$30m booster for refinery
Plans by Asx-listed Queensland Pacific Metals to develop a $2bn battery metals refinery in Townsville have been buoyed by a transformational deal to acquire the Moranbah gas project.
Sellers AGL Energy and Arrow Energy will effectively give QPM $30m to take over the underperforming assets, while QPM will use them to underpin processing at its proposed refinery and support carbon abatement initiatives.
It comes as QPM also announces support from German financiers for the Townsville Energy Chemicals Hub, bringing total conditional debt funding for the project to more than $1.4BN.QPM managing director Stephen Grocott said securing the energy supply chain through the Moranbah deal — expected to be finalised in June or July — could not be underestimated.
“This transaction is yet another commercial arrangement that the management team of QPM has been able to orchestrate to bring us one step closer to construction of the TECH project
and to deliver value for shareholders,” he said in a statement.
The refinery is planned to be built in Townsville City Council’s Lansdown Eco-industrial Precinct about 40km southwest of the city.
The gas project includes the production facilities and some 100 wells surrounding Moranbah, a 390km gas supply pipeline to Townsville which runs through the industry precinct, associated gas transport rights and 240 petajoules of proven and probable gas reserves.
Gas from the project supports Incitec Pivot’s ammonium nitrate plant at
Moranbah, Ratch’s gas-fired Townsville Power Station at Yabulu and Glencore’s copper refinery at Stuart.
About 30 staff employed by the gas project are to be transferred to QPM subsidiary QPM Energy as part of the transaction.
QPM says it has been able to secure an “attractive pricing” because the assets are “noncore” to the vendors and the TECH project holds the key to unlocking their potential.
Also, the assets, which cost some $1bn to develop while supporting a relatively small customer base, are not connected to the wider eastern Australian gas market.
AGL wrote down the value of the gas assets to zero in 2016.
Under the deal, QPM Energy will pay the vendors $5m while receiving $35m from them to assume the supply obligations under current contracts.
“The $30m net consideration being paid to QPME provides buffer and working capital against any short term losses,” QPM says.
QPM Energy CEO David Wrench said the potential of the Moranbah project and QPME’S carbon abatement initiatives was enormous.
QPM Energy wants to help Northern Bowen Basin coal mines meet the federal government’s new emission safeguard mechanism by harnessing waste gas which would otherwise be flared, releasing CO2 into the atmosphere.
Minster for Resources Scott Stewart welcomed the deal, saying it would help QPM progress its refinery project set to create about 800 construction jobs and 1700 jobs during operation.
Subject to finance, QPM wants to start construction next year.