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Hopes fading for Burrup projects

THE Western Australian Government’s dream of turning the Burrup Peninsula into a world-class industrial park seems to be rapidly eroding as yet another project is called into question.

This week news emerged that the proponents of the Japan DME project were considering alternative locations in either Asia or the Middle East for a $1 billion dimethyl ether plant that had been proposed to be built on the Burrup. Escalating costs associated with the impact of the Australian dollar are being blamed for the rethink.

The viability of projects on the Burrup have been affected by a range of issues including a rising Australian currency, issues concerning Government-funded infrastructure support, taxation, environmental and Native Title concerns, industrial relations issues and skilled labour costs and shortages.

WA Business News raised the question back in November 2002, as to how many of the $6 billion worth of projects slated for the Burrup would get over the line.

To date, only one of the original six major projects initially proposed for the Burrup, the $645 million Indian-backed Burrup Fertilisers, has commenced construction.

Several other projects have been axed and the remainder are under a cloud of uncertainty.

The first setback for the Burrup came in July 2001 when a petrochemical project proposed by Shell and Dow chemicals was abandoned. This was followed by the scrapping of the proposed $1.1 billion synthetic fuel project by Syntroleum.

Last October, the $800 million methanol project proposed by Canadian firm Methanex was abandoned amidst criticism (by both Methanex and the WA Government) of the Federal Government’s lack of support. The rising Australian dollar was also cited as a factor in the project’s lack of viability.

Around the time of the Methanex collapse, a Japan DME spokesperson told WA Business News that high construction costs remained an issue for the project.

A spokesman for the Dampier Nitrogen project, a $1 billion ammonia project by Plenty River Corporation, also raised the remoteness of the Burrup and construction costs as a concern.

Speaking to WA Business News in October, Plenty River director Peter Streader said there “is a real requirement in my view for multi-user infrastructure support”, particularly in the areas of wharf facilities, power supply and water supply.

“Because of its remoteness and high construction costs, every bit of assistance is going to be much needed,” he said.

More recently, the proposed $770 million Liquigaz methanol project backed by UK company GTL Resources has failed to secure adequate financing within its self-imposed deadlines, which calls into question the viability of the project.

The State Government has already committed $137 million to the development of multi-user infrastructure on the Burrup, however, some major project proponents say more is needed.

While State Development minister Clive Brown and Premier Geoff Gallop were both overseas and unavailable for comment, in September 2002, Mr Brown said he hoped at least two of the proposed projects would be under construction within a year.

Those opposed to the Burrup development maintain that it was an inappropriate choice of location due to its environmental and heritage value, citing the Maitland industrial estate as a more appropriate choice.

Greens MLC Robin Chapple is one of those in favour of Maitland as an alternative to Burrup and also questioned the role of Government in subsidising business.

“We are of the view that we should work to what is in the best interest of the State,” he said.

“By the time we see the proper cost evaluation as to how much this [the development of the Burrup] is going to cost the State, it is going to be similar to Oakajee.”

State Opposition leader Colin Barnett has also publicly stated that the State Government should push more development to Maitland rather than on the Burrup.

However, Roebourne shire president Kevin Richards remains confident the Burrup holds appeal for industry due to Australia’s political stability and surety of supply among other things.

 

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