Govt lets Cape Hardy land purchase deal lapse
Negotiations for the potential sale of land at Cape Hardy for the Northern Water desalination plant have ended, with the state government saying it is yet to make a final decision about the project’s location.
ASX-listed and Adelaide-based Iron Road told shareholders yesterday that it has been “unable to come to satisfactory commercial terms with the Northern Water Project Delivery Office on a proposed additional extension to the parties’ Option Deeds relating to the purchase of land owned by Iron Road at Cape Hardy, together with various easements”.
Announced in April 2024, Iron Road and Northern Water executed Option Deeds for the purchase of land within the 1207-hectare Cape Hardy Industrial Port Precinct.
Iron Road was to receive land acquisition payments of about $3.3 million for the 89.55ha desalination plant site, 5ha pipeline easement and 9ha transmission line easement.
If built, Northern Water will oversee the construction of a 260 megalitre/day desalination plant and a 600km pipeline to transport desalinated water to the Far North to meet the needs of mining, defence and pastoral industries.
A state government spokesperson told InDaily a Final Investment Decision (FID) would be made on a preferred site in the “coming months”, and that “while we were not able to agree terms with Iron Road for a further short-term extension of that arrangement, we do not anticipate this will influence the eventual FID outcome one way or another”.
Feasibility studies have been undertaken at Cape Hardy (200 kms from Whyalla) and Mullaquana Station (20kms south of Whyalla) for the project.
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Two potential sites have been identified to host the major infrastructure project. Image via Northern Water.
The latest announcement follows a years-long process to find a site for the Northern Water project – a significant component of the State Prosperity Project, which also included the now-shelved Whyalla green hydrogen plan.
Iron Road first got involved with the Northern Water project in March 2022, following the announcement of state and Commonwealth government funding of $15 million to commence scoping work for the desalination plant.
At the time, Iron Road proposed that the desalination facility be located at its Cape Hardy site.
In 2023, four possible sites for the desalination facility were under consideration by Northern Water and in September 2023 a multi-criteria assessment (MCA) indicated that Iron Road’s Cape Hardy site was likely to deliver the “greatest benefits and have the least negative impacts”. A second site near Mullaquana Station ranked second in the MCA.
On 6 December 2023, Northern Water advised that planning and environmental documentation had been lodged, and in January 2024 Planning Minister Nick Champion directed that an environmental impact statement be prepared for the Northern Water project.
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One month later, the state government announced that the state and private sector had reached an agreement to contribute towards the expected pre-Final Investment Decision (FID) costs of approximately $200-230 million for Northern Water. Private sector partners included BHP, Origin Energy, Amp Energy and Fortescue Energy.
On 30 April 2024, Iron Road announced the Options Deed and Licence Agreement with Northern Water. That deal saw the pair agree that if Northern Water exercised the options for the purchase and easements it would pay Iron Road $3.33 million.
Northern Water was given until 31 December 2024 to exercise this option, but extended that timeframe by three months. During this time, the state government paid Iron Road monthly option fees.
With that timeframe now concluded, Iron Road announced it was unable to come to commercial terms with Northern Water.
“As summarised in the Company’s announcement on 30 April 2024 the Option Deeds have now lapsed,” Iron Road said.
In a statement sent to InDaily, a government spokesperson said the government had undertaken “extensive modelling and planning work on the Northern Water project, including assessing the social, economic and environment impacts of the project as well as procurement, land access, community engagement, and financial feasibility before a Final Investment Decision is made”.
“That effort has focussed on two potential preferred sites, Cape Hardy, approximately 200km from Whyalla, and Mullaquana Station, approximately 20km south of Whyalla,” the spokesperson said.
“We anticipate further narrowing the focus to one preferred site in coming months. The Government has for some months retained an Option Deed with Iron Road over a portion of its land in Cape Hardy.
“While we were not able to agree terms with Iron Road for a further short-term extension of that arrangement, we do not anticipate this will influence the eventual FID outcome one way or another.”
