Gindalbie Metals and Western Power have finalised funding and access arrangements for an electricity transmission project in the Mid West, moving the $380 million Mid West Energy Project (MWEP) closer to reality.
Under a series of agreements, Gindalbie’s wholly-owned subsidiary, Karara Mining, will fund and construct a 75 kilometre power line from Three Springs to Eneabba, where it will connect with Western Power’s South West Interconnecting Network.
Karara is also funding and constructing a 105km, 330kV high voltage connection from Three Springs to the Karara iron ore mine, and has constructed a terminal substation at Three Springs.
Western Power has agreed to buy back the 75km stretch of line for $86.4 million and refund Karara’s contribution to the substation for up to $40 million, once the state government gives its approval for the first stage of the MWEP.
Gindalbie managing director Tim Netscher said the agreement represented a significant step towards the successful completion of the Karara mine, which remains on track for first test shipments in September.
The proceeds from the asset sales will be put towards repaying the project’s $US1.2 billion financing facility, Mr Netscher said.
“By building and funding the line itself, Karara ensured its power supply would be in place well before it was needed, removing risks associated with relying on third parties to provide crucial infrastructure,” he said in a statement.
“This is also another excellent example of the flow-on benefits that come from the development of major resource projects such as Karara, with the construction of this new 330kV transmission line acting as a key catalyst for the first stage of Western Power’s MWEP, which will ultimately benefit communities across the Mid West region with greater security and reliability of supply.”
The MWEP got the nod from Western Australia’s Economic Regulation Authority in January, after the first proposal was knocked back by the ERA in December.
The ERA determined the project would deliver $414 million in benefits for the region.
The first stage of the project, which is considered crucial for the development of the Mid West, is a 260km transmission line from Neerabup to Three Springs.
The line is expected to incorporate a number of Mid West mines in development, including the Karara mine, Asia Iron’s Extension Hill project, and Crosslands Resources’ Jack Hills mine.
The second stage of the line will stretch from Three Springs to Geraldton.
