Vicinity Industrial Base Walker Industrial

Adelaide mistakenly overlooked by investors as projects get under way

11 April, 2012 - Terry Ryder

South Australia is our most under-rated economy. People still see it as a state that lacks population and economic impetus. Some economists believe it's a recession state.

Here's what they're missing:

South Australia is our third big resources state. Not many realise it, but a quick counts shows $50 billion in mining projects percolating in the background, largely unnoticed – other than BHP Billiton's expansion of Olympic Dam, which gets most of the media attention.

The $50 billion figure doesn't include projects that will emerge from the 2011 decision to allow mining in the Woomera Prohibited Area, which contains copper and uranium resources larger than Olympic Dam.

The only reason we're not agog about the level of mining enterprises in South Australia is that Queensland and Western Australia, which have even larger numbers, are getting all the attention.

Adelaide is the centre of the defence industry in Australia, with the $8 billion Air Warfare Destroyer project well under way. There is also a big expansion of military resources at the Edinburgh facility in Adelaide's north. And there's the possibility of the submarine fleet project, likely to cost tens of billions.

Adelaide is a leader in car manufacturing, with an assured future emerging from the announcement that Holden has agreed to inject $1 billion into vehicle manufacturing in Australia and to make two next-generation models at its Adelaide plant, after getting federal government's contribution of $215 million.

Adelaide has more infrastructure development currently happening than Sydney (which is more an indictment of NSW than a tribute to South Australia).

Current major enterprises include the Royal Adelaide Hospital ($1 billion), the Southern Expressway upgrade ($500 million), the South Road upgrade ($800 million), the extension of rail to Seaford ($300 million), the desalination plant ($1.8 billion) and the ongoing electrification of the city's rail system.

South Australia is the national capital for wind farm developments, which could be a significant industry (from both the economic and environmental viewpoints) if state governments would stop impeding it for dubious political reasons.

So far South Australia has avoided the impulse to inflict the draconian restrictions that have made Victoria and NSW look silly.

As the South Australian resources sector expands with a rapidly growing number of projects, property markets around the state will thrive, including those in the state capital. Often what matters is not where the big projects are located so much as where the key companies are headquartered.

The $30 billion expansion of Olympic Dam is a fine case study. The big holes will be dug at Roxby Downs, but the impacts will spread hundreds of kilometres in various directions.

As we have seen with Perth and Brisbane, we can expect demand for CBD office space to grow, as well as demand for industrial space. The growth in white-collar jobs will fuel demand for dwellings in Adelaide, as will the creation of thousands of fly-in-fly-out positions for people who live in the state capital but work in Roxby Downs.

The state government says the project is worth an average of $8.6 billion a year to the state's economy. Some say they doubt the project will proceed, despite the fact that it has already started.

Adelaide company Ausco is among the first to win work from Olympic Dam. It has been handed a contract to build transportable units which will house some of the first of 10,000 workers for the project. Ausco increased its shopfloor workforce by 50% to 120 during 2011 and is busy recruiting the same number again - a doubling within 18 months.

Adelaide civil engineering firm Exact Mining has recruited 80-90 specifically for this project, in addition to 60 of its existing personnel, because it's been hired to build haulage roads and level the site alongside the proposed open pit of the copper-gold-uranium mine, so heavy equipment can be brought to Olympic Dam.

Other companies to secure contracts include Roxby Downs-based earthmovers Heading Contractors and Adelaide engineering company Tonkin Consulting.

Our biggest miner will be building new infrastructure at Port Adelaide, which will boost property markets in the area, which already has the AWD project creating jobs.

Regional centres like Port Augusta and Whyalla will also feel the impacts.

Port Augusta will provide the landing stage and assembly point for imported equipment. Its power stations are also likely to be the primary power source for the Olympic Dam expansion.

Whyalla will be the site of the $700 million desalination plant and pipeline that will provide the water BHP Billiton will need. The monster trucks used in the mining operation will be assembled at Whyalla by Cavpower.

The likely impacts of allowing mining in the Woomera Prohibited Area can only be guessed at, given that the announcement was made only last year. But this area, previously off limits to everyone but the military, is the largest untapped minerals resource in Australia and is likely to be worth hundreds of billions of dollars over time.

Coober Pedy, which has some major mining action already happening, is well positioned to grow as a result. So too are Port Augusta and Whyalla, as the WPA minerals will need to be processed and exported – and these are the logical places.

For more information about Walker Corporation, visit www.walkercorp.com.au.

For any enquiries about the estate or for other property opportunities contact Nick Greenwell on 0421 948 800 or Click Here to contact us.