The Pilbara rivals the Snowy River as an engineering icon
This article originally appeared in the Australian Financial Review on 1 June 2015.
The proverbial visiting Martian could be forgiven for thinking that Australia's iron ore industry has been defined by two, strikingly different eras: Before Twiggy (BT) and After Twiggy (AT).
The BT era appears dimly, like 1960s wallpaper – all grey suits, Brylcreem and boring meetings. Nothing much to see here with the exception, of course, of Lang Hancock's legendary flight over the Hamersley Range all those decades ago. The passion, the drive, the bright lights and the Aussie entrepreneurial flair, that only arrived AT.
For some, this parable infuses the so-called 'iron ore wars'. Its beaming, plucky David up against the faceless, multinational Goliaths, in a fable that surely fits the short attention span and easy moralising of our 24/7 news cycle.
But there's a hitch. It is almost entirely wrong.
A new study by David Lee, one of Australia's finest young historians, shows why this is the case. In Iron country: Unlocking the Pilbara, Lee traces the larger narrative of Australia's modern iron age from the lifting of the iron ore export embargo in the early 1960s through to the China boom.
It is a remarkable corporate tale of hope, faith and far-sighted decision-making; one that, in all seriousness, our country can be very proud of.
As Dr Lee shows, the pioneers of Australia's modern iron ore industry were many and varied in the BT era. They included prospectors and geologists, politicians and business visionaries. Would you believe, a few even worked for multinational firms?
As Lee points out, the central role of Australian capital and management in establishing the foundation Pilbara projects should not be underestimated. Whether it be the likes of Garrick Agnew who drove development of the red-faced hills and mesas at Robe River, or Maurice Mawby who built Hamersley Iron into one of the world's great mining companies, or James Vernon and James McNeill who locked CSR and BHP, respectively, in behind Mount Newman, one project that nearly didn't get up.
SNOWY SCHEME'S PEER
The broader multinational coalition that unlocked the Pilbara included the engineers, architects and workers who built the region's vast infrastructure, not least the hundreds of Thursday Islanders who laid two of the world's biggest privately owned rail networks, now run by Rio Tinto and BHP Billiton, and in record time. Building the infrastructure that still underpins the Pilbara iron ore majors has been described as like building a "state in miniature". Apart from mines, ports and railways, we're talking everything from power and water supply, to schools and roads, right through to suburban street lighting.
The conclusion Lee draws is compelling. The Snowy Mountains Scheme is held up as the benchmark of Australian engineering and technological prowess in the 20th century. The foundation Pilbara projects, constructed by private enterprise and over a much shorter time period, are at least a comparable achievement.
A key theme Lee develops is that there was nothing inevitable about the Pilbara becoming the jewel in the crown of the Australian mining industry. As he notes, the temptation to "read history backwards" should always be resisted.
In the early years, projects hung in the balance. Long-term trade deals had to be negotiated with tough-minded Japanese negotiators. Unprecedented amounts of capital had to be secured. And in a weird parallel with today, some politicians were sceptical that the myriad of uncoordinated players in the industry could ever truly serve the national interest.
New challenges arose in the 1970s. Japanese steel demand flattened out. In time, low prices would drive structural change in the industry and highlight in the 1980s why restrictive work practices were unsustainable. The lesson from these long, grinding years was unmistakeable: the global steel industry did not owe the Australian iron ore industry a living. Other exporters like Brazil were ready and willing to grab market share if we took our eye off the ball.
Of course, Lee also covers the China boom that turbocharged Western Australia's iron ore industry. These were the pay-off years which vindicated the earlier era of industry-building and the hard slog that then followed.
The story here is more familiar. Prices surged, followed by investment. Australian living standards rose as the iron ore industry became our largest export earner.
New players entered the industry to take advantage of high prices. Battles emerged over things like tax. Indigenous Australians claimed a stake in the Pilbara's red riches for the first time. No one could suggest the 2000s were anything but exciting and enriching times for Australia's iron ore industry.
Still, the sneaking sense from Lee's work is that, for sheer historical grandeur, the BT era is impossible to beat.
Full disclosure: Iron country is published by the Minerals Council of Australia. In case you are wondering, it has nice things to say about Mr Forrest as well.
John Kunkel is the deputy chief executive of the Minerals Council of Australia.