Western Australia to start sale of state-owned iron ore and coal terminals

Western Australia’s government confirmed it is to start the process to privatize two of its state-owned port terminals — Fremantle port’s Kwinana for coal exports and Utah Point for iron ore shipments at Port Hedland, state premier Colin Barnett and state treasurer Mike Nahan said in a joint statement late Thursday, August 28

The state-owned port assets are first in line in the Western Australian government’s assets sale announced by Nahan in his May budget and are designed to recapture the state government’s AAA credit rating which has been lost due to high government borrowing.

“These are the first assets we will open up to the market. They are likely to be better run by the private sector,” Barnett said, adding that proceeds from selling the port terminals as long-term leases could amount to A$1 billion-2 billion ($930 million-$1.9 billion).

The government of Western Australia is to shortly call for expressions of interest from potential bidders interested in the ports sale, followed by a period during which bidders can carry out due diligence checks on the assets.

Utah Point bulk handling facility is one of four vessel berths owned by the state government’s Pilbara Ports Authority, and is within Port Hedland — a major shipment center for iron ore exports from Western Australia’s Pilbara region.

In the financial year ended June 2013 the Utah Point facility earned revenue of A$86.5 million and had expenses of A$44.1 million, the statement said.

A ship-loader, two stockyard areas for iron ore exports and related infrastructure are included within the sale of Utah Point. “The port assets are likely to be sold as a long-term lease,” said Barnett.

KWINANA PORT TERMINAL

Kwinana bulk terminal operated by Fremantle Port Authority is the main gateway for Western Australia’s finished goods imports, and is used to ship a variety of commodities including iron ore, coal and LPG, and had a throughput of 5.2 million mt in fiscal 2014, said the statement.

Operating revenue for Kwinana terminal was A$61.6 million in fiscal 2013 and expenses were A$36 million, said the statement.

The Indian Ocean terminal shipped 690,000 mt of thermal coal originating from Lanco Infratech’s Griffin Coal mines in the Collie coal field, according to Fremantle Port Authority’s 2012-2013 annual report.

Barnett is taking personal charge of the assets sale process, and detailed work on the process is being undertaken by an assets sales task force within the treasurer’s department.

Western Australia owed A$22.04 billion in net debt at the end of fiscal 2014, of which the largest components were related to electricity, water and transport infrastructure and the public health system, said the government in a breakdown of its state debt.

Standard & Poor’s, a sister company to Platts, last September downgraded the credit rating on Western Australian government bonds to AA+ from AAA on concerns about the state’s level of debt.
Source: Platts