TAS: Tas govt seeks federal help in bid for magnesium plant

AAP General News (Australia)
02-01-1999
TAS: Tas govt seeks federal help in bid for magnesium plant

By Don Woolford

HOBART, Feb 1 AAP - The Tasmanian government is pushing for federal help as multi-pronged
negotiations over a $920 million magnesium project for the state's north reached a critical
stage.

Tasmania is competing with New South Wales and Victoria as the site for the Crest
Resources-Multiplex Industries processing plant.

State Energy and Resources Minister Paul Lennon said today he'd had talks with federal
ministers and Bob Mansfield, Prime Minister John Howard's adviser on major infrastructure
projects, over commonwealth help.

Mr Lennon noted the commonwealth had promised Visy Industries $40 million towards a pulp
mill in Tumut, southern NSW, and $100 million to Comalco for an aluminium refinery in northern
Queensland.

He didn't say how much help Tasmania wanted.

But it's understood he's seeking $35 million to $40 million, mainly for a spur line to run
from the magnesium mine in far northwest Tasmania to link with the existing railway line near
Burnie.

But the key issue, and the one weak spot in the Tasmanian bid to capture the processing
plant for Bell Bay, near the mouth of the Tamar River, is energy.

Crest managing director Peter Salter yesterday tried to pressure the state government to
hurry, saying it had identified sites in the Hunter Valley of NSW and the Victorian Latrobe
Valley and energy negotiations were well advanced there.

"We are getting frustrated and it is getting to a stage where we need a decision," Mr
Salter said.

Until those remarks, Mr Salter had always said Bell Bay was its preferred site because of
its proximity to the mine, port facilities and the nearby Comalco aluminium plant for hot
alloy material.

Mr Lennon refused to be ruffled, saying Bell Bay remained the front runner.

But there is some nervousness that with NSW, in the leadup to a state election, might find
some extra inducements to have the plant located in the Hunter Valley.

Tasmania's problem is that, unlike its rivals, it has no gas.

The previous Liberal government last year appointed the American multinational Duke Energy
to oversee the development of a gas pipeline from Victoria.

Part of Duke's brief was to negotiate supplies and price with the Victorian Bass Strait
producers.

It is now doing this in order to provide Crest and its new partner Multiplex with a gas
price for its plant.

As Mr Lennon noted: "The government can't control the Duke-Esso BHP negotiations."

But he said Duke should be able to provide the partners with a price by the end of this
week.

While Mr Lennon gave no hint of this today, it's understood that the government may play
hard ball if the plant goes across Bass Strait.

A source said the government regarded the mine and the plant as a single project and
indicated that it might provide little infrastructural help if the plant went elsewhere.

AAP dw/cfm/br

KEYWORD: MAGNESIUM

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