Mining in Papua New Guinea: New Horizons for 2019

Mining in Papua New Guinea Hero Image

Mining in Papua New Guinea: New Horizons for 2019

It’s been an interesting year for the Papua New Guinea mining industry. A leadership shakeup, coupled with looming mining law changes, has given the country a lot to celebrate.

Mining in Papua New Guinea Hero Image

Mining and petroleum is an integral contributor to Papua New Guinea’s (PNG’s) economy.

The region is seriously jam-packed full of resources; copper, gold, nickel, cobalt, LNG and more.
But, despite this resource potential, it’s faced many challenges over the years, including illegal mining and a civil war between 1988 and 1998 sparked by mining tensions.

PNG has also been victim to a number of environmental disasters, including a devastating earthquake in February 2018, which caused disruptions to the country’s biggest mines, Ok Tedi and Porgera.

However, this hasn’t dampened the spirits of producers in the region, with mines bouncing back from troubles, and a wave of new projects on the horizon signalling good times to come.

Papua New Guinea mining benefits

In February, the World Bank released a report forecasting new large-scale resources projects will boost Papua New Guinea’s Gross Domestic Product (GDP) to 5% this year.

The PNG Chamber of Mines and Petroleum said a rebound in the economy was great news, particularly at a time when the country faced challenges with its foreign reserve.

“The World Bank Report demonstrates that the mining and petroleum sector remain absolutely critical for PNG jobs, the economy, and all the social benefits that flow from this,” it stated.

In mid-June, the PNG Chamber of Mines and Petroleum held its 35th Australia Papua New Guinea Business Forum in Port Moresby, which also put a spotlight on the strength of PNG’s mining and petroleum industry.

Chamber president Gerea Aopi said the resources sector is a key economic driver, contributing 26% of PNG’s GDP and 80% of the nation’s export revenue.

“The sector also provides more than 20,000 jobs to Papua New Guineans, whilst 30,000 more are employed in landowner businesses, and other PNG businesses that support the industry,” Mr Aopi said.

“Resource companies invest heavily in establishing, and providing necessary governance and administrative support to landowner companies which serve to ensure long term sustainability.”

Papua New Guinea Chamber of Mines and Petroleum president Gerea Aopi at the June conference.
PNG Chamber of Mines and Petroleum president Gerea Aopi at the June conference. Image: PNG Chamber of Mines and Petroleum.

New PNG mining laws proposed

The conference was held just weeks after long-running PNG prime minister Peter O’Neill resigned, and was replaced by former finance minister James Marape.

New prime minister Mr Marape has pledged to “tweak and turn” laws related to mining to improve economic conditions for PNG citizens living in poverty.

“At the moment, our resource laws are outdated … we will look into maximising gain from what God has given this country from our natural resources,” Mr Marape said in his first address to parliament as prime minister.

However, Mr Marabe said major reform to the laws would not take effect for years, and urged resources companies not to worry.

“While I’m speaking on natural resources, many of our corporate citizens amidst us will feel a little bit doubtful or will feel a little bit intimidated,” he said. “I’m looking at 2025 in which we will migrate to a new legislative framework.”

PNG Chamber of Mines and Petroleum president Mr Aobi applauded the new Government’s desire to amend resource laws.

“We share this desire and will support the development of legislation that encourage investments and provides a better outcome for PNG,” Mr Aobi said.

“We want to work together with Government and all stakeholders to make this happen. The vision shared by many, including our prime minister to grow PNG’s wealth is supported by us. We want to see a stronger Papua New Guinea, a stronger economy, and a bright future for our country.”

Papua New Guinea Map

Operating Mines in Papua New Guinea

With a positive outlook ahead for the PNG mining industry, let’s take a look at the country’s key operating mines and latest developments.

Ok Tedi

State-owned mine Ok Tedi is an open-pit copper, gold and silver mine in the Western province in PNG, and the country’s oldest operating mine. In recent years, the team developed a revised mining strategy that has enabled it to access higher grade ore and extend mine life to 2025.

Porgera

Porgera is an open pit and underground gold project, about 600km north-west of Port Moresby. The project is owned by Barrick Gold (47.5%), Zijin (47.5%) and the Enga provincial government (5%). In June, the joint venture met with new prime minister James Marape about extending the current special mining lease, set to expire in August, for another 20 years.

Hidden Valley

About 210km northwest of Port Moresby, Hidden Valley is an open pit gold and silver mine in the Morobe province in Papua New Guinea. In 2016, South African miner Harmony Gold became the sole owner of the project, after its JV partner Newcrest sold its 50% interest.

Lihir

Newcrest’s Lihir mine is one of the largest gold mines in PNG, and is located on Aniolam Island, 900km north-west of Port Moresby. The project has an ore reserve of 24 million ounces and mineral resource of 50 million ounces. In June, the company deployed a private LTE network at the project to improve communications onsite.

Kainantu gold project
Kainantu gold project. Image: K92 Mining.

Kainantu

K92 Mining’s Kainantu gold project is in the Eastern Highlands province of PNG. In Q2 2019 the mine produced 18,980oz of gold, 261,800 pounds copper and 6894oz silver, with production 25% above forecasts. Over the coming months, K92 is advancing a plant expansion to double capacity to 400,000 tonnes per annum and increase annual production to an average of 120,000 ounces of gold equivalent.

Simberi

St Barbara’s Simberi gold project is in New Ireland – the easternmost province of PNG. The project comprises various open cut mines, and has a mine life out to 2021. However, there is the prospect of extending mine life should a 1.5 million tonnes per annum (mtpa) sulphide circuit be developed.

Ramu

Ramu NiCo Management (MCC) operates the $US2.1 billion Ramu nickel-cobalt project in Madang. In 2018, the project faced pressures on the sales front, only selling about 75% of nickel production, which its executive team put down to a global economic downturn and price plummet. This year, the company plans to improve efficiencies, boost revenue and be adaptable to the changing market environment.

Edie Creek

Niuminco operates the Edie Creek mine in PNG, and also owns exploration projects, May River and Bolobip. Over the last year, the company has struggled with its finances, but in May, entered into a $500,000 funding agreement to put towards general working purposes.

New Papua New Guinea Mining Projects

Wafi-Golpu

Wafi-Golpu is a world-class copper-gold project, which, if approved, could be the largest and most complex underground mine in PNG. The project is a 50:50 joint venture between Newcrest and Harmony Gold. If developed, it could provide 2500 direct jobs during construction and 850 ongoing operational jobs for an estimated 28-years. The project is advanced, however still needs to obtain a special mining licence before construction can begin.

Frieda River

PanAust’s undeveloped Frieda River project is also highly anticipated. In December 2018, the company announced the Sepik Development project, a new nation-building development pathway for Frieda River, which focuses on the development of shared-use infrastructure that will support a hydroelectric facility and mine operation.

Ekuti Range, Ipi River, Bismarck projects

Canterbury Resources has a suite of copper-gold exploration projects in PNG, including Ekuti Range, Ipi River and Bismarck. The projects are early-stage, however, with Rio Tinto managing and sole funding exploration at Canterbury’s Bismarck project on Manus Island, it’s all looking promising.

Busai deposit. Image: Geopacific.

Woodlark

In November 2018, Geopacific released a Definitive Feasibility Study for its Woodlark gold project in PNG. The project, once developed, is expected to produce 100,000 ounces of gold annually for its first five years. Over the coming months, Geopacific will be advancing finance solutions.

Misima Island

Junior miner Kingston Resources is also pursuing shuttered gold mine Misima Island, which closed in 2004. Since acquiring a 70% interest in the project in 2018, Kingston has identified five key exploration targets for follow-up drilling.

Solwara 1

Canadian company Nautilus Minerals is planning to develop PNG’s first deep sea mine, Solwara 1. The company is planning to extract high-grade Seafloor Massive Sulphide (SMS) deposits of copper, gold, zinc, and silver in 1600 metres of water. The project still needs to obtain approvals.

Central Cement and Lime, Orokolo Bay and Amazon Bay

Mayur Resources has industrial and mineral sands exploration projects in PNG. In July, the company announced it had lodged a submission for its Central Cement and Lime project, with only a few steps ahead before construction can begin.

Simuku

Coppermoly is advancing the Simuku copper molybdenum project in the West New Britain province of PNG. In July, it completed a Ground IP Survey, which spanned 21km of ground. The company has also recently renewed an exploration license at its Nakru project in the region.

How F.E.S. TANKS can help Papua New Guinea miners

If you’ve got this far, we’re sure you can agree there’s a lot happening in the PNG mining space at the moment.

We’ve got an exciting announcement of our own too.

This year, we’ll be launching our self-bunded fuel tanks into PNG, servicing all industries in the country, through our division:

Self Bunded Tanks in Papua New Guinea

Power reliability is key, and at F.E.S. TANKS we can help with all your diesel fuel storage needs.

Our self-bunded tanks come in a variety of sizes ranging from 1,000l to 110,000l, meaning there’s a fuel storage option to suit all project sizes.

If you’re involved in the PNG mining industry, drop a comment below, we’d love to connect.

Mining in Africa: A Bright Future

mining in africa hero image

After a period of volatility, commodity downturn, upward cost pressures and unstable politics exacerbating sovereign risk, demand is picking up again for African mining projects, with investors, producers and suppliers (like us) in the box seat.

Mining activity in Africa is ramping up at warp speed.

You see, the continent itself produces more than 60 metal and mineral products, including high-grade gold, bauxite, manganese, coal, iron ore, cobalt, uranium, platinum, rare earths, copper to diamonds.

It’s a treasure trove for mineral extraction. Yet for many years, concerns around regional stability prevented companies from taking that much-needed ‘leap of faith’ and pouring capital into the region.

But, with political tensions easing in parts and demand for commodities on the rise, more projects are transitioning from exploration to production.

Opportunities for African mining

At the Mining Indaba conference held in Cape Town in February, Global Business Reports launched a lengthy white paper outlining investment opportunities in Africa for 2019.

“Overwhelmingly, our research conducted throughout 2018 suggests an air of cautious optimism heading into 2019,” Global Business Reports stated.

“Paradoxically, that stability has been driven by a broad trend across the continent towards diversification away from the mining industry into sectors such as agriculture, power generation and manufacturing.”

Global Business Reports said in the Central African copper belt, the DRC stole the spotlight and “will continue to demand the world’s attention in 2019” as skyrocketing cobalt prices and ongoing political chaos ensure the perfect storm.

“Throughout Southern Africa – from Botswana’s depleting diamond reserves to Zimbabwe’s well-established chromium deposits and Zambia’s deepening copper mines – maturing jurisdictions are more increasingly focused on the task of achieving local content and beneficiation,” it said.

“Conversely, in West Africa, the region’s underexplored mineral resource potential makes the area an attractive proposition for investors from across the globe and more nascent jurisdictions like Burkina Faso and Côte d’Ivoire are eager to incentivize foreign investment.”

Resolute Gold - Syama Gold Mine Mali
Image: Resolute Mining

In Australia alone, there were more than 200 companies investing in Africa, with about 700 projects in 35 countries. Of these companies, most of them were based in South Africa, Namibia, Tanzania, Zambia and Burkina Faso.

And as the world transitions towards electric vehicles, all the associated materials were trending, from lithium, graphite, nickel to copper.

“80% of the world’s lithium is solution-based and comes from Bolivia, but more and more discoveries are being made in Africa of hard-rock type lithium,” WorleyParsons RSA chief executive Denver Dreyer said.

“Thermal coal is still interesting for South Africa, because of our ongoing reliance on coal and the need to replace the depleting coalfields with higher quality coal. Additionally, 80% of Africa’s manganese is found in South Africa and it is of good quality.”

In its Future of Mining in Africa: Navigating a Revolution report, Deloitte said in the midst of all this growth, the fourth industrial revolution had emerged, presenting further opportunities and challenges for African mining projects.

“Regulatory changes and societal impacts require mines to become not merely compliant, but to adopt smarter ways of deriving value from regulation, while ensuring mutual benefit to surrounding communities and environments in which they operate. New skills, a changing workforce, organisational restructuring and adoption of new technologies are all important to navigate in this era,” Deloitte stated.

New Mining Projects in Africa

So there’s a brief rundown on the opportunities for mining in Africa. Let’s now take a look at some of the exciting new developments.

  • Yaouré | Perseus Mining (ASX: PRU) began construction at its third African project, Yaouré, in May. The $US265 million project is in Côte d’Ivoire and once operational in 2020, will produce 215,000 ounces of gold.
  • Syama | In April, the Mali Government granted Resolute Mining (ASX: RSG) a 10-year extension of the Syama mining permit to enforce the provisions of a new Mining Convention Agreement. The new agreement guarantees an income tax rate of 25%; a 10% reduction on the previous rate of 35%.
Resolute Gold - Syama Gold Mine Mali
Image: Resolute Mining
  • KCC & Mutanda | Following some setbacks at its DRC operations late last year, Glencore (LSE: GLEN) has entered into a long-term revolving agreement for the supply of cobalt hydroxide (cobalt) to Umicore’s battery materials value chain. The agreement underpins continued operations at the DRC cobalt projects.
  • Obuasi | Earlier this year AngloGold Ashanti (ASX: AGG) resumed operations at its mothballed Obuasi gold mine in Ghana. In June, the miner announced it would recruit up to 2500 workers to ramp up the mine to full operations.
  • Fekola | Canadian miner B2Gold (TSX: BTO) is assessing a $US50 million expansion of its Fekola gold project in Mali. The potential expansion would see it increase annual processing capacity to a baseline of 7.5 million tonnes per annum (mtpa).
  • Boikarabelo | Resource Generation (ASX: RES) is a step closer to advancing its $550 million Boikarabelo coal mine in South Africa, after receiving formal participation (credit approval) from the second member of a proposed three-party lending syndicate in June. This should facilitate the completion of the project finance.
Boikarabelo Epanko project for resolute mining
Image: Kibaran Resources
  • Epanko | Perth-based Kibaran Resources’ (ASX: KNL) $US88 million graphite project is development-ready after receiving in-principle approval in late May from the Tanzanian Government for its proposed debt financing arrangements. Construction is expected to begin in late 2019.
  • Kola | Kore Potash (LON: KP2) has secured $US13 million to continue development of its Kola potash project in the Democratic Republic of Congo. Construction is planned to begin in late 2019.
  • Boffa | Aluminium Corp of China (Chalco) began construction at its $US500 million Boffa bauxite mine in Guinea late last year. The company planned to begin production in late 2019, with the first stage producing 12 million tonnes of bauxite per annum.
  • Segilola | Thor Explorations (TSX: THX) is developing the high-grade Segilola gold project in Osun, Nigeria. The project is considered the most advanced gold project in Nigeria with an EPC contract now locked in.

Power challenges facing African mines

Given the remote location of many of these projects, companies were still hitting roadblocks when it came to accessing reliable power.

“Some of the biggest challenges for power projects when they reach the point of bankability is the purchaser or offtaker,” Andrew Herscowitz, co-ordinator at Power Africa, an arm of the United States Agency for International Development (USAID), told Global Business Reports.

“A recent study indicated that only two of 37 utilities in sub-Saharan Africa were actually financially solvent… The question is not whether there is enough flow across the continent – they are pretty much on par with anticipated demand for power in most countries. The power will simply not reach industry or the local population if we cannot improve the financial viability of utilities, build out the distribution network and set up transmission lines.”

Renewable energy projects were being considered, however, for now, mining companies in Africa were generally looking at hybrid energy systems, incorporating a traditional power source, like diesel fuel, and renewables.

“If the mine implements a hybrid solution, it is very important to have the right capacity installed to handle their consumption needs. At this stage, mining companies cannot afford to rely on the weather for their power supply and thus hybrid solutions are currently the best option,” Wärtsilä vice president for Africa Mamadou Goumble said.

Its clear diesel fuel will continue to be a reliable power source for African mines, and self bunded tanks to store fuel in bulk (securely) on site are in high demand.

Fekola mine
Fekola mine. Image: B2Gold

Self Bunded Tanks for African mining

At F.E.S. TANKS, we’re excited to announce we’re launching our self bunded diesel tanks into the African market this year, and will be servicing all industries through our new divisions:

  • F.E.S. TANKS NIGERIA
  • F.E.S. TANKS AFRICA (based in South Africa)

We look forward to working with mining companies in Africa to help them with their bulk fuel storage needs, providing secure, safe tanks so issues like fuel theft and power outages can be a thing of the past.

If you’re a mining company that’s looking for secure power at your project in Africa, we’d love to hear from you.

Renewable energy in mining: Diesel vs Renewables

Renewable energy in mining Diesel vs Renewable Energy hero image

Where does diesel fit into the ‘Renewable Energy’ economy?

We all know energy is one of the highest operating costs for Australian miners.

Large haul trucks, heavy machinery, processing plants, conveyors to railway spanning hundreds of miles– a lot of power is needed to deliver ore from pit to port.

Renewable energy in mining Diesel vs Renewable Energy hero image

And this is only expected to rise in coming years as miners extract deeper, lower-quality ore that requires greater processing.

According to the Australian Renewable Energy Agency (ARENA), the sector currently accounts for about 10% of Australia’s total energy use (500 petajoules per year). Of this, diesel is the main contributor (41%) followed by natural gas (33%), and grid electricity (21%).

The Rise of Hybrid Systems

However, a ‘New Energy’ economy is emerging that is changing the way mining companies power their operations.

Solar farms, wind farms and batteries are making their way into sites. And for companies not already on the renewables wagon, we can only assume discussions are on the table.

In its 2017 white paper, Renewable Energy in the Australian Mining Sector, ARENA said diesel is historically the “favoured fuel source” along with natural gas, but the concept of an ‘all-electric mine’ integrating renewables, batteries and traditional energy was building momentum.

Australian mining sector's renewable energy consumption

Australian mining energy consumption by source. Image: ARENA.

“Large-scale hybrid systems are gaining traction in the mining sector,” ARENA said. “Recently installed systems in Australia and Canada combine diesel with solar PV or wind, with capacities up to 47MW diesel/9.2MW wind and 19MW diesel/10MW solar PV.”

With renewable capacities anticipated to advance further, many are left with the question: where does diesel fit into the future energy mix?

Miners Making Moves

First, let’s take a look at the renewable systems already deployed across mines around the globe.

Sandfire Resources

Diversified miner Sandfire Resources was one of the first Australian miners to build an off-grid renewable application.
In 2016, it commissioned a 10.6 MW solar PV installation at its brownfield Degrussa copper-gold mine in WA, which is connected to a new 6MW lithium-ion battery storage facility and its existing 19MW diesel-fired power station.

The $41 million facility, partly funded by ARENA, is owned by Neoen, operated by EPC contractor juwi Renewable Energy, and provides about 15-20% of the mine’s energy needs (21GWh per annum). This has led to a 5ML reduction in diesel consumption a year.

Degrussa solar renewable energy mining facility

The Degrussa solar array in WA. Image: Sandfire Resources.

Antofagasta & Barrick Gold

In July 2018, Antofagasta and Barrick Gold announced their joint venture copper project Zaldívar would utilise 100% renewable energy by 2020, which will reduce its greenhouse gas emissions by 350,000 tonnes per year for 10 years. The mine will use a combination of wind, solar and hydro energy.

Rio Tinto

Between 2008 and 2017, mining giant Rio Tinto has reduced its greenhouse gas (GHG) emissions intensity by 27%, according to Deloitte. Today, about 75% of the company’s energy comes from hydroelectric, nuclear, and renewable power sources. In northern QLD, Rio’s Weipa bauxite operation includes a 6.7MW solar PV farm, which reduces 600,000 litres of diesel consumption a year.

Gold Fields

Gold-miner Gold Fields will also soon install a new mobile and modular energy storage system at its Granny Smith project in WA. The facility is one of the world’s largest renewable energy microgrids and will include 20,000 solar panels and a 2MW/1MWh battery system. The solar-plus-battery system is projected to reduce fuel consumption by 10-13%.

Renewable Energy Challenges

While renewable energy sources have a host of benefits for miners, there are still many limitations. Reliability has been a key issue raised by many.

ARENA also flagged operating lease versus capital lease as a matter, technical integration particularly among offtakers, commercial integration, as well as a mismatch between contract duration and asset life.

For instance, solar PV assets typically have an operating life of 30 years, and some sites only have a small mine life of five to 10 years, and are so remote that to move infrastructure at the end of mining is not economically feasible.

Although, there were already solutions being implemented to de-risk renewables in mining, including SunSHIFT, a plug and play mobile solar module developed by Laing O-Rourke in partnership with SunPower, ABB and ARENA. The solar PV system comes in an array of sizes and can be bought, rented or available via power purchase agreements. Interesting stuff!

Sunshift renewable solar energy equipment

The ‘plug and play’ SunShift solar system. Image: SunShift.

Diesel: A Strong Future

There’s no denying with all of this change, something’s got to give.

And while diesel may experience a reduction in demand in the mid-term, we are of the firm view it will remain a key energy source for mines for years to come, particularly when it comes to powering heavy machinery and haul trucks.

Diesel is also a proven reliable source. It’s trucked in, safely stored in bulk fuel tanks (like ours) and can power up trucks even when the sun isn’t shining or the wind isn’t blowing.

This topic was discussed at length at the April Bauma conference in Munich, which put a spotlight on all the latest industry technologies and innovations.

Diesel Technology Forum executive director Allen Schaeffer said that diesel engines are the technology of choice for fuelling the largest off-road machines and equipment types globally, for many reasons including the energy density of diesel fuel.

“The credentials for the future are innovative, automated, efficient, connected and clean, which ensures that advanced diesel technology will continue to play a dominant role in these vital sectors of the global economy,” Mr Schaeffer said.

Diesel truck and digger
Diesel is here to stay. Image: Diesel Technology Forum.

“Equipment on display in Munich by industry innovators and leaders including AGCO, Bosch, Caterpillar, CNH Industrial, Cummins, John Deere, MTU, Volvo Penta and Yanmar demonstrate diesel’s continued capability to meet the commercial demands of customers along with improved environmental performance that will keep clean diesel in the driver’s seat of the global economy for decades to come.

“It’s all about doing more work with less fuel, not only on a machine basis but also through integrated and connected site ecosystem.

Engine and equipment manufacturers are innovating to achieve increased productivity and fuel-saving for their customers, including for example hybrid and energy storage systems, where smaller diesel engines serve as electrical generators to lessen the load and deliver fuel savings and emission reductions.”

In short, diesel will remain the lifeblood of mining operations for decades to come.

Over to you: Where do you see renewables and diesel in mining in 10, 20 years down the track?

Federal Budget. A timeline of small business incentives.

federal budget updates - money notes

Federal Budget Update: 2019-2020

The delivery of the Federal Budget one month early means business owners now have more time to consider the merits of a new investment under the expanded instant asset write-off.

In a move that isn’t dependent on the upcoming Federal election, the new write-off threshold took effect on Budget night, 2 April.

The threshold has been expanded to $30,000 and the write-off is now available to any business with an annual turnover of less than $50 million, expanding access to medium-sized businesses to encourage growth.

Businesses can purchase assets valued at up to $30,000 and write the investment off against their 2018-19 tax return. There is no limit to the number of investments that can be made.

ACAPMA CEO Mark McKenzie said the move to expand the write-off scheme was a win for fuel retailers.

“The increase in the threshold is a major win for businesses in the fuel retail industry and has come, at least in part, through the combined advocacy efforts of ACAPMA and the Council of Small Business Organisations of Australia over the past 12 months”, he said.

The National Farmers Federation has also praised the expansion of the scheme.

“We’d requested an extension of that program. It sounds like a small commitment, but it’s a really big one for small businesses and for farmersm” said President Fiona Simson.

Ms Simson also welcomed funding particularly dedicated to horticulture and barriers associated with that industry.

“Horticulture is one of our fastest growing industries — recording double-digit growth over the last decade.”

Other key budget measures include:

  • Company tax rate for small and medium business with annual turnover less than $50 million lowered to 27.5 per cent and will be further lowered to 25 per cent by 2021-22.
  • Improving freight routes by committing a further $1 billion to improve network of Roads of Strategic Importance, on top of existing $3.5 billion investment. This will better connect communities and make it easier for regional businesses to access markets.
  • An additional $550 million will be targeted at accident black spots, and an additional $571 million will be provided for bridge renewals and heavy vehicle safety including the establishment of an Office of Road Safety with $15.2 million for innovative safety research.
  • Provision of $6.3 billion in assistance and concessional loans to support those affected by drought.
  • $100 million for regional airport infrastructure upgrade.

Federal Budget Update: 2018-2019

Tax cuts for small business have continued in 2018-2019 as part of the government’s Ten Year Enterprise Tax Plan.

The plan increased the unincorporated small business tax discount rate from 5 per cent to 8 per cent, up to a cap of $1000. This rate will increase to 16 per cent by 2026-27. By lifting the small business entity turnover threshold from $2 million to $10 million, access has also been extended to a range of small business tax concessions.

Small businesses will also benefit from the extension of the $20,000 instant asset write-off for a further 12 months to 30 June 2019.

The budget also includes:

  • $24.5 billion for new nationally significant transport projects and initiatives.
  • $225 million to improve the accuracy and availability of satellite positioning across Australia, enhancing use of GPS to increase productivity including in the agriculture, construction and logistics industries.
  • Improving access to water infrastructure for farmers.
  • Increasing access to a broader range of agricultural and veterinary chemicals.
  • New funding of $102 million for biosecurity and $26.6 million to better manage costly pests and weeks and help farmers maintain access to valuable export markets.

Federal Budget Update: 2017-2018

Expanding on last year’s small business initiatives, the government has announced it will extend the $20,000 instant asset write-off for a further 12 months to 30 June, 2018. The turnover threshold will also be lifted to $10 million, five times higher than was originally available.

KPMG tax partner Simon Thorp said the extension of the write-off is “very significant.”

“This will provide a much needed shot in the arm for many small businesses across the country and will stimulate the economy and increase the investment and productivity of small business,” he said.

The Victorian Farmers Federation called for the scheme to be extended indefinitely to ensure real benefits for rural business.


Federal Budget Update: 2016-2017

FUEL retailers looking to upgrade ageing fuel storage tanks or buy new tanks for unmanned sites have been handed the perfect opportunity after the May budget.

2016-2017 budget for fuel retailing graphic

The Australasian Convenience and Petroleum Marketers Association has welcomed changes to the definition of small business that will mean more qualify for a range of tax concessions on offer, including the $20,000 instant asset write-off.

Excluding fuel revenue is the game changer

From July 2016, businesses with a turnover of less than $10 million qualify for the write-off.

Even more relevant to fuel retailers, the determination of the annual earnings threshold excludes revenue earned from fuel sales, opening the door for many more small retailers to take full advantage of the benefit.

ACAPMA chief Mark McKenzie says the change means a fuel retail business with a total annual turnover of $18 million, where fuel revenue totals $14 million and convenience store and other business revenue $4 million, would be deemed to be only earning the $4 million.

That means it could claim benefits including the instant asset write-off, a lower company tax rate of 27.5 per cent, and an 8 per cent unincorporated small business tax discount of up to $1000 for small businesses with a turnover of less than $5 million.

Also in 2016-17, the tax rate for companies with an annual turnover less than $10 million will drop to 27.5 per cent. Unincorporated businesses with an annual turnover of less than $5 million will benefit from an increased unincorporated tax discount of 8 per cent.

 

Federal Budget Update: 2015-2016

From Budget night, all small businesses will get an immediate tax deduction for any individual assets they buy costing less than $20,000, up from $1000.

The $20,000 small business tax break budget incentive means any small business with a turnover of up to $2 million can fully deduct the purchase price of any new assets valued at up to $20,000.

There is no limit on the number of items valued at up to $20,000 a business can purchase and deduct, and the break remain available for two years until June 2017.

The rebate, which expands on the ATO’s accelerated depreciation measures, will apply to anything from new cars and machinery to sheds and storage, including fuel storage tanks.

Business will also benefit from a 1.5 per cent tax cut for small companies, down to 28.5 per cent – the lowest small business company tax rate in almost 50 years.

Unincorporated small businesses, including sole traders, will get a tax discount of 5 per cent of business income up to $1000 a year. This means the amount of tax unincorporated businesses pay on their business income will be reduced by 5 per cent, capped at $1000.

Institute of Public Accountants chief executive Andrew Conway said the deductions delivered real help for small business.

“The immediate write-off of an asset under $20,000 provides real, direct benefit and cash flow to small businesses now,” he said.
“The ability to purchase a small asset to grow a small business will encourage people to become more efficient and more productive.”

NAB Agribusiness general manager Khan Horne said June had already been a busy month, and the signs were there that the budget had boosted confidence.

“There are definitely people looking at the tax incentives and how to make the most of them as they assess their business earnings and borrowing position at the end of the financial year,” he said.

Fuel Security Report Delayed

oil tanker

Only three months into 2019 and Australia’s liquid fuel security has again reared its head as a critical issue, with the Federal Government under criticism for failing to publish the promised review of Australia’s liquid fuel reserves.

oil tanker

Then Energy Minister Josh Frydenberg ordered the urgent review of Australia’s liquid fuel reserves last May after the country dipped below 50 days’ supply. This has since been delayed, but the Department of Environment and Energy has promised the review will be delivered early this year.

Most recently, Resources Minister Matt Canavan has signalled the review will consider whether a commonwealth reserve is needed.

Senator Canavan said a reserve was only a temporary solution, and the key to fuel security lay in boosting domestic oil production in the Great Australian Bight and the Beetaloo Basin in the Northern Territory.

“I’m not saying you shouldn’t necessarily think of national reserves or stockpiles but obviously by definition they only provide temporary relief,” he said.

“If we can boost domestic production, that can ensure that however long a crisis eventuates, we can ensure our fuel security.”

Liquid fuel such as petrol, diesel and jet fuel accounts for 37 per cent of Australia’s energy use, including 98 per cent of transport needs.

The International Energy Agency mandates that countries hold at a stock in reserve equivalent to 90 days of net imports. Australia does not meet the standard with 56 days of import coverage.

In January, latest Department of Energy figures showed Australia’s reserves were sitting at 22 days of petrol, 17 days of diesel and 27 days of total petroleum products.

There’s concern that with instability in the Middle East and tensions in the South China Sea and on the Korean peninsula there is a real threat to the security of transport fuel imports.

“With increased uncertainty in the Middle East, from where much of our oil and refined fuel comes, and the growing uncertainty in our own region due to great power tensions and the unpredictability of the US as a stabilising force, a review of Australia’s liquid fuel reserves is more important than ever,” Coalition Senator and retired Major-General Jim Molan told The Australian.

He said Australia was one of the few places in the world without a government-mandated strategic reserve of fuel.

Meanwhile Australian Strategic Policy Institute head of Risk and Resilience Dr Paul Barnes said Australia’s position at the end of a supply chain means we are particularly vulnerable to geopolitical disturbances.

New solutions for waste oil storage

waste oil storage tanks

Oils ain’t oils, and not all waste oil storage tanks are the same.

Whether you’re a service station, a lube shop or a mine site operating heavy diesel machinery, if your business generates used oil you need waste oil storage.

waste oil storage tanks

If you’re operating a mine site, a single oil change on a haul truck could generate 250 litres of used or waste oil that needs to be stored in a way that makes sense for your business and complies with environmental and safety legislation.

Whether your business is big or small, you’ve probably already thought about investing in quality oil storage to prevent degradation, protect your product and keep your machinery ticking over. What many businesses often miss is that getting used and waste oil storage right is just as important, and can make a huge difference to your bottom line – particularly with the Federal Government offering incentives to recycle waste oil.

Given our increasingly tight environmental regulations to prevent water and soil contamination, and the growing trend towards waste oil recycling, it’s worth thinking about the most efficient and effective storage system for your operation.

What contaminates oil?

Modern engines may be efficient, but the heat they generate still changes motor oil, causing a breakdown of additives and other key properties. This creates acids that combine with other contaminants including dirt, dust and rust, along with small amounts of water. Add to this exhaust gases that leak past the piston rings and you have contaminated oil that could contain cadmium, aluminium, lead, steel, iron and chromium as well as arsenic and benzopyrene.

It’s a list of chemicals you wouldn’t want in your drinking water, which is why waste oil storage is heavily regulated.  It only takes one litre of waste oil to make one million litres of fresh water undrinkable, so preventing spills has to be a first priority.

Waste oil storage –the basics

In Australia, the standard for waste oil storage is set in AS1940,with each state and territory creating itsown legislation based on the national standard.

Essentially, the legislation forbids the disposal of waste oil into the soil or into stormwater and outlines the requirements for the prevention of any spills by ensuring oil is stored in a bunded and covered area and in appropriate containers.

Depending on state legislation, you may also need a licence if you’re storing large quantities of waste oil, and in some cases there will be a levy on liquid waste. The transport of waste oil may be subject to hazardous waste tracking.

Across the board, the basics around waste oil storage are:

  • Don’t mix waste oil with other substances
  • Label waste oil containers correctly
  • Never store waste oil in a rusted or damaged container or tank
  • Know your state or territory legislation around waste oil storage

The NSW EPA says importantly, you should minimise the number of liquid waste containers you’re storing and use spill containment systems that minimise the likelihood of drums tipping over and causing a spill outside the designated containment area.

Storing waste oil in drums

Drums are a traditional form of oil storage, but there a few pitfalls to be aware of when using drums.

Apart from being a less space-efficient storage method, summer temperatures can make leaks more likely, particularly if the drums are exposed to weather. As it rains, water can be trapped on top of the barrels and submerge the bungs. As the drum heats and cools, air is exchanged between the air space above the waste oil and the atmosphere. This can result in water that is sitting on top of the bungs being pulled into the oil, ultimately settling at the bottom of the barrel and raising the overall fluid level. As the process continues and more water is accumulated, the barrel can become deformed and push oil out of the bungs, causing a potentially harmful and expensive spill.

A new trend in waste oil storage tanks

Given those requirements, F.E.S. TANKS Managing Director Craig Cygler says it’s no surprise self-bunded waste oil tanks are an increasingly popular alternative to traditional drum storage options.

Designed toAS1940 and AS1692 (tanks for flammable and combustible liquids), an F.E.S. waste oil tank ticks all the regulatory boxes in one step, reducing the need for multiple barrels and for a designated bunded storage area.

“We’ve got more and more business customers looking to our 1000-2500 litre Bloc tanks as waste oil storage tanks,”Craig said.

waste oil storage tank - 1000l
Bloc1000 (1000 ltr. Waste oil storage tank)

waste oil storage tank - 2500l
Bloc2500(2500 ltr. Waste oil storage tank)

“Unique to F.E.S. TANKS, our waste oil tanks are designed for safety, efficiency and long life and comply with all Australian regulations.

“Our waste oil tanks are built to the highest quality standards with a heavy-duty 300 micron paint finish and stainless steel fittings that won’t react with the chemicals that can be found in waste oil.  With an in-built bund capable of taking 110 per cent of the tank’s capacity, they can be placed wherever they are needed on site without the need for building work, concrete walls or excavations and are also easy to store, relocate and transport.

 “The 6mm steel double-walled construction and the design of this range makes them easy to service and means waste oil can be stored outside while minimising the risk of corrosion, water contamination, and leaks. Because of their capacity self-bunded Bloc tanks also eliminate the spills and safety risks that come with using multiple barrels.”

The cube styling of the F.E.S. waste oil tank range also gives maximum volume with a small space-saving footprint.

BLOC 1000 waste oil storage tank

Ask the fuel experts at F.E.S. TANKS for the right solution to your waste oil storage requirements on 1300 651 391, or email us your requirements.

The fuel farm revolution – the future of mining fuel storage

self bunded fuel farm on isolated mining site

The fuel farm revolution – the future of mining fuel storage

Emerging technologies are changing the way mining companies operate with automation and standardisation boosting safety and productivity.

QUT robotics researchers have already developed technology that will equip underground mining vehicles to navigate autonomously through dust, camera blur and bad lighting and will allow vehicle-mounted cameras to track the location of vehicles in underground tunnels within metres.

The Internet of Things – technology that networks devices, equipment and appliances through the internet – is connecting fleets, equipment and people using radio frequency identification devices and sensor technologies.

Now, innovators have turned their attention to one of the biggest challenges for remote mine sites – access to reliable power through efficient fuel storage.

self bunded tank farm in isolated mining area of Queensland, Australia

The rise of the fuel farm and self-bunded fuel storage tanks

For many miners, developing large-scale fuel farms on site is one way to ensure a secure supply of diesel to power operations.

Western Australia alone now has about 200 fuel farms, with about half of those in the mining sector.

An innovation that has paved the way for the rise of this storage options is the development of self-bunded tanks with integrated spill containment.

F.E.S. Managing Director Craig Cygler, a specialist in remote fuel refuelling solutions, says using self-bunded tanks has made the construction and relocation of bulk fuel storage to meet mining needs a simpler and safer process.

“With self-bunded tanks you avoid the need for construction work to build bunds around tank farms, and the associated valve maintenance and drainage issues to ensure contaminated rainwater doesn’t escape into the water table. 

“In self-bunded tanks the dual wall protects the environment against leaks, protects you against fuel loss and saves on excavation and construction work.

“Another great benefit with our modern tanks is that they are fully modular systems, which makes site design simple. Everything, including connecting pipework, walkways and ladders, can now be prefabricated and put together on the site within 1-3 weeks, depending on the size of the farm.

“This is a huge advance – using old methods the process would have taken twice as long.

“It also means that after three or four years when the operational needs change, the farm can be easily pulled apart and relocated to another site.”

Why fuel farms?

While renewable energy and the electric mine might be on the horizon in the future, experts say diesel is likely to remain a primary power source for the foreseeable future.

With that in mind, tackling overheads by reducing fuel haulage costs and locating storage close to work sites means fuel tank farms that can be quickly built in remote locations is a logical move.

What’s more, the farms are compatible with new automated refuelling technologies that are already being trialled by major players including Rio Tinto.

Robotic refuelling that removes the need for manual intervention is not only expected to make the refuelling process safer, but boosts the potential for fuel farms by making it even easier to build them closer to operations.

Fuel farm planning – getting the basics right

Craig Cygler says the first consideration for miners planning remote fuel storage farms is consumption – getting the capacity right can reduce the frequency of fuel deliveries, which means significant cost savings in remote locations.

“The first consideration is what type of machinery will you be filling and how many vehicles, and that will give you an idea of the storage capacity you need and the required flow rate,” he says.

“For example if you’re only looking at 10 vehicles you might only need two to three tanks.

“Most fuel farms might have 5-10 100,000 litre tanks, giving them 500,000 to 1 million litres of fuel storage.

“The dispensing equipment needs to deliver about 800 litres per minute, because it’s filling 3000-litre tanks and high-flow equipment means faster refuelling and cost and productivity savings. There’ll also need to be separate refuelling points for the lighter vehicles.”

Security is another key consideration – Cygler says while fully automated and robotic refuelling is probably still 5-10 years away for most sites, advanced fuel management systems have significantly streamlined the refuelling process and dramatically reduced losses.

Having access to real-time data and analytics allows for predictive maintenance processes that reduce vehicle down-time.

“AVI refuelling, or automated vehicle identification systems, identify each vehicle and monitor fuel usage. They can compile detailed data that includes who is operating the vehicle and changes in fuel consumption,” he says.

“Fuel management systems provide an important basis for fuel management and are also an effective way to reduce theft and wastage.”

The future of mining fuel storage

It seems likely increased automation will be the way of the future for mining refuelling.

QUT Professor Michael Milford says automated refuelling technologies trialled in agriculture could have mining applications.

“Refuelling is obviously potentially quite hazardous,” he says, “so that’s an area which is under active research in terms of automating it.

“The big appeal of robots is in dull, dirty and dangerous conditions, and mine sites often fulfil two or three of those criteria simultaneously.”

To find out more about fuel tank farm planning and installation, talk to the experts at F.E.S. TANKS on 1300 651 391 or email us.

 

Record truck sales bring new technology to Aussie roads

Record Truck Sales Bring New Technology to Aussie Roads-hero image

Record truck sales bring new fuel saving technology to Aussie roads

Transport fleets are increasing their rate of adoption of fuel-saving technologies – and enjoying the benefits in fuel economy – according to the annual fleet study in the USA.

Australia has already seen trials of innovations like platooning, and our Truck Industry Council (TIC) says investment in new vehicles and their accompanying new technology is up in 2018.

New offerings like the Man TGX D38 are bringing latest fuel efficiency technology to Australian transport fleets.
New offerings like the Man TGX D38 are bringing latest fuel efficiency technology to Australian transport fleets.

What US transport fleets are doing with fuel-saving technology

The North American Council for Freight Efficiency’s (NACFE) 2018 Annual Fleet Fuel Study, which looks at the adoption of products and practices to improve freight efficiency among 20 major North American fleets, found the overall adoption rate for 85 currently available technologies grew from 17 per cent in 2003 to 44 per cent in 2017, with economic benefits totalling more than $636 million across the fleets in 2017. Fleet vehicles that were latest models were delivering up to 4.25kpl.

Let’s put the survey in context. In the United States, fuel costs over the past decade have fluctuated from around 20-40 per cent of the total cost of operating a commercial vehicle. While fuel-saving technologies have increased, barriers to adoption have included a lack of data about performance gains and a lack of confidence about the payback on investment.

Investment in proven technologies that let fleets do the same amount of business while spending less on fuel are a promising option, but the needs of operators are vastly diverse. The NACFE research aims to provide the information the industry needs by gathering information around the purchases of 20 fleets that involve any of the 85 relevant technologies.

The 2018 report found fleets that successfully adopted the technology tried to make the new specifications their norm, recognising that implementation was not always easy and involved a change management process including driver and technician training and new suppliers.

“ContinuiNACFE's 2018 report summarises adoption of key fleet fuel-saving technologiesng to make investments in technologies that improve fuel efficiency makes good sense,” a senior executive at one of the large US carriers told NACFE.

“Given the historic volatility of oil prices, it’s a safe bet that we’ll see the price of diesel go up, (and) fleets that have improved their fuel economy will be at a competitive advantage when that happens.”

Technologies that had the largest gains in adoption rate were cab extenders, lower viscosity engine oil, shift to neutral, direct drive transmission, in-cab cameras, high efficiency alternator, engine start-stop for HVAC, trailer tail fairings, trailer solar panels, two-speed/modulated cooling fan clutch, two-speed/variable speed water pump and trailer lift axle. Smaller fleets were higher adopters of cab insulation, tyre pressure monitoring and wide-base tyres.

The Australian story – a bumper year for truck sales

The good news in Australia is that truck sales results for 2018 suggest a record investment in new trucks, with their accompanying fuel saving features.  This year’s January to June result – with 19,970 heavy vehicles delivered – smashed the previous mid-year peak and bodes well for a more fuel-efficient industry.

Truck Industry Council (TIC) President Phil Taylor says it’s the first step in a long road– the average age of Australia’s truck fleet is 14 years for trucks above 3.5t GVM, compared with seven years in Western Europe, and the TIC argues adoption is being slowed by technical restrictions which mean we are out of step with global dimensional and axle mass limits, making it expensive to import some vehicles without expensive modifications.

“We need regulators to work more closely with truck manufacturers, the companies developing these technologies, to develop processes that could see the streamlining of new regulation development and introduction in Australia,” Phil says.

“Most importantly, we need these new technologies and features to filter through our nation’s truck fleet far more quickly than is currently happening, and that can only be achieved with a newer, younger truck fleet.”

Consider upgrading fuel storage and systems

If new vehicles are not yet an option, managing fuel quality through storage and monitoring fuel use through fuel management systems are proven options to improve fuel efficiency.

Poorly managed diesel fuel is responsible for about 80 per cent of engine failures in the transport industry, and in a time critical environment these failures can cost a business much more than the price of engine repairs.

Find out more about keeping fuel costs down from the fuel storage specialists at www.festanks.com.au

Farmers stay resilient in face of drought

AUSSIE FARMERS STAY RESILIENT IN FACE OF DROUGHT hero image

Farmers stay resilient in face of drought

Australian farmers resilient as more drought assistance announcedAustralia’s 135,000 farmers are tightening their belts as the severe drought gripping the eastern states deepens and forecasts point to a dry, hot spring and summer – but it’s not all bad news.

While the Rabobank rural confidence index survey signals an expected drop in positive sentiment across regional Australia over the past three months – with 100 per cent of NSW and much of Queensland and Victoria in drought – it shows most farmers believe their businesses are well-equipped to weather the storm.

More than 93 per cent of around 1,200 farmer surveyed around Australia said they will remain viable for the next year even if the big dry continues or an El Nino event develops.

Rabobank Australia CEO Peter Knoblanche said farmers across the country are showing great resilience and adaptability to manage their businesses through worsening drought conditions.

“Parts of central and western Queensland have been in drought for seven years with only sporadic short-term relief, while the whole of NSW is drought-declared and its reach is spreading into South Australia and Victoria,” he said.

“(But) the outlook for Australia’s ag sector is fundamentally very sound, with strong commodity prices – particularly for lamb, bee, wool and cotton and, more recently, grain – ensuring the majority remain in overall strong positions.

“Farmers have managed through droughts before and have put in place the infrastructure and systems to try to mitigate the impact as best they can. That is not to say it isn’t extremely challenging, especially in areas where it has been so prolonged.”

Western Australia was the only state that bucked the trend, with improved conditions meaning 48 per cent of the state’s farmers were expecting an increase in gross farm incomes.

Farmers in Tasmania and Western Australia were more likely to be planning to increase investment in their farm business.

New drought assistance measures announced

Meanwhile, while farmers in some areas are celebrating their first taste of rain in a long while, the Federal Government has appointed a new national drought co-ordinator and increased direct assistance and concessional loans to $1.8 billion.

Under the next phase of drought assistance:

  • The Drought Communities Programme will be expanded and receive an additional $75 million to help support 60 councils in drought-stricken areas, funding local community infrastructure and other projects, such as emergency water supply.
  • Primary producers can immediately deduct (rather than depreciate over three years) the cost of fodder storage assets, such as silos and hay sheds used to store grain and other animal feed storage, making it easier for farmers to invest in and stockpile fodder. The deduction will be available for storage assets first used or installed ready for use from August 2018.
  • The instant deduction is in addition to the $20,000 instant asset write-off already available for small businesses to support capital investment in infrastructure. The write-off is one way farm businesses can take measures to improve cost-efficiency, including upgrading farm fuel storage to maximise efficiency and reduce farm fuel costs.
  • The Government is doubling the amount a farmer can borrow in low-interest loans to $2 million and increasing the total amount available for these loans to $500 million in any one year. These loans will assist with financing immediate needs such as purchasing feed and fodder. The first five years of these loans will remain interest only. Farmers with existing government loans will also be able to refinance to take advantage of the interest-only concessional period.
  • An additional $23.7 million will be provided to improve drought resilience by extending the Great Artesian Basin bore capping program that plugs abandoned bores and replaces free-running channels with new water-efficient piping.
  • There will be a special drought round under the National Water Infrastructure Development Fund that will provide up to $72 million for water infrastructure in drought-affected areas.
  • An additional $2.7 million will be provided to allow the Bureau of Meteorology to develop new finer scale regional weather and climate guides, helping farmers make decisions about crop planting and stocking levels by better understanding their local climate risks.

NSW freight changes support hay transport to drought-affected farmets

In NSW, the State Government has taken action to change freight dimension allowances to reduce prices for farmers forced to look further afield to source cattle feed.

The change will allow eligible vehicles transporting hay to travel under notice and without a permit with loads 2.83m wide and up to 4.6m high on approved roads.

Minister for Roads, Maritime and Freight, Melinda Pavey, said for vehicles that weren’t eligible the process for obtaining a permit would be made easier.

NSW is also offering a transport subsidy of $20,000 per farm business to cover 50 per cent of the full cost of freight up to a maximum of $5 per kilometre and 1,500km per journey.