BURRUP Fertilisers has pledged its commitment to maximising local content on its $630 million ammonia project, amid rumours that the company has failed to prepare adequately for local participation.
The Burrup Fertilisers project was one of the first projects to be covered by a new government scheme designed to maximise local content on major Australian projects.
As such, it was shaping up as a test of the effectiveness of the tariff concessions scheme that took effect on January 1.
The formal go-ahead for Burrup Fertilisers project was announced last December and the company awarded its first contract this week, to Fleetwood Corporation for the site camp.
It also issued tenders earlier this week for site preparation works.
Despite being so far advanced, the project has still not prepared an Australian Industry Participation Plan, which is meant to outline its strategies for maximising local content.
The project has also had very little contact with potential local suppliers, according to various industry and union sources contacted by WA Business News.
State Development Minister Clive Brown wrote to the company last year, stating that the WA Government expected local con-tent to be at least 65 per cent of the project’s total capital spending.
Burrup Fertilisers deputy managing director Vikas Rambal said this was also the company’s target level.
“Our intention is to achieve 65 per cent, depending on the level of support we get from local industry. The percentage could go higher,” he said.
Mr Rambal said his company, owned by India’s Oswal Group, understood its “moral responsibility” to work with local suppliers.
“I would like to make it clear that our intention is to maximise local content. Every tender has to go to local vendors,” he said.
Mr Rambal explained that his company had deliberately waited until financial close before developing its procurement plans.
“It would be premature to go to vendors before we reached financial close,” he said.
“We didn’t want to waste people’s time by getting quotes before then.”
This approach contrasts with other projects, which usually obtain detailed quotes from potential suppliers prior to their formal go-ahead.
Mr Rambal said the company has already done a lot of work behind the scenes to learn about the capabilities of local vendors.
It has appointed engineering company SNC-Lavalin as its engineering, procurement and construction contractor, and consulting firm Trade Consultants has been appointed to prepare an AIP Plan.
SNC-Lavalin and Trade Consultants have started working with the Industrial Supplies Office of WA, which helps to identify local firms that could bid for work on major projects
Site preparations for Burrup Fertilisers’ project are due to commence in April while construction work is scheduled to start early next year, with a view to completing the project in May 2005.
The project will have a peak workforce of 700 and its ability to attract sufficient workers locally will depend on the number of competing projects.
Australian Manufacturing Workers’ Union State secretary Jock Ferguson said he expected other projects in Queensland and WA to compete for skilled workers.
Preparation and implementation of an AIP Plan is necessary if Burrup Fertilisers hopes to obtain tariff duty exemptions, potentially worth several million dollars, on imported capital equipment.
The exemptions are only provided to projects that give Australian firms a “full, fair and reason-able” opportunity to supply goods and services.
This includes a requirement that “Australian industry is provided the same opportunity as global suppliers to compete on an equal and transparent basis, including being given reasonable time in which to tender”.
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