Innovation is key to infrastructure investment
Posted : Tuesday, September 04, 2012
South Australian companies will look for innovative ways to
deliver infrastructure projects as market uncertainty prevails, a
CEDA forum in Adelaide has heard.
The forum heard that Flinders Ports and ElectraNet continuing to
expand their respective investments in ports and electricity
networks to cater for demand from smaller mining companies - but
would need to be flexible in adapting to rapidly changing economic
Key leaders in SA's infrastructure sector identified the need
- Interim port solutions with low initial capital investment to
cater for smaller mining companies;
- A new electricity network to serve the Eyre Peninsula;
- Smart electricity grids and the use of electric cars as power
storage devices to even out demand for electricity and to reduce
- A re-think of user-pays/beneficiary pays models of funding
infrastructure to free up finance for new projects; and
- Governments to look at capital contributions for public private
partnerships in social infrastructure projects to deflect the
additional cost of debt.
SA Department of Planning and Infrastructure, CEO, Rod Hook said
that while South Australia had started the 21st century
with a capital investment program of $150 million a year, spending
from state and federal governments would dry up over the next
couple of years.
"I know it is a sobering thought for industry but we do have an
Australian Government with a fixation on getting to a balanced
budget as they head to a federal election, and you can see the
almost insignificant allocation from the Commonwealth Government to
South Australian projects over the next couple of years," Mr Hook
In this context, the State Government was looking to the private
sector to move into the infrastructure investment space, he
Flinders Ports, CEO, Vincent Tremaine said the company continued
to expand with the mining boom despite publicised fears about the
impact of falling iron ore prices.
"The really exciting area for us is the mining sector - and
forget about Olympic Dam, there's plenty of other mining activity
about to keep us busy and to keep the State developing," he
He said the challenge was to develop infrastructure for junior
miners - particularly catering for iron ore producers with large
volume, low value parcels that require deep water ports.
"Our view is that we need to get the mines up and running - the
best way to do that is to give them an interim solution. They need
some way of moving ahead with their project, generating some cash
flow, getting the volumes up and then we can provide them with a
better solution at some stage in the future," he said.
Flinders Ports has developed an innovative system to transport
ore by rail containers to Outer Harbour in Adelaide, emptying the
containers into the ship hold with a water spray to minimise
This containerised transport system, which avoids the need to
build storage sheds at the port and has a fairly low operating
cost, has attracted interest from around the world, he said.
ElectraNet CEO Ian Stirling said the company's shareholders
expected to invest between $600 million to $1 billion to increase
the capacity of the circuit line to the Eyre Peninsula six-fold by
2020 - depending on securing deals with potential customers.
"Over the next five years we will spend at least another $1.3
billion expanding our network and potentially, depending on what
happens with a number of these mining developments, it could be
double that," he said.
Ernst and Young, Project Finance Advisory Partner, Darrin
Grimsey said governments should re-examine the user-pays concept to
assist with funding infrastructure at a time of financial
"I think we do need to re-visit the user-pays model particularly
for large scale infrastructure and risk allocation, and not just
throw the baby out with the bath water because some projects went
wrong," he said.
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