, the economy is booming. In the September quarter alone, Western Australia’s economy grew by a whopping 8.4% – the highest level of quarterly growth on record for any Australian state. Compared with the same period last year, private capital expenditure is up a whopping 43.2% in seasonally adjusted terms.
Key Moving Sectors:
Not surprisingly, given the impact of Wheatstone, Ichthys and other large resource projects, the outlook for mining construction going forward is very strong.
- Wheatstone LNG Project
- Ichthys LNG Project
- Extension Hill Magnetite Project
- Aquila West Pilbara Iron Ore Project
- Ichthys LNG Project
- Tropicana Gold Project
- Karara Iron Ore Project
- Shell Prelude FLNG Project
- Balmoral South Iron Ore Project
With the airport upgrade, combined with work associated with Perth City Link, there is a reasonable amount of action in transport construction.
- Perth City Link
- Terminal 1 (International Terminal) expansion, Perth Airport
As mentioned above, there is a reasonable volume of activity in power and electricity construction.
- Yarnima Power Station
- Horizon Power hybrid diesel solar plant
- Greenough River Solar Farm