Who will fund the River Murray pipeline extension from Port Wakefield to the Hillside mine?

YORKE PENINSULA LAND OWNERS GROUP

Q & A:  Who will fund the River Murray pipeline extension from Port Wakefield to the Hillside mine?

In July 2015, at the request of YPLOG, the Member for Goyder, Steven Griffiths, wrote to the Minister for Water and the River Murray seeking clarification re the funding of the Port Wakefield to Pine Point water supply upgrade which will bring River Murray water to the proposed Hillside mine.

This question was in response to a statement in the 2014/15 budget papers that the SA Govt. had budgeted $8.5m for this pipeline extension.  This seemed to contradict the frequent statements made by Rex Minerals’ that Rex would meet the full cost of this extension.

Follow this link to Minister Hunter’s full response (dated 17/8/2015) is attached for your information.

Key points from the Minister’s  response

 In November 2013, SA Water set a capital cost for the Port Wakefield to Pine Point extension at $25.57m which would deliver up to 1,700 million litres per annum of River Murray water to the Hillside Mining operation, with the remainder (about 300 million litres) ostensibly being available to the community.

While Rex will fully fund the pipeline extension, SA Water has budgeted 8.5M for this project in 2015-16.

 

• SA Water will recover this cost from Rex Minerals over the life of the mine.

 

• The construction is subject to Rex Minerals obtaining full project funding and all necessary approvals for the Hillside mining operation.

This response raises three questions

Will Rex be required to pay interest on what is, in effect, a government loan?

1. The cost recovery period (ie “over the life of the mine”) seems unduly long (potentially 15 – 20 years+) and ill-defined.  Why not set a clear ‘end date’ by which time the full amount has to be repaid to the Government?
2. What happens if, following the construction of the pipeline and the commencement of mining at Hillside, Rex Minerals goes broke and the mine is forced to close?   Will the State Government (ie the taxpayer) have to wear any outstanding costs?
3. If  there is a shortage of River Murray water in the dams that supply YP, does the general population have guaranteed priority of supply over Hillside?

 

This seems to be another example of the State Government doing all it can to prop up a highly questionable project which has little community support.

 

YPLOG would like to thank Steven Griffiths for obtaining clarification of this issue.

 

 

YPLOG

25^th August 2015