24/08/2004 - 22:00

Growth in energy and infrastructure

24/08/2004 - 22:00

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THE development of new and improved infrastructure will account for a big chunk of investment spending over the next few years.

THE development of new and improved infrastructure will account for a big chunk of investment spending over the next few years.

This includes investment in road and rail transport as well as energy supply and water supply.

The big projects currently under way include the State Government’s new metro rail project, which has a total bill of about $1.5 billion.

Work has commenced on some of the biggest and most challenging components of the rail project, including the $324 million city tunnel section, which was awarded to a Leighton-Kumagai Gumi joint venture.

The second big package in the rail project was the $310 million package A, awarded to a John Holland-Macmahon-Multiplex joint venture.

It involves the laying of 70 kilometres of rail line as well as traffic and pedestrian bridges and tunnels.

Several big road projects are also under way. The $140 million Tonkin Highway extension in Perth’s southern suburbs – the State’s single largest road project – is being built by a John Holland-Macmahon joint venture.

The good times for civil engineering firms were reflected in last week’s profit announcement by Macmahon, which reported a record order book, increased profit and a positive outlook.

“Resurgence in the resources sector and growth in public spending on infrastructure projects has created a positive outlook,” Macmahon chief executive Nick Bowen said.

There have also been plenty of opportunities for consulting engineers, with the likes of GHD, Kellogg, Brown & Root, Maunsell, SKM and SMEC Australia picking up contracts on road and rail projects.

Infrastructure is a large and often overlooked aspect of big resource projects.

Nearly $1 billion is being spent on a major expansion of Rio Tinto’s port facilities at Dampier, including construction of a larger wharf and upgraded materials handling equipment.

Its subsidiary Robe River is also expanding the capacity of its rail lines in the Pilbara.

Notably, the amount being spent on port and rail infrastructure is three times the amount being spent directly expanding production capacity at Rio’s iron ore mines.

Similarly, BHP Billiton has invested heavily in port and rail infrastructure to support increased iron ore production.

The energy sector is another area attracting big investment dollars. 

Arguably the most important energy project will be the increase in capacity of the Dampier to Bunbury natural gas pipeline, estimated to cost between $500 million and $800 million.

An increase in capacity is considered inevitable, despite the current uncertainty about ownership of the pipeline.

Its receiver manager, Korda Mentha partner Martin Madden, is expected to receive four bids this week for the pipeline, from Alinta, Australian Pipeline Trust, Babcock & Brown and Envestra.

In the absence of an unconditional $1.85 billion bid, which would pay out the pipeline’s bank debt, it is likely there will be further negotiations before a sale is finalised.

Also in the energy sector, six new power stations are likely to be built in the next three to four years.

These include a Western Power peaking plant, a 300-megawatt base-load power station, Griffin Energy’s Bluewaters coal power station and a second Alinta-Alcoa co-generation plant.

In addition, Griffin and Renewable Power Ventures have advanced plans for two major wind farms.

One infrastructure project that is a definite starter is the Water Corporation’s $350 million desalination plant, announced by Premier Geoff Gallop a month ago.

The Water Corporation is also involved in the development of some of the common user infrastructure on the Burrup Peninsula.

This infrastructure includes a seawater supply scheme, construction of a service corridor through the rugged terrain, and building of a new industrial jetty.

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