Babcock grows as WestNet

Four months after completing its purchase of Alinta, investment group Babcock & Brown has commenced expansion of its infrastructure business in Western Australia under a new brand.

Babcock has combined its rail freight business, which it bought in 2006, with its Western Australian gas and electricity distribution and transmission assets in a new entity, WestNet Infrastructure Group.

The group, which owns or operates assets worth more than $5.5 billion, is headed by former Wesfarmers executive John Cleland, who said the seemingly odd combination fits together very well.

“A gas transmission line and a rail network are remarkably similar assets,” Mr Cleland said.

“From an engineering, commercial and regulatory perspective, they are remarkably similar.”

WestNet Infrastructure Group is a major Western Australian employer, with about 800 staff, and has started a recruitment campaign to attract up to 100 more.

This includes about 20 extra staff to establish a stand-alone IT services group in Perth. Previously, Alinta ran most of its IT infrastructure from Melbourne.

“We will be recruiting a lot of people over the next six to eight months, predominantly on the IT side,” Mr Cleland said. “We are also recruiting in other areas because we are experiencing such strong growth…as we grow our existing businesses and move into other infrastructure segments.”

The biggest growth opportunity on the group’s radar is the planned construction of a railway in the Mid West region to link proposed iron ore mines with a new port at Oakajee north of Geraldton.

“The Mid West is a phenomenal opportunity,” Mr Cleland said.

The progressive expansion of Portman’s iron ore mining operations has created another opportunity.

“We will be upgrading the railway between Kalgoorlie and Esperance to support that expansion,” he said.

Mr Cleland  referred to the expansion of bauxite mining and alumina production in the South West as yet another opportunity.

The group, which operates the Perth to Kalgoorlie rail line, is also benefiting from growth in interstate freight. Mr Cleland said ‘intermodal’ transport has been growing faster than the economy in general.

New rail links would add to the 5,000-kilometre rail network operated by WestNet Rail, which was formerly part of the state government’s Westrail freight business.

Mr Cleland has worked in the rail business since 2001, when it was bought by a joint venture between Wesfarmers and US company Gennesee and Wyoming.

He was appointed chief executive of WestNet Rail in 2006 when Babcock bought the rail network.

Mr Cleland also sees plenty of growth potential in the energy side of the business.

WestNet’s assets include a 20 per cent shareholding in the Dampier to Bunbury Natural Gas Pipeline and 76 per cent of the Alinta gas distribution network.

It also has operating service agreements for these assets, and is project managing the current expansion of the Dampier pipeline.

The group is also a contractor in the electricity transmission and distribution sector.

“Clearly there is a huge amount of work by Western Power…and the private sector,” Mr Cleland said.

He said the combination of the energy and rail businesses had created opportunities for the group, which is in discussions with mining companies in the Mid West region to provide both rail services and electricity transmission services.

“Its remarkable how people who have worked in the gas business and people who have worked in the rail business all of a sudden find they have all of these uncanny similarities in terms of the day-to-day issues they face and the way they expand their business.”