Chalco no longer preferred tenderer as Queensland Government to call open tender for Aurukun bauxite development
by James McCullough
From:The Courier-Mail
July 02, 201112:00AM
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RULED OUT: How The Courier-Mail reported the story. Source: The Courier-Mail
THE Queensland Government has confirmed it will call an international tender for the development of the Aurukun bauxite resources in western Cape York, effectively snubbing the giant Chinese Aluminium Company (Chalco).
Treasurer and Minister for State Development and Trade Andrew Fraser last night confirmed reports in The Courier-Mail that Chalco would not be the preferred developer of the bauxite mine.
Chalco had believed it was the frontrunner to develop the leases but during her recent visit to China, Premier Anna Bligh shocked the Chinese by revealing she would seek other bidders for the development of what will be a $1 billion mine.
The Treasurer said the original tender in 2005 to 2006 was based on bidders committed to develop the bauxite resource as a bauxite mine as well as a new alumina refinery and that attracted bids from around the world.
Mr Fraser said some companies withdrew because they were unable to meet the development requirements of the new alumina refinery but Chalco, the world's second-largest aluminium company, signed a development agreement in March 2007.
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Following discussions between the Government and Chalco, both parties allowed that agreement to end on June 30, 2010.
"This was due to the Global Financial Crisis resulting in significant unfavourable market changes in the global aluminium industry and Chalco's feasibility study work indicating challenges in delivering the alumina refinery component," Mr Fraser said.
"In the past year, the Queensland Government has continued to have discussions with Chalco on an exclusive basis - including in relation to new development and value-adding investment options that could be considered as a substitute for the alumina refinery, and what form the alternative might take.
"However, the Queensland Government has now discontinued those discussions with Chalco."
The head of the Queensland Resources Council, Michael Roche, last night welcomed the move, saying it was a more competitive method of developing the resource.
"It is good news that the Government is moving to an open tender process," he said.
"We certainly were concerned at rumours of a special deal between the Government and one company, so the best outcome for the state is the open tender process where the state can maximise benefits from this important resource."
Mr Roche expected strong demand, given there were about 10 parties interested in the original tender.
"There are a lot of large companies with strong balance sheets operating in this space in Australia, such as Rusal, Alcoa and Rio," he said.
However, analysts thought there would be limited interest given the bauxite is low grade.
"There will only be a few bidders at the end of the day, maybe three at best I would think," one resources analyst said.
Mr Fraser said the Government expected the new tender process would commence by the end of this year and Chalco was again welcome to bid.
"The Government acknowledges Chalco's very substantial efforts over many years, including its work with the Government and the Aurukun community, and its work on its feasibility study into the combined mine and refinery project, and would expect and welcome a bid from Chalco for the new opportunity," he said.
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