GROWER-OWNED agribusiness Free Eyre is the newest partner to venture into the Lucky Bay port development on eastern Eyre Peninsula.
The announcement was made on Friday at the official opening of the Lucky Bay harbour extension, which has been developed by Australian-based company Sea Transport Corporation.
The new Spencer Gulf Trust partnership brings together STC’s unique transshipping technology with Free Eyre’s graingrower shareholders and clients, who produce about 75 per cent of the region’s grain.
Free Eyre chairman John Crosby said the decision to join the project was made after a survey was conducted 18 months ago which highlighted grower support to contribute to an alternate storage and handling system.
Further support was confirmed at Free Eyre’s annual general meeting in late September, he said.
The joint venture is planning to build a bulk commodity transshipping terminal and enterprise at Lucky Bay, using shallow draft transshipping vessels to load larger cargo vessels moored off-shore in the Spencer Gulf.
The grain receival terminal is expected to cost between $40 million to $45m to construct, with negotiations between STC, Free Eyre, EP farmers and other interested parties, like banking institutions, well advanced to finance the project.
It is also expected a proportion of the project funding will come from a user-pay charge on graingrowers who choose to use the facilities.
“An equity contribution will be built into those charges of about $3-$4/t, which will go towards repaying the debt, but it will also be converted into shares in the company,” Free Eyre chief executive Mark Rodda said.
“Essentially, growers that use the facility will eventually become owners of the facility – similar to the way SA graingrowers became equity holders in the former SACBH.”
Free Eyre has also incorporated its storage and handling assets into the project.
The joint venture anticipates it will be able to offer significant savings to all EP graingrowers and exporters through reduced freight charges and storage, handling and exporting costs.
“Financial modelling suggests that when compared to the incumbent charging regime, savings will average between $10 a tonne and $19/t (depending upon individual grower’s freight costs to port) in the Lucky Bay catchment zone,” Mr Rodda said.
“Plus, we believe our storage and handling charges will also be $10-$12/t cheaper than our competitors because of lower capital costs, more modern facilities and new technologies.”
Once financed, construction of the Lucky Bay grain facility is expected to start early next year and be completed for the 2017 harvest.