Forums / Property Investing / General Property / Who invested in Dysart? Mine is closing…..

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  • Profile photo of goldiesgoldies
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    Just read on perthnow.com.au that Norwich Mine in Dysart is closing.

    400 jobs gone and the town is pretty shattered…

    Will this be devastating for all of you that invested there? Or is there more to Dysart than this one mine?

    Profile photo of Nigel KibelNigel Kibel
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    I think there are a number of mines in the area

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    Profile photo of moxi10moxi10
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    Up to 1400 jobs (presumable including contractors) affected, according to this article. And yes, there are many more mines in the area, but bad news none the less. A BHP spokesman is quoted as having said the mine "has been loseing money for several months." Seems to have been a pretty quick decision, given that the strikes and recent weather would have contributed to those losses.

    http://www.cqnews.com.au/story/2012/04/11/bhp-closes-norwich-park-mine/

    Profile photo of Nigel KibelNigel Kibel
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    This is one problem with mining areas if there is a downturn it could see prices fall hard.

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    Although I do not own any property in Dysart (I came close to buying one this month but did not sign the contract as I thought it was a high entry point) I think fundamentals of mining is very strong and these towns will benefit from it for next 30 years atleast. Just because they have closed one mine doesnt mean that coal is not required at all. For example I come from India where in the town I studied even today there is no electricity for 10 hours per day and governments are investing huge amount on this and India needs coal and same applies for other developing countries. As long as coal is there in the town the mining will continue. Price of Dysart may reduce by say 50% in next 3 to 6 months but fundamentals are strong and you will profit if you stick to long term. Who knows they may very well open the same mine in next 6 months. So my suggestion is do not panic, understand the fundamentals but I am sure there will be major impact in next 3 months due to this. Remember one thing, Be Greedy When Others Fear  & Be Feared when others are greedy.

    Profile photo of ScratchScratch
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    Definitely do not panic, lol. There are several other mines surrounding Dysart, but if you did proper due diligence prior to buying you would already know this. It will definitely see a drop in demand with an increase in available properties, but this is a primary example of the risks involved with investing in mining towns.

    Good luck to those who have already invested in Dysart, I for one will be watching with interest what affect this mine closure has on property in the area.

    Profile photo of KeyStrategiesKeyStrategies
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    Scratch wrote:
    Definitely do not panic, lol. There are several other mines surrounding Dysart, but if you did proper due diligence prior to buying you would already know this. It will definitely see a drop in demand with an increase in available properties, but this is a primary example of the risks involved with investing in mining towns. Good luck to those who have already invested in Dysart, I for one will be watching with interest what affect this mine closure has on property in the area.

    Shane I totally Agree – this is a short term hiccup for the area – those who invested at the top of the market will feel the pinch but long term I think Dysart will continue to do quite well – This Is the risk of investing in a mining town.
    Cheers

    Profile photo of robrokrobrok
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    I have a few properties in Dysart and compared to your regular IP it is a no brainer. Current have a $450k purchased property earning $2k per week and with the recent news it might go down to $1200 per week on next renewal – which will still yield a %13.8 return ( oh me oh my what should we do!)
    More important than the mine closure due to union and political reasons the mining companies have put a freeze on new rentals which is having a short term effect on all of the towns in the Bowen basin and is unrelated to the mine closure. This is the primary reason rentals like mine will drop from $2k to $1.2k. This will be short lived and is just a rent cooling stunt the mining companies are performing.

    In fact it irks me a little when investors and media in particular with their measly %4.5 returns and neg growth wave their arms in the air and exclaim their “I told you so’s” with regard to resource based investments.

    To make this crystal clear – a severe downturn in the resource market represents a %13.8 return. Need I say any more than this?

    All towns driven by mining have their ups and downs due to the volatility of the labour market, unions and general supply and demand however the long term outlook for Dysart and similar towns is very strong. The Norwich mine by the way isn’t fully closed and has direct, non union/contractor staff working it at the moment. The so called closure resulted in a whopping 49 people without work and BMA have even admitted that they will reopen in 2013. For people who don’t know the area there is also a scheduled expansion of the Saraji mine which will require 2500 people to construct and another 1400 people to work it on going for the next few decades. This coupled with Norwich reopened will place a huge demand on housing.

    Back in 2008 BMA there was a similar scenario with rents and temporary mine closures. Anyone who purchased in this time got a great deal. Be greedy while everyone is fearful is what ( someone very reputable said) The long term upside is too good to ignore

    feedback on this is most welcome and anyone who is after any further information on the area please let me know. We have been working property in the Bowen Basin for the best part of 8 years now and having seen our fair share of property cycles are more than happy to share the experiences.

    Rob

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    Profile photo of streamlineinvestingstreamlineinvesting
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    I remember recently I made up a spreadsheet on purchasing a mining property as an investment, and comparing to a more traditional investment property.

    Obviously the big difference is that mining property has an extremely high rental yield, but loses significant value once the mine closees. Whereas a traditional investment has lower yields but as long as you buy in the right area, well there is the capital gains that you can look forward to.

    I guess if you are after instant cash flow, then a mining property would be ideal for your investment portfolio, but looking in the long term, it seems that you are almost always better off with a property that will achieve capital gains in the future. I guess you may be lucky to purchase a mining property, collect some great cash flow for a couple years, and then on sell the property while the mine is still open, hopefully at the same price you initially paid for it, or maybe slightly higher. Then it would definitely be an attractive option, however long term it almost never seems to work out.

    Sorry I guess this post is a bit off track with the initial topic, just thought it might be interesting to note.

    Profile photo of mattstamattsta
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    good thing i didn't invest there.

    However, even though the mine is closing, arent there other mines around the area which will still help to maintain some of the demand for properties there

    Profile photo of ArnoldusArnoldus
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    robrok wrote:
    We have been working property in the Bowen Basin for the best part of 8 years now and having seen our fair share of property cycles are more than happy to share the experiences. Rob House Hunters Australia http://www.househunters.com.au

    If you've only been there 8 years you haven't seen a genuine downturn yet.  Wait and see what happens if/when the coal price goes below the cost of production.

    Profile photo of ayjaeayjae
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    Hi all,

    see more info about this area at:
    https://www.propertyinvesting.com/forums/property-investing/general-property/4344732

    I currently reside in Dysart and there is money to be made. Will try to keep it short as there is so much info. @ my post. Dysart is surrounded by some other mines though predominantly accomodates BHP employees (not contractors). There is also a smaller mining camp which services Thiess Lake Vermont mine.

    Dysart has become the new accomodation centre for workers at BMAs Peak Downs mine, normally accomdated at Moranbah. The travel is about the same and with the temporary hold on Norwich Park, this is the only area which has some accomdation available.

    But a word of caution..

    BHP is building a bucket load of their own housing including 2 bed units, 3 and 4 bed houses of a very high quality (estimate is 50). They have put a stop in their new agreement to leasing any external rentals in Moranbah (so may follow suite in Dysart) and most of the current leases in Dysart are done on a periodic lease, so as soon as the house is complete the tennant moves out. The houses being constructed are built by a contractor and shipped up in 2 pieces and take as little as 4 weeks to make turn key ready. This stands to reason as it is a much cheaper alternative to being at the mercy of the rental market and gives the company an asset which it can pay off and own – where the value does not matter.

    To add a little salt – Hutchinson group are also doing a private project of units I think about 14 (they demolished a small shopping square for this as the returns are far better) *note this is not shown in website link below, and Cullen Group are doing a reasonable size multi unit dwelling right in the centre of town. In addition the BHP camp is building a whole new section for contractors with at least 100 rooms (encroaching on the golf course !!) and I have watched the MAC camp import so many new rooms that at one stage they could only store them offsite on the verge of the main road to the mine.

    http://www.hutchinsonbuilders.com.au/project-categories/modular/

    http://www.cullengroup.net.au/gallery/79

    http://www.themac.com.au/our-businesses/the-mac-accomodation/mac-villages/dysart

    ABS stats put the population of this town at best at 4000, I would say that it easily eclipses 5000. However there would be close to 3000 camp rooms available at any one time. The fly-in-fly-out arguement keeps brewing, but in my view the bottom line is that if the companies don't have to accomdate employees, it saves a significant amount of money. And business is about making money.

    Always do your due diligence and have your worst case scenario considered !

    AJ.

    Profile photo of robrokrobrok
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    streamlineinvesting wrote:
    I remember recently I made up a spreadsheet on purchasing a mining property as an investment, and comparing to a more traditional investment property.

    Obviously the big difference is that mining property has an extremely high rental yield, but loses significant value once the mine closees. Whereas a traditional investment has lower yields but as long as you buy in the right area, well there is the capital gains that you can look forward to.

    I guess if you are after instant cash flow, then a mining property would be ideal for your investment portfolio, but looking in the long term, it seems that you are almost always better off with a property that will achieve capital gains in the future. I guess you may be lucky to purchase a mining property, collect some great cash flow for a couple years, and then on sell the property while the mine is still open, hopefully at the same price you initially paid for it, or maybe slightly higher. Then it would definitely be an attractive option, however long term it almost never seems to work out.

    Sorry I guess this post is a bit off track with the initial topic, just thought it might be interesting to note.

    Fair call here from streamline investing

    You definitely have to be more active with your IP’s there and pick your times based on what the market conditions are. Same rings true for the comment about coal prices and downturns in the area although I would argue that if you wisely use your cash flow to pay down the property over time then the exposure is drastically reduced compared keeping any debt you have at fixed interest and wasting the income away. I am also all for a balanced portfolio ( use a combination of cashflow and growth/equity creating properties ) and wouldn’t suggest that your whole portfolio was geared around resource related properties.

    Comments from AJ were also very informative and I agree that there is high demand and money to be made but there are also risks that are specific to the mining areas and that accommodation in the area is a big business for investors and for the miners/contractors

    Rob

    Profile photo of yourokcpropertyyourokcproperty
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    I currently reside in Dysart and there is money to be made. Will try to keep it short as there is so much info. @ my post. Dysart is surrounded by some other mines though predominantly accomodates BHP employees (not contractors). There is also a smaller mining camp which services Thiess Lake Vermont mine.

    Profile photo of keikokeiko
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    If mining turned to poop, what would be the good effects it could have throughout Austraila
    Will the dollar drop?

    Profile photo of moxi10moxi10
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    Here's an article that will be of interest to Dysart's property investors. Oh yeah, I forgot the boom is over, so don't read this.

    LEIGHTON'S mining services arm, Thiess, has won a $2.3 billion contract to extend operations at Jellinbah Group's Lake Vermont coal mine in Queensland's Bowen Basin.

    The six-year agreement will double production from 4 million tonnes to 8mt a year, and continues Thiess's responsibility at Lake Vermont for mine operations and maintenance.

    Thiess managing director Bruce Munro said, "Thiess is very proud to continue its involvement at the Lake Vermont mine where we've been working with the Jellinbah Group from the very beginning to plan, build and operate the mine."

    Michael Wright, the Thiess executive general manager for Australian mining, said the extended operations would bring opportunities for the people of Dysart, about 20km from Lake Vermont Mine, which now employs 350 people.

    "The contract is reward for their performance, their daily commitment to the safety of our people and to meeting our clients' objectives," Mr Wright said

    "We are mobilising ultra-class mining fleets to meet the increased production requirements and we are truly excited by the opportunities this brings to the people of the Dysart area."

    Jellinbah Group chief executive Greg Chalmers said the continuation of Thiess as the mine's long-term operator ensured its on-going delivery of competitively priced coal.

    "We look forward to working closely with Thiess to maximise the value of Lake Vermont and continue the mine as a safe, reliable, responsible and productive operation,'' Mr Chalmers said.

     

    Profile photo of bardonbardon
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    That mine contract that Thiess won will double the production that’s not too shabby at all.

    Profile photo of FreckleFreckle
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    bardon wrote:
    That mine contract that Thiess won will double the production that’s not too shabby at all.

    It’s going from 4mtpa to 6 then 8 over the next 3 or so years depending on access to freight sources. In terms of volume its a tiny blip in the scheme of things. In terms of increased personell…. you won’t even notice them. In places like Karratha and Port Hedland they talk about increases in the 100’s of million tons.

    Profile photo of bardonbardon
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    Freckle wrote:
    In places like Karratha and Port Hedland they talk about increases in the 100’s of million tons.

    But everything is always bigger in Texas.

    Profile photo of FreckleFreckle
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    bardon wrote:
    Freckle wrote:
    In places like Karratha and Port Hedland they talk about increases in the 100’s of million tons.

    But everything is always bigger in Texas.

    I think there’s something like 700mtpa mined of which we export around 320mt. Some little mine somewhere that increases production by 2-4mtpa over 3+ years hardly gets me excited. Its the problem with MSM and media releases. The hype is always over the top and out of proportion to the actual event.

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