Page last updated at 10:06 GMT, Tuesday, 31 March 2009 11:06 UK

Australia hit hard by mining slump

By Nick Bryant
BBC News, Western Australia

The mine closure has had a devastating effect
The mine closure has had a devastating effect

The G20 summit in London later this week will consider drastic action to revive the world economy. The BBC's Nick Bryant reports on how the economic downturn has hit Western Australia.

It's 0530 at Perth Airport, and the departure lounge is packed with passengers wearing fluorescent orange and bright yellow boiler suits with reflective strips looping around their chests and midriffs.

They are the men and women who have flocked to Western Australia to get their slice of the resources boom, an itinerant workforce preparing to start their working week with an aerial commute.

As the boarding announcements are made for flights to some of the state's biggest mining towns, the rows of seats quickly start to empty.

But when passengers are called for the service to Ravensthorpe only a trickle of mine workers gets up to leave.

End of the boom

The unthinkable has happened: the mine has just been closed down.

Few Australians had even heard of Ravensthorpe up until two months ago, but now it is synonymous with the end of the country's resources boom.

G20 LONDON SUMMIT
World leaders will meet later this week in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit.
The G20 countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the US and the EU.

In January, the Anglo-Australian mining giant, BHP Billiton announced the closure of its nickel mine.

Remarkably, it had only been operational for eight months.

BHP Billiton blamed the slump in global commodities prices, which is due partly to the slowdown in China.

The price of nickel, which is used to make stainless steel, has nose-dived since its high in 2007.

Then it commanded a price of $51,000 a tonne. Now it can be bought for a fifth of that amount.

The closure of Raventhorpe has meant 1,800 jobs losses among BHP staff and contractors.

Knock-on effect

Abandoned new houses are littering the landscap
Abandoned new houses are littering the landscape

But its knock-on effects on the local communities are incalculable.

The nearest towns are Ravensthorpe itself, a once-tranquil country town, and the unfortunately named Hopetoun on the coast.

Both communities bought the BHP Billiton pitch, that the mine would generate profits for at least the next 25 years.

They had planned, and more importantly invested, accordingly.

New suburbs sprung up, their cul-de-sacs lined with expensive homes. Boutique cafes. Shops. A state-of-the-art car wash. A pharmacy. Wind turbines to provide electricity. A brand, spanking new school.

But with no alternative employment in these towns, people drawn here by the promise of prosperity are now trying to flee.

As a result, property prices have fallen by up to 50% and their hard-pressed owners are saddled with debts.

Some businesses have reported a 70% drop in turnover, and others have shut down.

The number of pupils at the new school is expected to drop from 195 to 50.

Toxic communities

We have heard a lot in recent months about toxic assets.

Ravensthorpe and Hopetoun are in danger of becoming toxic communities.

Pharmacist
Business at Ibrahim Alabsaw's pharmacy is down 50%

Rick Besso, who runs a local construction company, showed me a small community which he had built: pristine homes, with a swimming pool, a tennis court and barbecue pits.

The entire community is now going to be dismantled.

"It is absolutely heartbreaking. It's disastrous. We put a lot of work, a lot thought and a lot of time into this," he sighs.

"To see this be removed and taken away is absolutely disastrous for this town and region.

"People need to make a living. People need regular employment. People have now been saddled with huge debts over the past three years because of the inflated values because of BHP. They are simply leaving Hopetoun in droves."

Hopetoun is in danger of becoming a ghost town, with phantom suburbs.

Ibrahim Alabsawi came here with his young family from Perth to set up a pharmacy.

Sales are down 50%, and his shelves are half empty.

There is no point in replenishing his stock because there are so few customers.

"We thought we had hit the jackpot," he said.

"But now we're struggling. We're finding it hard to make ends meet.'"

After coming here with so many hopes and ambitions, he is contemplating the closure of his fledgling business.

In fact, he might not have much choice. "It would leave this town without a pharmacy," he says. "The nearest pharmacy is 200km away."

Long boom

Australia has enjoyed 17 years of uninterrupted economic growth, and much of it has been underwritten by the booming mining sector.

For all that Prime Minister Kevin Rudd attempts to stave off recession, with a multi-billion dollar stimulus package, it now seems unavoidable.

The hope that China's continued growth would grant Australia a measure of immunity has been dashed.

Ravensthorpe is in a remote corner of a remote country, but neither distance nor its abundant resources have offered it any protection from the global downturn.



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