Pilbara Prospects 2020: Challenges and Threats to Regional Security

31 May 2011 FDI Team

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Analysis

The economic and social profile of the Pilbara will continue to increase in complexity over the coming decade[1]. Bolstered by vast infrastructure projects, a growing population and a highly efficient, interdependent and maturing economic profile the region’s future seems ostensibly secure.

Existing and future vulnerabilities, however, have the potential to destabilise the region, and impact upon state and national security.

Threat Assessment  

The region’s population, iron ore, hydrocarbon and critical infrastructure will become increasingly vital, and accordingly at risk over the course of the next decade.

By 2020, the Pilbara’s population is expected to reach 62,000, primarily concentrated in the newly developed ‘Karratha City’ and ‘Port City’ (Port Hedland). The demographic transition from the current widely dispersed population of 45,000, to the Pilbara Cities vision of highly concentrated regional communities, leaves the populace more exposed to potential hazards and threats.

In addition to the residential population, the expansion of the resources sector will increase the number of transient fly-in fly-out (FIFO) workers drawing services from the Pilbara cities and satellite towns. In the event of a catastrophic incident, this additional transient population will increase the pressure on already strained critical services and amenities.

Current expansion in the iron ore industry is projected to continue. Sustained urbanisation and industrialisation in Asia will bolster current projects, lead to an expansion of new mines and create market opportunities for junior players. While risk management and employee safety will remain a paramount tenet of the industry, mining remains an inherently dangerous industry with the threat of industrial accidents, exposure to natural disasters and human acts of violence remaining constant.

Projected expansion of the offshore hydrocarbon industry with the Gorgon, Pluto and Wheatstone projects, along with the complementary onshore facilities, such as the Ashburton North Industrial Estate, will bolster the regional profile. The Pilbara’s oil and gas sector is projected to expand throughout the decade, continuing as a prime source of employment and revenue for stakeholders in the region. As current projects advance and are augmented by further developments in the industry, the susceptibilities within the sector will also dramatically rise.  

The continued development of the Pilbara will depend upon the effective functioning of critical infrastructure and supply management networks, to provide regional employment, sustain private profits and continue economic diversification. The region’s growing role as an area of strategic importance is accompanied with an increased sense of vulnerability to existing, as well as emerging threats.

Regional Vulnerability

The forecast rise in the economic, social and political profile of the Pilbara makes its especially vulnerable to human, industrial and ecological challenges. The development of a successful risk management strategy is reliant upon understanding the potential magnitude of challenges to regional security. Previous national experience and events in the international milieu provide an insight into the potential capacity of future threats to the Pilbara. 

The lack of a present or emerging armed threat, combined with the ever-increasing interdependence between states, ostensibly guarantees Australian security over the next decade[2]. Traditional security paradigms have encapsulated prevailing public perceptions of physical threats emanating from state actors. The definition of security, however, has evolved over the last few decades to include industrial and ecological considerations, as well as non-state actors.

Human

While the conventional threat to Australia remains negligible, non-conventional threats may exploit susceptibilities with potentially devastating consequences. These threats may range from terrorist organisations, disenfranchised individuals/groups, cyber warfare, industrial espionage, organised crime, pandemics, natural and industrial disasters. 

The amorphous behaviour of non-state actors makes the prediction of their actions and the form that they will take a formidable task. The human security threat is likely to be autonomous, with their connection to an ideological maxim vague or not existent. Estimative intelligence from national and international experience suggests that non-state threats will be well versed in technology and will comprise of home-grown disenfranchised groups or individuals[3], such as the attempted Holsworthy Barracks attack.

The organisational devolution of terrorist organisations from hierarchical entities, such as Al Qaeda and Jemaah Islamiyah, to self-motivated autonomous units will not reduce their capacity to inflict catastrophic damage. The anonymity afforded to home grown terrorists provides privileged access and understanding of Australia, whilst simultaneously, operating beneath intelligence flags. 

The reduced access to terrorist training camps and terrorist materiel will not prevent future attacks. As demonstrated by the 2007 Glasgow Airport attack and attempted attacks in Time Square, New York and the so called “Underwear Bomber” on Northwest Airlines Flight 253 in 2009 respectively, rudimentary devices may be manufactured from crude and accessible products and provide the desired maximum human, political and economic cost.

Comparative economic and social marginalisation of the Islamic diaspora[4],coupled with Australia’s increasing geopolitical importance as a middle power may act as the catalyst for radicalisation of elements of the Australian Muslim community. The arbitrary nature of terrorism makes prediction of the frequency of events impossible.

Whilst Islamic terrorism has been the topic du jour over the last decade, and will continue to feature in Australia’s national security discourse, “lone wolf” or sociopathic actors, such as disgruntled employees cannot be discounted as a threat.

The Pilbara lays vulnerable to economic targeting, which is a cornerstone of terrorist modus operandi and an attractive option for other human acts of violence. The projected expansion in the resource sector, with its subsequent infrastructure projects, will elevate the Pilbara’s existing economic profile.

The region’s growing export profile presents an attractive target for those seeking to achieve maximum economic impact through the disruption or cessation of projects. Economic targeting generates maximum impact, instigating global increases to commodity values, logistical and operational costs. Targeting of the Pilbara’s commodity base, particularly, the emerging hydrocarbon sector would cause disproportionate damage due to the low input/high consequence nature of energy sector terrorism. The threat to offshore facilities remains remote due to geographic barriers. Risk management strategies however, are required, in order to mitigate potential targeting of onshore facilities due for completion over the next decade, such as the Ashburton North Industrial Estate.

The risk of terrorist and other criminal networks exploiting the vulnerabilities inherent within critical and logistical infrastructure will continue to increase as the regional economy expands over the next decade. Attacks targeting maritime and port facilities, inspired by incidents in the Arabian Gulf and Horn of Africa remain a distinct possibility. Maritime terrorism, including suicide operations, could target existing congestion in the ports of Dampier and Port Hedland, creating a bottle neck and stopping exports for an extended period of time. Large ships, specifically bulk freighters, caught in the bottle necks of ports are highly susceptible to attack as they are too slow and cumbersome to avoid attackers. Similarly, pipeline infrastructure connecting offshore gas to onshore infrastructure will be highly vulnerable.

To alleviate projected deficits in employment the resource sector will invest in greater remote computer access centres for product extraction and management. Initiatives such as Rio Tinto’s “Mining for the Future” will streamline mine, plant, rail, port and utility management from Perth. Despite addressing projected productivity shortages, reliance upon computerised project management will simultaneously serve to increase vulnerability to cyber exploitation from individuals, terrorist, criminal and potentially state actors and competitors.

Low level threats may emanate from disaffected employees and potentially criminal entities motivated by the potential to cause economic damage or disruption in business, rather than inflicting causalities.  These parties are likely to be involved in intellectual theft, vandalism, product, value or equipment tampering.

Industrial

As the Pilbara’s economic and infrastructure activity expands over the course of the next decade, so too will the regions exposure to industrial accidents. Such incidents have the potential to disrupt projects and stakeholder revenue, and will also carry a myriad of regional, state and national consequences.

The volatile nature of hydrocarbons highlights the highly consequential nature of offshore hydrocarbon projects, demonstrated by the Deepwater Horizon, Piper Alpha and Alexander Kielland catastrophes. The National Offshore Petroleum Safety Authority’s chartered mission “to independently and professionally regulate offshore health and safety”[5] requires careful negotiation on the balance of constraining industry and protecting workers, whilst mitigating death, suffering, pollution and disruption to the local, state and national economy.  The 2003 Varanus Island and 2009 Montana Oil leak illustrate that Australia is not immune to such accidents. 

The supply management chain of the iron ore industry will remain susceptible to industrial accidents. Serious incidents involving rail and port facilities could delay and disrupt projects throughout the region. Protracted issues in logistics that result in a failure to meet contractual commitments would prove economically disastrous for both the region and beyond.

Ecological

Environmental challenges pose a formidable challenge to the resource industry. The Pilbara has a capricious ecology, categorised by long dry spells, punctuated by severe cyclonic activity. This provides a considerable challenge for risk management when combined with the vague predictions of climate change forecasting. Depressed first quarter profits from the mining giants due to torrential rain highlight the ecological challenges of the region.

Adverse ecological activity canalso exasperate existing vulnerabilities causing industrial accidents. Natural disasters do not preclude businesses of their environmental responsibility. Cyclonic activity may cause flooding which can release contaminants from mining operations or damage critical infrastructure in turn causing environmental damage.

Impact

The growing spectrum of aforementioned threats, combined with the increasing complexity of regional assets places the Pilbara in a highly vulnerable position over the next decade. It is imperative, particularly when evaluating prevention and response options, to consider the human, economic and reputational implications of potential regional challenges.

The potential human, cultural and heritage loss from a catastrophic incident in the Pilbara is difficult to quantify and will be dependent on the intensity of the disaster. It is clear, however, that a higher concentrated community will increase the probability of exposure to the impact of human, natural and industrial challenges. The regions vulnerability to such challenges impedes development and may slow the region’s required five per cent growth rate to meet population projections.  Decreased growth will exasperate projected worker shortages stifling economic diversification and objectives consistent with the Pilbara cities vision.

The resource and hydrocarbon industries have attempted to mitigate the impact of catastrophic disaster through long term contracts with suppliers and customers. Through “force majeure” clauses, these agreements protect the parties in the event that elements of the contract cannot be performed due to factors that are outside control of the parties.

Medium to long term productivity, however, may be negatively affected. In the aftermath of a disaster companies will be forced to raise the costs of transactions due to externalities, such as increased security measures, higher insurance premiums, and increased costs of counterterrorism, natural and industrial regulations. Rising project and product costs, coupled with perceived risk elevation and expansion to ever increasing sources of commodities may damage the Pilbara’s standing as a secure market. Damage to consumer and investor confidence in the region could have catastrophic economic ramifications.

Significant damage to the Pilbara from a security challenge may divert Royalties for Region’s investment and impede the development of the Pilbara Cities project. Elements of the community may also experience decreased resilience and enthusiasm for further development of the region, making negotiation and agreement with government and industry fractured.

Conclusion

Regional complacency and current deficiencies in risk management policy are inconsistent with the Pilbara Cities vision. Realisation of the scheme is dependent on proactive and dynamic strategies to mitigate threats and challenges.

Over the coming decade, regional, state and federal stakeholders must engage in constructive dialogue to ensure that the region is able to withstand potential challenges and fulfil its projected economic and geostrategic capacity.

 

Liam McHugh

Strategic Analyst, Northern Australia and Energy Security Research Programmes 

 


[1] Future Directions International, Pilbara Prospects 2020: Developments and Challenges for the Region, May 2011

[2]  Department of Defence, Defending Australia in the Asia Pacific Century: Force 2030, May 2009

[3] Department of Prime Minister and Cabinet, Counter Terrorism White Paper: Securing Australia – Protecting  Our Community, February 2010

[4] S. Mullins, Home Grown Terrorism: Issues and Implications, Perspectives on Terrorism, 2010, p. 256

[5] National Offshore Petroleum Safety Authority, Understanding NOPSA and How it Operates, August 2010

Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

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