PhD Candidate - Brent McKenna,
BA, MA.
Topic: “A Critical Analysis of Contemporary Boom Bust
Impacts on a Set of Pilbara-Based Mining Towns: towards addressing the
strategic management problem of developing mining communities and their sustainability”
Supervisor (and Associate Supervisor)
Dr.
Daryl McPhee – Associate Dean (Research) Faculty of Society and Design, Bond
University, Gold Coast, Queensland.
(Dr Bhishna Bajracharya - Faculty of
Society and Design, Bond University, Gold Coast, Queensland)
Preamble to the PhD by Research
This
research would be a case study (Yin, Robert, K., 2009) of mining towns located
in the Pilbara in the NW of Western Australia to assess the impact of major
projects undertaken to increase the mining and extraction of resources and, at
the same time, develop ongoing communities to service industry needs. An
important set of long term issues (listed as the Principal Research Questions below)
would be critically analysed with a view to better understanding what we mean
by the sustainability of communities in remote regions, where people and
families are settling in the expectation that they will become communities that
will continue to exist in the future. Much of the information and data would be
obtained from: discussions facilitated within focus groups involving people
from several mining towns, records of stories from inhabitants and new
settlers, a household survey targeted to people in and beyond the region that
have one or more household members employed in the region. As well, key players
connected to managing major projects in the resources industry would be
consulted in an effort to develop an understanding of how decisions to proceed
with major investments are made and how they connect with the policy context,
implementation process and notional plans to develop sustainable communities.
The study would identify the context by way of reports, demographic and
industry statistics as well as project management plans for resource industry
developments and would connect these details to a critical analysis of the
systemic framework and theory on Boom Bust Cycles especially as it relates the contemporary
“Resources Boom” and how major project investments impact on the goal of
developing “sustainable communities” in remote areas during the process of
mining and extracting non renewable resources.
The
research proposal arises out of the researcher’s direct experience in three
different positions during a two and half year period in a major mining town
(Karratha) that has grown during the Boom that started around the mid 2000s followed
by the Bust that took place in 2013. During this period of living in Karratha (July
2011 to Dec 2013) the researcher became aware of a contradiction in extracting
non-renewable resources and the public discourse suggesting that two sustainable
cities of NW Western Australia would exist after resources are mined out. Beyond
this contradiction, the researcher also became aware of a set of issues and
problems faced by those who had arrived during the Boom and were impacted during
that time and as the Bust started. On a day to day level for the workers,
managers and business owners along with their families, the stresses and
difficulties faced in these mining towns are often far more pervasive than many
would aware of, especially as daily newscasts across the rest of the country
generally report the Boom as high remuneration with little regard to the
downside. In effect, many remote mining towns are almost completely invisible to
Australian society apart from often being represented in company videos and mass
media presentations about growth, the many opportunities and lifestyles that
become available to those who might be thinking of, and then moving to, these remote
regions.
At
the macro level, the Resources Boom has been described as that part of the national
economy that changed into top gear with commentators alluding to it when they
described Australia as having a “Two Speed Economy”. The resources sector was
characterized by increased prices and higher demand and the Resources Boom was generally
seen as a ‘very good thing’ based on increased and sustained economic activity further
enhanced, as if by a fuel injection system, by a set of major investment
decisions by resources companies that became “Multi-Billion Dollar” resource
development projects to increase output from inland mines and off shore gas
fields to supply projected global demand. As prices for iron ore fell
dramatically (or, in the case of gas, were projected to fall) in 2013, the
resources sector, that had statistically led the national economy, changed back
down to a lower gear and overall economic activity in the sector “flattened out”.
During 2013, several major project investment plans were “put on hold” by large
resources companies (e.g. BHP Billiton’s plan for a $24 Billion upgrade to
production from the Olympic Dam mine, Woodside Energy’s “Prices Point” or off
shore development plan near Broome) which forms part of the rationale and
motivation for this research as those plans are expected, at some stage, to be
implemented to continue the expansion of production in the resources sector which
is likely to lead to significant community impacts that may be alleviated by
knowing more about how the strategic management of major projects can be significantly
improved.
At
the micro level, the impact of the major projects and the Boom Bust Cycle on
mining towns is related to the whole period from the start of the Boom through
to the economic downturn described as the Bust. In the Boom there are the
stresses of high demand beyond the ability to supply scarce goods and services in
remote mining regions (such as potable water and accommodation to those wishing
to move into the towns) leading to extremely high prices for many goods and services
(such as rents for housing, short and long term accommodation) compared to the
rest of the country. In the Bust there are the stresses of declining and curtailed
demand for resources leading to lower prices and poor sales which impacts on mining
towns through businesses closing, redundancies, ending contracts and decisions taken
by workers to seek employment elsewhere and business owners to re-establish in
different places. In worst case scenarios sales cease, houses are left vacant,
shop shells and factories are left empty, original inhabitants and settlers accept
lower paid jobs, leave the towns or become dependent on welfare and this keeps happening
despite a known history of Resources Booms being replete with examples of Boom turning
to Bust. As far back as the 1860s Gold Rush we know that many mining towns in remote
regions became Ghost Towns (and more recently welfare dependent towns). We also
know the Gold Rush occurred as the precious metal was discovered and word
spread and led to Prospectors rushing in large numbers to the areas where Gold
had been found and, upon arrival, they mined for gold in the hope of finding their
fortunes. These early Booms tended to be characterized by rapid population
expansion of “miners” who were soon serviced by small businesses arriving to
feed, clothe and supply them with the goods and services they needed or wanted.
Little or no planning occurred, much less committing to principles of
sustainability and strategically managing development to ensure a community
developed that might eventually become an established town or city.
During
that early Boom Bust era, each Australian state was a separate colonial
government and functioned largely to administer the organic growth of towns and
the development of infrastructure such as roads and bridges. Communities evolved
from these mining towns and, if ongoing economic activity took place in the period
associated with the earliest Gold Rushes, then the towns sometimes grew to become
cities with industry and economic activity that had diversified beyond Gold as
the main source of income. Gold Rush towns that turned into Ghost Towns were completely
dependent on the Gold and, after it was mined out or became uneconomical to
mine, and no other industry existed to continue economic activity, the
populations declined to nothing leaving only mines, infrastructure and
buildings and minimal, if any, economic activity. The contemporary period for
the “resources industry” has very significant differences with the resources Booms
of the past; one difference is related to the immense scale of major resource
development projects managed by large companies to service global markets whilst
another is the remoteness of resource projects from established communities thereby
requiring labour to be brought into remote mining regions, some of which are
yet to be explore (e.g. the eastern Pilbara). These two factors have led to the
creation of new mining camps relatively near to mines and completely new mining
towns (e.g. Karratha established in 1970) which grew in relation to major projects
that were announced to proceed thereby requiring a construction workforce for a
period of time followed by a production workforce for ongoing operations. The contemporary
Boom in the NW of Western Australia led to rapid population growth from around
2005 through to early 2013 due to in-migration by job seekers, as well as companies
arranging Fly In Fly Out (FIFO) personnel who work in mining and related jobs and
live in mining camps or rented dwellings in mining towns. As projects are
completed and the inevitable Bust occurs many workers and managers are discontinued,
made redundant and usually leave so the downturn impacts both local and non
local families due to job losses unless they can “stay put” until the next
major development project proceeds or they might be flown out to another development
project.
Whilst
Booms of the past have come and gone, this research would undertake a review of
Boom Bust Cycle theory and relate it to developing the resources sector during
the contemporary period and this would be woven into a critical analysis of the
existing system and strategic management ideas used in deciding on and planning
major investments as well as developing major projects. The study would seek to
better the understanding of factors that led and lead to decisions on major
investments and analyse project planning and the related implementation of
major projects and their impacts on mining towns. Most importantly, it would focus
on the collection and review of community based viewpoints related to the
socio-economic, psychological, cultural and environmental impacts of the
resources industry and its development in and beyond mining areas to represent impacts
on communities living in remote regions and living in towns and cities beyond
those areas. This research should therefore help to improve the strategic
management framework used to implement major resource development projects as
well as help monitor and manage their impacts on families in local and non
local communities where many “bread winners” are flown in and out of the region.
In
the contemporary Boom Bust period, the WA Government has distinguished itself from
the past by being more proactive in the advance planning of public
infrastructure to service projected larger populations in existing and new
mining towns compared to the past in which mining towns were essentially
company towns guided by company regulations. During that earlier period there
was little or no involvement by government apart from creating the relevant
legislation to enable the mining towns to be built and to operate according to
mining company rules. Governments normally provided very little support to mining
towns by way of public services, administration or the judicial processes, leaving
the mining companies to manage everything that guided the mining community and
how it functioned. As company run “mining towns” in the Pilbara have become and
are becoming government run “public towns”, the WA Government has instigated “visionary”
planning efforts with the ambition of creating two cities in the north west of
WA and these cities are meant to service communities throughout the Pilbara. The
plans and reports on decisions related to major investments are guided by
notions of sustainability that connect to the goal of “sustainable communities”.
The history in the Pilbara shows that
there are many old mining towns that became Ghost Towns (e.g. Wittenoom) or
tiny townships with economies dependent on welfare and a few small businesses
that survive rather than thrive after the mines are closed. This research seeks
to influence the discourse on developing mining communities and raise the
prospect that strategic thinking about the potential for a better future is possible
if we seek to know what really constitutes “sustainability” in remote regions rather
than allowing Ghost Towns to be the outcome if we don’t manage and develop these
towns to optimize the potential for sustainability with a different economic
base that is required to replace mining when the mining of non renewable
resources is completed and mining ceases altogether.
The
core problem of contemporary remote mining communities remains the same, namely
that resource industry dependence can only last so long; then we may simply see
“Ghost Towns and Cities” as the mining stops if we are incapable of generating the
sustainable economic activity required to sustain those towns and communities. There
are also community development problems related to the instability of the
populations, as people move in and out, fly in and out and businesses finish
contracts and leave, etc. that can lead to the sense of a community’s loss and
decline if not also leading to sections of those communities falling into
poverty and dependence on external support. As well, the Pilbara is known for
having one of the most harsh climates in the world so the research problem is
focused on sustainability that is not merely about “eco changes” like
retrofitting houses so that they might be more self sufficient by way of:
collecting water, generating solar power, bio-disposing waste, recycling and
re-using products; it is fundamentally connected to a different economic base that
is far more challenging than the sustainability pursued in self sufficient eco-villages
with back yard gardens. New industries will be needed to underpin economic
activity to assist in population retention that enables sustainable communities
to survive after the main economic base, being a non sustainable industry,
reaches its end point. Accordingly this research and its findings should be
applicable and useful to mining regions elsewhere due to the challenges the
Pilbara faces and any solutions the research may assist in creating.
Apart
from enhancing knowledge and theory related to managing major resource
development projects and the impacts on related communities during the
contemporary period, this research aims to create better social impact
assessment tools that might be used to inform resource investment decision
makers and major development project managers about assessing impacts generally
and specifically. These impacts would be relatively distinct from viewpoints in
the resources industry and in governments as a real transition is taking place
where “mining towns consisting of workers” are becoming “public towns consisting
of citizens” who will be seeking sustainable public services funded by tax
revenue from new industries rather that becoming welfare dependent towns after
mining and royalties from mining cease. As some commentators argue that
governments don’t always achieve the optimum balance between serving industry and
serving remote communities this research aims to optimise potential for that
balance to be achieved. Most importantly, this research seeks to distill the
essence of what constitutes a “sustainable community” after resources are mined
out in the regions where mining towns currently exist but may not be able to
exist in future if sustainable industries and different lifestyle choices are
delayed too long because any post resources industry adjustments needed are
likely to be more difficult if the main industry departs and the adjustments
have not been made before that point in time.
Principal Research Questions:
This research project
would therefore seek to answer the principal questions posed below:
1.
Why and
how is the Boom Bust Cycle continuing to impact on contemporary Australian mining
communities?
2.
What are
the socio-economic impacts, problems and related issues in mining communities?
3.
What are
the environmental and cultural impacts, problems and related issues in mining
communities?
4.
What are
governments and industry doing to strategically plan for sustainable mining
communities?
5.
How could strategic
management improve major investments impacting mining communities and
sustainability?
6.
Can sustainable
communities in mining regions exist after resources are mined out?
Theoretical and Practical Framework for the Research
The theoretical
framework would be based on critical systemic analysis, Boom Bust Cycles
theory, strategic management theory and practice, and notions of sustainability
that go beyond “greening” or “eco-housing” theory and practice (See References
section below). In historical industrial and post modernist terms, after the
extraction of all non renewable resources in Australian mining regions, the alternate
outcomes at either end of a continuum describing “mining towns” as the former
locations of mining populations (we might idealize as eventually becoming communities)
would be Ghost Towns at one end and Sustainable Communities at the other end
of the continuum. Those towns and communities at mid points along the continuum,
after mining ceases as the main economic activity, will face varying problems
and challenges related to creating and continuing sustainable economic activity
to ensure paid employment and the ability to sustain a social fabric that
constitutes a “sustainable community”. This research is seeking to enhance strategic
management theory and related impact assessment tools that might be used to help
improve the potential for achieving sustainable communities in remote mining regions
based on the certainty that mining will cease when the non renewable resources
are fully extracted and mined out.
Empirical data collected
during the research process would seek to identify the transitional context by
way of social and demographic change, key dimensions of technological change,
economic and institutional considerations, with complementary details of relevant
major project investments and the financial fluctuations that impacted Pilbara
based mining communities during the Boom Bust period being studied. As well,
the research would seek to identify key objectives and the results from management
decisions made by resources companies that directly led to (or delayed) major investment
decisions that boost economic activity and create needs, demands and socio-economic
stresses described as the “Booms” and then, on completion of projects to expand:
exploration, construction, processing and delivery of resources, there are the economic downturns,
declining demand and needs with additional socio-economic stresses that also impact
on mining communities, described as “Busts”. This research seeks to identify
key demographic changes and impacts on communities during Boom Bust Cycles: as people
move in and settle to establish families,
as different types of labour arrive and depart, as different businesses invest,
establish, operate, close and sometimes liquidate whilst the major companies: upsize,
downsize and move assets in and out of mining regions.
Public policy and
private industry intentions would be critically reviewed in terms of what is
currently meant by their “sustainability” ambitions based on the stated (and
sometimes unstated) principles, goals and outcomes achieved and expected in
future and the relationship these have to the sustainability of remote (mining)
communities. These reviews would be based on analysing contemporary government visions,
platforms and planning programs, as well as analysing industry investment decisions
and management strategies adopted to implement project development plans. In
effect the overall review would be to create or enhance sustainability impact
assessment tools that might categorize objectives and outcomes into short term
“temporary” or long term “permanent” investments (e.g. investments in portable
accommodation against investments permanent housing). The sustainability
analysis undertaken would focus on the socio-economic costs and benefits including
hidden costs of the policy commitments to Fly In Fly Out (FIFO) and drive in
drive out (DIDO) workforces, as well as the implications to mining communities of
rapid upsizing and downsizing of company structures and related workforces. The
analysis might therefore enhance public discourse and debate on the community
based viewpoint and socio-economic costs, benefits and consequences to mining
communities of major investment projects in terms of sustainability principles,
expectations, the actual and perceived long term impacts on community
sustainability. Complementary to empirical data would be interviews of key decision
makers in the public service and in private industry as well as a carefully
designed household survey administered to a random sample of existing
populations connected to a set of mining towns in the Pilbara to measure
opinions and obtain mining community views about key issues and problems. The survey
design would start with a set of focus groups to identify the socio-economic
ups and downs, existing problems linked to community implemented (and idealized)
solutions, the impact of short and long term employment contracts, including details
of changing patterns of spending during Boom Bust periods, as well as “localized”
investment planning and decisions made within the population of mining communities
(to also possibly include consideration of non local investors in housing, industrial
land and SMEs).
Focus group
discussions would cover Boom Bust issues related to the social and
psychological strains as well as the cultural impacts plus views and opinions on
the pricing of goods and services, family and household needs and demands and
perceived gaps or excessive provision of services within mining towns including:
welfare, health, education, recreation, the service utilities (water, power,
gas, etc.) plus essential and emergency services. The discussion would also seek
commentary on market interventions implemented to mitigate free market shortcomings,
for example, Warrambie Estate in Karratha is a government funded housing suburb
provided to assist small businesses [and government departments] in retaining
staff through subsidized accommodation, also Land Corp WA manages land release
ballots “during Booms” to set land prices in an effort to ensure “local
residents” are able invest and settle in their own mining community rather than
allowing demand to drive prices beyond local affordability. The focus groups
would explore community views on potential solutions to problems created by the
Boom Bust Cycle and would seek to decant the community based perspective on how
sustainability could be achieved. As such the focus groups would be facilitated
to extract views and engage in the public discourse on the development of
mining towns and communities that seeks to actively include community views and
thereby balance up the known views expressed via the PR functions and public commentaries
sponsored by the resources industry and governments.
The rationale
and logic of the Case Study research design, based on critical analysis and
reviews, would seek to identify flaws in current investment planning,
implementation and outcomes and what might be done to address Boom Bust problems
and impacts arising out of investment decisions to proceed with major resource
and infrastructure development projects approved by mining companies and
governments. Essentially the research would critique the implementation of recent
major investments designed to create infrastructure, seek “best value” and profitable
returns for shareholders as well as increase the flow of royalties to
governments. The results of these critiques might then be contrasted with investment
planning that could be designed to achieve sustainable returns and valuable
infrastructure to assist in settling mining communities and creating the real potential
for sustainable communities. As such the triangulation of findings from
multiple sources of evidence compiled through the research tools to be used would
seek to explain contemporary Boom Bust impacts and how these might be managed
better in future, especially if the notion of a “sustainable community” can be
defined to be more concrete and achievable through critical thinking and planning
that commits resources towards sustainable economic activities that might
underpin future communities.
The WA Government
vision for creating “Cities of the North West” (Port Hedland and Karratha) is
one example of a plan and set of major investments, funded by (Mining) Royalties
for Regions, to help create sustainable infrastructure and related economic
activity, with each of these “Towns becoming Cities”, expected to have
populations in the order of 50,000 by 2035, only a few decades before the
resources are projected to be completely mined out (depending on further
developments to increase the “efficiency” with which resources are mined and extracted).
In this sense the research would seek answers that identify “how to” minimize or,
more idealistically, eliminate problems created by Boom Bust and mitigate the negative
impacts of major investment decisions through ideas to enhance the strategic
management and planning of those investment decisions made by resource
companies in collaboration with governments. The research would critically review
relevant policy commitments, for example policies on “industry diversification”
that are tentatively designed to identify business gaps then facilitate and
assist in the creation of supply chains for goods and services which might support
the development of more sustainable economies. Some sustainable industries in
the Pilbara are either in their infancy (e.g. Bio-fuel production), or are established (e.g.
evaporative Salt Mining), or still don’t exist in some mining towns (e.g.
industrial and eco tourism) and some could be created by governments collaborating
with the resources industry (e.g. projects like a “Sustainable Energy Research
Centre” as a starter to higher education options for a mining region such as
the Pilbara). Resource industry commitments to policy goals of sustainability
tend to be managed by the companies via departments that administer “Community
Engagement Programs” which allocate resources to projects reported to be seeking
to deliver sustainable outcomes.
This research would
make a contribution to knowledge about that part of the national economy which
goes into “overdrive” as global demand for Australian resources increases but, as
Boom inevitably turns into Bust, we still experience heavy social stresses and
economic problems from the social changes and economic decline that impacts mining
communities despite being a modern economy with a relatively stable political
system. Whilst resource companies quite rightly expect higher productivity and more
automated capabilities to ensure increased output for the company which has
made the major investment, this study is based on the view that the planning
and implementation of major project investments takes insufficient account of
community impacts despite knowing the ultimate result of mining non renewable resources
draws ever closer to an end point as each major project enhances output to meet
the projected market or global demand. Importantly, this research would be “independent”
of the mining industry, governments of the day and political parties (in power
or in opposition) thereby seeking to contribute a set of ideas unconstrained by
the organizational frameworks and political platforms that otherwise make new policy
fit within a particular set of interests that, in turn, might impose unintended
socio-economic problems and impacts that adversely affect the people and
families currently in or connected to mining.
The goal of the
research is therefore to provide critical insight into what might be described
as the existing strategic management framework and also identify “sustainability
principles” that should underpin major project planning but which may otherwise
fail to comprehensively consider community impacts that are mostly attributable
to the impact of major investment projects. The research would find out if notions
of sustainability might be largely underpinned by what constitutes the best
avenue to: shareholder returns, a flow of government royalties and industry viability
glued together by “community engagement” programs that often work largely to contain
adverse commentary about the resources industry and its major projects rather
than to pursue real change designed to achieve sustainability and sustainable
communities. Sustainability reports by resources companies give consideration to
the retention, protection, preservation and conservation of environmental and
cultural values that should exist after resource project upgrades are completed
and after mining ceases so that communities which (might) remain after the mining
are more likely to be sustainable. The main research question is therefore focused
on whether major investment planning might better consider the principles
behind and goal of creating “community sustainability” and how that
consideration might impact on the strategic management of major resource
development projects by knowing more about socio-economic impacts on
communities before, during and after the major projects.
