OPERATIONS

Doubts over local content remain

THE West Australian government is hailing the $2.6 billion worth of contracts handed out by Chevron as a sign local participation is on the up, but doubts linger over steelmakers and fabricators' roles in the resources boom across the nation.

Doubts over local content remain

Minister for Commerce Simon O'Brien said recent contracts handed out by Chevron for its Gorgon project were a sign that Chevron and the government were committed to providing the citizens of the state an opportunity to get in on the boom.

In July Chevron awarded a $2.3 billion contract to the Australian operating unit of Kentz and CBI&I for mechanical, electrical and instrumentation work, which is expected to create more than 1500 jobs over four years at Barrow Island and another 150 at the Australian Marine Complex at Henderson, south of Perth.

Local fabricators AGC secured a $12 million contract to fabricate and supply the adjustable pipe support structures for Gorgon in the same month, while Civmec also won a multi-million dollar contract for the supply of structural steel.

Civmec will fabricate and supply about 10,000 tonnes of steel for the LNG plant on Barrow Island.

Meanwhile, O'Brien also listed local subsea company Velocious' contract win for the delivery of intricate tooling components and associated services to the project as further proof a renewed focus on local content was delivering.

"These projects clearly demonstrate that Western Australia's economy is continuing to benefit from activities available in major resource projects currently underway," he said.

"These outcomes illustrate both the commitment of project proponents to source locally and the continued competitiveness of WA's industry in what is now a very complex and challenging market."

Australian Steel Institute state manager James England told EnergyNewsBulletin that where exactly the state government got their assertion the resources sector was actively seeking to include local fabrication companies in the construction of large projects was puzzling.

"We wouldn't know where they get that from. They say this is happening but then don't publically release the figures," he said.

He said while the contract wins from AGC and Civmec were welcome, it was a drop in the ocean compared to what could be done within the state.

"Certainly those contracts are very welcome, and there is the potential there for some work to be done here but it's not exactly huge compared with the complete requirements of the project," he said.

"There's the potential to turn it around, but things are definitely not heading in the right direction. I think the government has gained a better inclination to pay attention, but they still haven't put in place any permanent fixes to the situation.

"What they're doing is they're talking about it, but what they've actually done is pretty minimal."

The bullish talk from the state government on local content comes after an estimated 1400 workers lost their jobs at BlueScope Steel's Illawarra and Mornington Peninsula operations, as the company could not compete with cheaper steel imports from China.

The job losses have fuelled debate about the future of Australian manufacturing, with a range of factors being blamed including the impact of the higher Australian dollar.

Federal Treasurer Wayne Swan reportedly told the ABC that he would investigate claims that big resources companies had shut out steelmakers and fabricators.

"Certainly some of the steel will be imported and I don't think anyone would be surprised about that, but if Australian manufacturers who are offering good product aren't getting the chance to get their head through the door then that's worth looking at very, very closely," he said.

The Australian Worker's Union said while the job losses were caused by a combination of factors, the reluctance of larger resources companies to award manufacturing work in Australia had taken its toll.

The union took aim at Woodside Petroleum for sourcing most of the steel for its Pluto LNG project from overseas, when the ore used for the steel was more often than not dug up in Australia, using the company as an example of a large resources company trying to bypass local industry.

"The great myth peddled by many of the players in the resource industry is that somehow Australian content is prohibitively expensive," AWU president Paul Howes was quoted by the West Australian as saying.

"It's not. We're digging it up, shipping it away and bringing it back at sometimes four times the price."

A Woodside Petroleum spokesperson reportedly told the paper that it did not source the steel from Australia simply because local suppliers could not provide the entire 50,000 tonnes of steel needed for the project.

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