Business News - WA
At Close of Business podcast October 9 2024
Jack McGinn and Isabel Vieira discuss how a few key government decisions could shape the future of the Henderson shipyard precinct.
Plus all the latest on Rio's US$6.7bn Arcadium deal; State's commitment to exhibitions centre renewal; and Woodside completes $1.3bn acquisition of the Driftwood LNG development.
- Broadcast on:
- 09 Oct 2024
- Audio Format:
- other
(upbeat music) All the latest business news from WA, deliver daily. At close of business, news briefing. - Good afternoon and welcome to the Outclose of Business podcast, I'm Sam Jones and I'll be reading your Wednesday headlines. Rear Tinto was struck a $6.7 billion US dollar deal it's by Arcadium Lithium giving the global miner a major foothold in the Lithium market. The transaction is priced at a 90% premium to Arcadium's closing price of $3.08 per share on Friday, October 4, though that followed a big fall in the company's share price. Arcadium, which is chaired by Perth-based Peter Coleman, has assets around the world, including Mount Catlin Mine in WA, but most of its assets are in Argentina and Canada. It is recently flagged the closure of Mount Catlin in response to market weakness. Rear Tinto Chief Executive, Jakob Storsham, said acquiring Arcadium was a significant step in Rear Tinto's long-term strategy. Rear said it was confident in the long-term outlook for Lithium, predicting a compound annual growth rate in Lithium demand of more than 10% through to 2040, leading to a supply deficit. And in politics, the state government has promised $16.6 million towards planning a new Perth Convention and Exhibition Centre in collaboration with the Wiley Group and Brookfield Joint Venture. The centre was previously earmarked for a redevelopment with concept renders released earlier this year. Premier Roger Cook and tourism minister, Rita Safiotti, today announced the state government undergo project definition phase planning for the redevelopment. A $16.6 million investment has gone towards this next planning phase, which will cover a scope and cost assessment before agreements are reached. Mr Cook said this was an opportunity to create a new tourism and economic hub for Perth. The state also claimed that the current centre built in 2004 was the oldest convention centre in the country to not have a major redevelopment. And finally, oil and gas major woodside energy has completed its $1.3 billion acquisition of the driftwood LNG development of the US Gulf Coast. The Magoneal Steed Company closed the $1.8 billion acquisition of the New York listed Tellurian and its LNG development, which it has renamed Woodside Louisiana LNG. The move expands Woodside's gas portfolio outside of the Australian market with the deal potentially providing access to 27.6 million tonnes per annum of LNG. A final investment decision for the under construction LNG production and export terminal is targeted for the first quarter of 2025. Miss O'Neill said multiple parties had expressed interest in potentially becoming a strategic partner in the fully permitted development. She said the deal significantly expanded its US LNG position, then enabled it to capture further opportunities across the Atlantic and Pacific basins. That's all for today's headlines. You can read more at businessnews.com.au. Coming up on the podcast, Jack McGinn and Isabel Vieira discuss how a few key government decisions could shape the Henderson shipbuilding precincts' future. MUSIC Celebrate business leaders, entrepreneurs and trailblazers with business news events. With our flagship event series bespoke online events, webinars, book launchers and Gala Awards programs, our forums showcase the policies and issues affecting Western Australia within industry and government. Our events are your platforms to engage and connect with the Western Australian business community. Visit businessnews.com.au/events for more information. Welcome back to the At Clothes of Business podcast. I'm Isabel Vieira and today I'm joined by Jack McGinn. Jack, how you going? I'm well, thanks Isabel. How are you? Yeah, good. Thank you. So, Jack, for the latest edition of the Business News magazine, you've written the defence feature. We take a bit of a deep dive into the topic of Henderson, particularly around calls for a dry dock and consolidation. Take us back to when that dry dock was first promised and, you know, where it's at now. Yeah, the dry dock is a long-running issue for those sort of southern coastal suburbs, particularly Henderson, but also the areas around it that are kind of wondering whether it's going to arrive or when it's going to arrive, if at all. We don't know for certain that there will be a dry dock at Henderson yet. But the reason it's become so politically contentious really goes back to the early part of 2022. Take your mind back there. That was the final days of the Morrison government or the final weeks of the Morrison government. And we had that thing that happens towards the end of the election cycle, where you get both parties making big promises in the hope of, you know, winning a few more votes. In that context, there was a promise by the then Prime Minister Scott Morrison that they would build a $4.3 billion dry dock at the Australian Marine Complex, which is off Henderson there or on the coast of Henderson. Which is no small announcement. It's a significant investment in infrastructure. And to contextualise what a dry dock is and its importance really, there is one dry dock or there is one graving dock in Sydney. It's right near the harbour there. It's very old facilities and they built it really close, you know. It's the James Cook graving dock. That facility is the only one of its kind in Australia. It's something like 70 years old and it needs urgent sort of maintenance to be done to it. What a graving dock allows you to do, essentially, is steer a ship into the facility, close it off behind it and then drain all the water out. Which means that you can take these enormous ships out of the water, which, as you can imagine, in a ship building precinct like Henderson, is a huge benefit. And just down the road, you've got Rockingham, where you've got, you know, Garden Island, HMS Stirling, increased defence presence happening around that area. It makes a lot of sense that you would be considering a dry dock anyway. 2020 to election happened. Anthony Albanese's government took power. The dry dock was an election promise. It was never budgeted. It's still not budgeted. But there is some recognition from Richard Miles, the defence minister and deputy prime minister now that there is a need for it and there is a need for it quite soon. So all of this kind of leaves Henderson in a state of flux. City of Coburn's pretty annoyed, still pretty annoyed. They did check in with them and just to see if their stance had changed on this, because I think it was last year that you should have a statement saying they were disappointed in the whole thing and the comment came back. No, so there is no change. They are still disappointed. But there is some hope on the horizon as well. Yeah, and this all comes at a time where we're starting to see nuclear submarines. Well, we will, you know, pull into WA. So why now? Yeah, that's a really good point. So under the AUKUS agreement, we're starting to see some nuclear presence with the submarines at HMS Stirling there off of Rockingham on Garden Island. Now is a critical time because we're going to have an increased presence. And look, Australia's presence is going to ramp up in the 2030s. We're going to get our own nuclear subs. And from the latter part of this decade, we're going to have regular presence from the UK and US with their nuclear subs just off the Rockingham coast. It's not all about submarines. There's also a real desire to increase shipbuilding presence at Henderson. And part of that is Ostal, which last year, was designated as the strategic shipbuilder of choice under the heads of agreement with the government. They still have to flesh out the details of that agreement, and what that all means. So that means that all the ships built on the West Coast would have Ostal's involvement. There's quite a lot of defense shipbuilders and defense-related businesses along the Henderson coast. And Ostal, we're getting that designation, actually, shakes things up a little bit. But part of the call for this dry dock has really been around a consolidation of business there. And that's not necessarily a physical consolidation, although that does need to be a physical consolidation as well. That's a consolidation of skills and of workforce and a real coming together to deliver things. And so, yeah, it's a really critical time, I think, as things ramp up, as Western Australia's position in the world goes from being on the periphery to the center of some pretty significant global tensions and geopolitical musings at now is probably the time. And Richard Miles said as much when he was here in July. Absolutely. And just for our listeners, in the future, Jack's put together a bit of a map of who's in Henderson and sort of where they are. It's not exactly a huge area. So on that, Jack, can you talk us through who's in Henderson? Who are the main players? Yeah, so you've got quite a few shipbuilders, as I mentioned before. And they're not all building defense ships. And I think that that's something that's been touched on quite a lot. But you have got your big players out there. So you've got OSTL, Bagwan, Echo Marine, FM Marine, Lerson, Sivmak. And so I actually went out and spoke to Sivmak as part of this feature. Now, there's been an agreement between Sivmak and OSTL relating to some ships that they're tendering to build over here. They'd like to build them. Sivmak has an very impressive facility right on the coast in Assembly Hall. It is enormous. I've never been in anything that big. It was so impressive. I couldn't believe the space that was in there. And what you would be able to build in there is very significant. So that's where that consolidation piece starts to come in. It's not necessarily a consolidation of businesses. It's a consolidation of skills and know-how. And you've got OSTL down the road. So that's really what they're talking about in terms of trying to come together, work together, and make Henderson a cohesive and functioning ship building precinct. In the process of that, as I mentioned, you've got a bunch of businesses that are not necessarily defense focused, or even someone like Sivmak, which has built its business on work in the oil and gas sector, in mining, and in other areas. And all of a sudden, ship building has become a really big thing in defense. You've got some luxury shipbuilders that Mark By has been reporting on recently as well. But you've got all of these other businesses out there. And with this big push towards defense, there really is a bit of apprehension, I think, from some of the other businesses there about what does the future look like for us in Henderson? If this becomes a defense precinct, what does that mean for us? So business like Sivmak, which has a lot of land holding on the coast in Henderson, they're starting to look at whether they can maybe free up some space a little bit further in in Henderson, so they can look to move some of that work that doesn't need to be on the water back and free up some of the space that is on the water for ship building or stuff servicing or only gas as well. It's not specific to defense. But really, the problem in Henderson is not space. The problem in Henderson is space on the water on the coast. It is at a premium. There is a common user facility there that is run by the state government. And that was a great bit of foresight, I think, by the state government to set that thing up. And basically, that means that all the businesses there have access to this one point, where they can access the water. If you were to build a dry dock there, that would be on a similar level for everyone's use. It would be a big investment. But it would have to go and fit in somewhere there on the coast. So yeah, look, it'll be interesting to see how business and defense shapes around this push to make it a real cohesive defense precinct, which is coming very heavily from the federal government. But also, business is driving it there as well. Those who are trying to grow that defense pipeline recognize that there is a need for cohesion and for consolidation in Anderson. Yeah, absolutely. Certainly want to watch. Well, listeners can check out the full article in the latest edition of the Business News magazine. Or check it out online today at businessnews.com.au. Jack, thanks for joining us. Thanks for having me. The latest business news, Deliver Daily. Subscribe and rate the show wherever you listen to your podcast. For all the latest business news, visit businessnews.com.au. [MUSIC PLAYING] [BLANK_AUDIO]