05/06/2014 - 15:21

MacDow out of Esperance project

05/06/2014 - 15:21

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One month after the state government named an Asciano-led consortium as preferred proponent for a major port expansion at Esperance, it has emerged that one of the key consortium members has withdrawn.

One month after the state government named an Asciano-led consortium as preferred proponent for a major port expansion at Esperance, it has emerged that one of the key consortium members has withdrawn.

The YES consortium, initially comprising Australian rail company Asciano, Japan’s Marubeni and experienced construction contractor McConnell Dowell, was one of two groups short-listed for the project, estimated to cost up to $200 million.

Transport Minister Dean Nalder announced last month that YES had been selected as the preferred proponent, but did not mention that McConnell Dowell had already withdrawn.

Its withdrawal is not widely known in the market, judging by calls Business News has made to people in the industry.

The Esperance Ports web site still refers to McConnell Dowell as a member of the YES consortium.

ASX-listed companies Cazaly Resources and GWR, and unlisted company Cashmere Iron, which are potential users of the expanded port facilities, all issued announcements last month naming McConnell Dowell as a member of the consortium.

Mr Nalder told Business News that McConnell Dowell’s withdrawal was “undertaken appropriately and disclosed as required”.

“The Request for Proposal responses were submitted on November 11 last year, and the YES consortium initially listed as the proponent partners Asciano, MacDow and Marubeni,” he said in a written response to questions.

Asciano subsequently advised the project team that “following the YES consortium’s analysis of the project scope and risks and anticipated miner demand, that Asciano intended to be the principal provider of equity in the YES consortium and that as a result, McConnell Dowell, would not be providing construction services to the YES consortium at that stage”.

Mr Nalder said advice was sought from the project advisers, including the probity adviser, about the impact of this amendment to the YES consortium. 

“The change was considered acceptable by the evaluation panel and the (port authority) board was advised accordingly.” 

An Asciano spokesman told Business News that MacDow withdrew last December.

The consortium now comprises Asciano and Marubeni, along with engineering firm SKM, ANZ Bank, and local consulting groups Integrated Project Solutions and Loop Advisory.

“The current priority for the consortium is to agree the final contractual terms with Esperance Port so we can commence discussions with potential port users,” the spokesman said.

The port expansion is designed to increase its export capacity from 11 million tonnes per annum to about 20mtpa, paving the way for aspiring iron ore miners in the Yilgarn region to develop their projects.

The successful consortium will be responsible for designing, building and operating the facility as well as providing all project funding and associated costs.

Potential users include Mineral Resources, which currently exports about 4mtpa through Kwinana, and Cazaly, which has completed a definitive feasibility study on its Parker Range project.

This is based on initial production of 2mtpa scaling up to 4.2mtpa in the first year.

Yilgarn Iron Producers Association chief executive David Utting said he met with the minister last week and was happy with the process.

Mr Utting said he expected other construction contractors would be able to fill MacDow’s shoes.

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