❓ Mr. Ripper questions the funding of the Oakajee port for the mid-west iron and steel project. Mr. Barnett responds, outlining the government's commitment, complexities, and funding plans, emphasizing the project's significance and potential for long-term profitability.
AnsweredQoN 376Legislative Assembly
QuestionView source ↗
I refer to the mid-west iron and steel project and the planned port at Oakajee. (1) How does the Government intend to fund the construction of the Oakajee port? (2) Will all the funds be provided for in the mid-year budget review papers? (3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT
AnswerView source ↗
(1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(1) How does the Government intend to fund the construction of the Oakajee port? (2) Will all the funds be provided for in the mid-year budget review papers? (3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(2) Will all the funds be provided for in the mid-year budget review papers? (3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(1) How does the Government intend to fund the construction of the Oakajee port? (2) Will all the funds be provided for in the mid-year budget review papers? (3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(2) Will all the funds be provided for in the mid-year budget review papers? (3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(3) If not, why not, given that the Government says that it is committed to the project? (4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(4) When does the minister expect to make a decision on Kingstream Steel Ltd’s request for a second extension for the steel mill project? Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT replied: (1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
(1)-(4) This is a very large, sophisticated, complex project and one that government and I strongly support. The development, not so much of Kingstream, but of a deep-sea port and industrial estate at Geraldton, will prove to be the most significant regional development in this State’s history since the development of the iron ore industry in the Pilbara. It is of that dimension and, therefore, worthy of support and going the extra yard to make it happen. As I have said, it is complex, and there are a lot of issues. The board of Kingstream, including the United Kingdom chairman, will be in Perth at the end of this month. I will meet with him and the board. I hope that is when we will discuss the extension of the agreement. I will also require from them a detailed assessment of the specific progress of the project. Significant progress has been made, but I want to know exactly where the project is at before we grant the extension. I expect they will require an extension, and I expect that the project will go into construction perhaps around mid next year. There have been delays and it has been difficult to pull together, but the Chase Manhattan group and other groups are involved, and I am hoping that a major international resources house becomes an equity participant. If that happens, even to the extent of 10 per cent, it will give the final bit of confidence for the project to proceed. I do not pretend in any sense that it is easy; it is complex, difficult and sophisticated, but it is happening. With regard to the funding of the port, the Government has always said, as per the agreement Act which passed through this Parliament in 1995 with bipartisan support, that if the Kingstream project goes ahead, the Government has a statutory commitment to see that a port is developed. The Act does not say how it will be developed but that the Government will see that a port will be developed. That commitment is triggered when the Kingstream project moves into construction; in other words, when the State is satisfied by due diligence that contracts are awarded, construction is about to proceed and the whole project is funded, banked and put away. When that point is arrived at, we are committed to seeing the port developed. The original proposal was to go for a build-own-operate-transfer port, but I have always made it clear that it would require government financial support. That would be secured in an equity arrangement. However, the difficulty for Governments is that there is always a risk involved in build-own-operate-transfer agreements, particularly with activities that relate to broad infrastructure that rely on growth in demand and usage. A private proponent will naturally identify all the risks. Those risks will then be built into the contract, and the proponent will always come back with higher prices. The Collie power station was a classic example of that. That is why the Government decided to construct it through Western Power. Mr Ripper: It still ended up a very expensive station. Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT: Yes, it did. Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr Ripper: One of the most expensive stations in the country. Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
Mr BARNETT: However, also the lowest cost generator on the south west grid. The Government decided to proceed on a design and construct process, not on a boot process, which will produce the lowest cost port. The Government will fund that. I remind the House that when Kingstream goes into production, it will produce 2.4 million tonnes of steel a year, carrying a port user charge of about $3.50 per tonne - nearly $10m worth of direct income will be generated from day one. That income stream will finance a large part of the capital cost of the port. As I have also publicly said, I anticipate, within a range of seven to 10 years, that with future investment the volume of trade through that port will be sufficient for the port to be fully profitable in its own right. At that stage - and I will not be the minister - the port should be privatised. That is what this Government has traditionally done, as have previous Governments - invested, established infrastructure and then shifted it to private ownership. There is nothing wrong with that.
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