Department of State Development

Dr Paul Heithersay Deputy Chief Executive

Australian Industry Group

February 2015

The information contained in this presentation has been compiled by the Department of State Development and originates from a variety of sources. Although all reasonable care has been taken in the preparation and compilation of the information, it has been provided in good faith for general information only and does not purport to be a professional advice. No warranty, express or implied, is given as to the completeness, correctness, accuracy, reliability or currency of the materials.

The Department of State Development and the Crown in the right of the State of South Australia does not accept responsibility for and will not be held liable to any recipient of the information for any loss or damage however caused (including negligence) which may be directly or indirectly suffered as a consequence of use of these materials. The Department of State Development reserves the right to update, amend or supplement the information from time to time at its discretion.

Disclaimer

Priority 1 – Unlocking the full

potential of South Australia’s

resources, energy and renewable

assets

South Australia – Economic Priorities

South Australia’s Economic Priority No.1

Five Point Plan to unlock the full potential of South Australia’s resources, energy and renewable assets.

1. PACE Frontiers

2. Implementing recommendations of the Oil and Gas Roundtable – Sealing the Strzelecki Track

3. South Australia Copper Strategy

4. Low Carbon Investment Plan

5. South Australia Iron Ore Strategy

Resource supply chain plays an important role in each of these points

RECORD HIGH

RECORD HIGH

RECORD HIGH

South Australian Resources Industry Indicators

• Petroleum ($531.3m) and Minerals ($116.3m)

$647.6 million EXPLORATION EXPENDITURE 2013-14

• ~$40 billion of potential capital for Minerals and Energy projects in the Major Developments Directory

$1.8 billion CAPITAL EXPENDITURE 2013-14

• Minerals ($5.6 b) and Petroleum ($1.9 b)

$7.5 billion RESOURCES PRODUCTION 2013-14

• Minerals ($4.5 b) and Petroleum ($0.2 b)

• 39% of South Australia’s total exports ($11.9 b)

$4.7 billion EXPORTS 2014

• Minerals ($157.4 m) and Petroleum ($133.9 m)

$291.3 million ROYALTIES 2013-14

• more than double - 6,641 ten years ago

16,299 people EMPLOYED November 2014

Copper Strategy making South Australia a globally significant copper producer

Grow exports to 1 mt/yr in 10-15 years

Address Copper Value Chain challenges – better productivity, better product

Synergies through Government/Industry/Research Collaboration

Olympic Dam - long life

Olympic Dam > 200 years resource life - longest life core asset of global mining major, BHP Billiton

Contained resource:

78 Mt copper, 2.5 Mt uranium,

95 Moz gold & 307 Moz silver

world’s largest uranium deposit

world’s 4th largest copper deposit

~65% of Australia’s copper resources

Resource Life - BHP Billiton’s core assets

Carrapateena – positive PFS

OZ Minerals announcement - 18 August

Pre-Feasibility study confirms Carrapateena is a technically and financially viable project

Capital cost $2.985 billion

12.4 Mtpa block caving via 2 x 500m lifts

producing copper-gold concentrate

114,000 tpa copper and 117,000 ozpa gold

low operating costs and a 24 year mine life

potential to use Prominent Hill concentrator

base case demonstrates ore exported via Port Adelaide - closer ports to be investigated

next stage – feasibility study and development of exploration decline

Ore reserve:

270Mt at 0.9 %Cu, 0.4 g/tAu, 4.5 g/t Ag

= 2.5Mt Copper, 3.5Moz Gold & 39Moz Silver

Government of South Australia PACE co-funded discovery in 2005

Parks with no petroleum exploration access

Officer Basin

Pedirka Basin

Cooper

Basin Arckaringa

Basin

Eromanga Basin

Arrowie Basin

Stansbury Basin

Bight Basin

Otway Basin

Petroleum exploration licence (Onshore: PEL Offshore EPP) Petroleum exploration licence application (PELA)

Polda Basin

Moomba

Olympic

Dam Mine

Simpson Basin

200 km

Gas pipeline Gas and liquids pipeline Oil pipeline

Acreage release blocks – bids close 29 May 2014

Selected mine

4 Cooper CO2013 blocks attracted aggregate $103 million work program bids (Senex x 2, Strike, Bridgeport)

Western Flank oil play in the Cooper-Eromanga continues with 50+ % success in finding avg. 2.5 mm bbls oil

Huge potential for gas in unconventional reservoirs in the Cooper Basin

Encourage results from Otway Basin exploration (Beach/Cooper)

Bight Basin attracting the majors – massive investment

Frontier basins’ plays include: Conventional oil and gas Unconventional regional plays

Overview – oil and gas onshore and offshore South Australia

BP & Statoil

EPPs 37 to 40

CHEVRON

EPP44 & 45

SANTOS & MURPHY

EPP43

BIGHT PETROLEUM

EPP 41 & 42

Offshore Bight Basin Commonwealth Waters

$1.2 bln guaranteed 2011-16 + $1.1 bln non-guaranteed 2017-20

Roadmap for Unconventional Gas informed by the Roundtable for Oil and Gas Projects

Informed by a Roundtable of: industry; governments; peak bodies for protecting environments and aboriginal people; research institutions & a few individuals. Now 615 members

Now under the auspices of the Roundtable for Oil and Gas Projects with 7 working groups to inform potentially affected people and enterprises while enabling cooperation amongst competitors.

Strategic actions: • Demonstrate where the net present value of cooperation (JVs for JVs)

exceeds the value of go-it-alone planning / investment; • Local businesses given a ‘heads-up’ to use competence to build

capacity to compete (local skin in the game)

Conclusions: Descend cost & ascend productivity curves to survive supply-side competition Regional sharing of costs mitigates distance for remote operations

Roundtable for Oil & Gas Working Groups

1. Training (Tonsley CoE, Chair Unconventional reservoirs)

2. Supply hubs, roads, rail and airstrips for the Cooper-Eromanga basins (Innamincka airport, depots, Strez. Track)

3. Water use in the Cooper-Eromanga basins

4. Minimize redtape for interstate 'wharf to well' corridors to/fro the Cooper-Eromanga basins (heavy vehicle, wiring)

5. Cost-effective, trustworthy GHG detection

6. Suppliers’ forum (make locals smart) (MIPO)

7. Use gas for transport and heavy equipment

OZ Minerals Research Partnership

• Relocates corporate head office to Adelaide

• The company is committing $18 million to copper research partnership, which will include the construction of a demonstration plant in SA

• State Government is investing $10 million in new research with OZ Minerals and local universities

• Purpose - develop new technologies to boost copper extraction

Royal Commission – South Australia’s nuclear industry potential

• Explore opportunities and risks of South Australia’s involvement in the full cycle for peaceful use of nuclear energy

• Former Governor Mr Kevin Scarce will be appointed to head the Commission

• SA 25% of world’s uranium resources

• More than 25 years of production stewardship

Mining Industry Participation Office

Takes a strategic approach to supply chain development

Mission

Objectives

Strategy

Actions/Programs

Measures/KPI’s

Vision: Unlocking the Full Potential of South Australia's Resources, Energy and Renewable Assets

Mission

Industry Participation Office programs deliver jobs, increased revenue and increased capabilities to SA minerals and energy suppliers.

Mining Industry Participation Office

Vision: Unlocking the Full Potential of South Australia's Resources, Energy and Renewable Assets

2015 Objectives - IPO

Objectives

1. Develop SA SME business development marketing and export readiness skills.

2. Commercialise new technologies by facilitating collaboration between researchers, SME’s and industry.

3. Grow the number of service companies in SA.

4. Increase the value of contracts won by SA minerals and energy suppliers.

5. Diversify non minerals and energy suppliers into the resources sector.

Mining Industry Participation Office

How can the Australian Industry Group engage with MIPO?

Mining Industry Participation Office

Actions/Programs

• Minerals and Energy Information and Communication Technology Roadmap

• Industry Capability Network South Australia

• Minerals and Petroleum Services Centre of Excellence

• Oil and Gas Projects Roadmap: Working Groups #1 and #6

• PACE Manufacturing

Mining and Petroleum Services Centre of Excellence

• Supporting the development of South Australian capabilities that assist local supply chains to compete nationally and globally, providing high value added products and services to the resources sector

Objective

Opportunity for Australian Industry Group

New Onshore Oil and Gas training facility at Tonsley

Aim: to develop and train skilled workers for the expanding onshore petroleum industry. CoE Funding: $500,000 Status: Pilot training 24-26 November, official launch 16 February 2015.

Remote Mining Operations Centre (ROC) Stages 1 & 2

An opportunity identified by the ICT Roadmap.

Stage 1 achievement:

Remote data transmitted from Prominent Hill to UniSA using 3G.

Partners: OZ Minerals, UniSA, IPACS and DSD.

CoE Funding: $383,000

Report released October 2014.

Stage 2:

Engagement with new mining industry partners, Lucas TCS/Arrium, Midas Environmental Technologies and Thiess/OZ Minerals.

Aim: establish a working ROC in Adelaide.

CoE Funding: $500,000 in 2014/15.

Real time Drill Site Project

Aim: To design, build and implement an

ICT platform that integrates geoscience

data thereby speeding up the exploration

to development cycle.

CoE Funding: $350,000

Status: Stage 1 – Technical Feasibility and business case.

Photo; courtesy DET CRC. Researchers testing down hole sensors at the Brukunga Drilling Research & Training Facility

Recently Approved CoE Projects

IMPTEC Super Fine Crusher – “game changing” technology

LAB SA Proppant Testing for the onshore petroleum industry

Normet Australia’s first electric underground light vehicle

Partnering with industry

Capabilities, skills and jobs for the future

Innodev/CSIRO ‘Big data’ analytics. Real time mineral processing optimisation

Arrium / Ian Wark Optimised sinter feed blend, from SA iron ores

FOX Trace element in iron oxide, detection and analysis

Vision: Unlocking the Full Potential of South Australia's Resources, Energy and Renewable Assets

Mining Industry Participation Office Priority #1: KPI’s

• Facilitate $50M of local contracts through ICNSA

• Progress working Group #1 and #6 recommendations from O&G Projects Roadmap

• Develop sales, marketing and export readiness capabilities for 68 companies

• Attract 3 service companies into SA in 2015

• Approve 10 Centre of Excellence projects and develop a further 10 ready for submission

High Level IPO KPI’s for 2015

Measures / KPI’s

For more information on the Mining Industry Participation Office, please contact:

PAUL GOIAK

Director, Industry Participation Office

Ph: 08 8303 2465

paul.goiak@sa.gov.au

www.statedevelopment.sa.gov.au

SOUTH AUSTRALIA Department of State Development

Dr PAUL HEITHERSAY

Deputy Chief Executive

Ph: 08 8303 3298

paul.heithersay@sa.gov.au

www.statedevelopment.sa.gov.au