AWB moves on Kwinana

25 Sep, 2002 10:00 PM

MANAGEMENT at Co-operative Bulk Handling is reportedly seething after the revelation of AWB Ltd plans to build a grain storage and loading facility at Kwinana.

It would compete with the CBH export facility at Kwinana and the CBH hierarchy believes it undermines the chances of the two organisations forming a business partnership.

A source close to CBH said it confirmed the bulk handler's concerns about AWB's dealings in WA.

"AWB has made agreements, paid for options and plans to compete against CBH in storage and handling in WA ‹ not just Kwinana," the source said.

"We have already heard public confirmation from port authorities, the chairman of AWB and the state manager that they have developed plans for other ports and some country sites, despite acknowledging that CBH has the most efficent and lowest cost grain handling fees in Australia."

CBH was disappointed that AWB continued to pursue an independent path because it was still committed to developing a business relationship with the wheat marketer.

It was also undermining CBH and WA grower trust, the source said.

"CBH does not intend to compete with AWB, and couldn't even if it wanted too because AWB has sole national export rights for wheat by law," he said.

"WA growers own a significant portion of AWB and all of CBH.

"Duplicating storage infrastructure can only erode value for WA growers.

"CBH wants to work with AWB and will continue to try and do so despite AWB's intentions.

"But it will not be intimidated or threatened into any action that is not in the growers' best interests."

A report from CBH said its Kwinana terminal "could handle a threefold increase in throughput" and blamed AWB for recent pressure on the terminal.

It said AWB had failed to achieve marketing results. The poor clearance rate had left transport resource idle and increased CBH's operating costs.

It said AWB should focus on marketing and stop trying to squeeze the WA supply chain.

The report also stated that AWB's Kwinana proposal was against government policy ‹ which was to divert freight to regional ports and shift as much freight from road to rail.

AWB media manager Peter McBride said WA growers should not overreact to news of the Kwinana facility.

"It is a case of intelligence gathering. We don't have plans to build the facility and we have not had engineers go over the site," Mr McBride said.

"We decided to take the option and sit on it.

"AWB's number one objective is to delevop an alliance with CBH but that cannot progress until after their board elections.

"We have to pursue options. Multinational grain marketers are moving into the east coast and we see this as a way of locking out potential competition from international companies - not CBH - in WA.

"We believe it would be to the benefit of the Australian economy."

Pastoralists and Graziers Association spokesman Leon Bradley said AWB would have to decide whether the Kwinana facility was a good business choice.

"CBH has been developed for a different era. It has huge overheads and if AWB draws revenue away, it (CBH) will struggle to maintain its infrastructure," Mr Bradley said.

"CBH has one bargaining chip and that is to marshall the support of WA growers and lobby for a change in the way single desk operates.

"If the system was changed to allow competition to port it would give CBH a whole new range of options.

"But CBH management need to develop strategies and take them to the growers to ensure their support."



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