Qube Holdings has entered into a joint venture with Noble Group to develop a multi-user grain handling facility at Port Kembla, New South Wales.
To trade as Quattro Grain, the proposed new facility will have the capacity to handle in excess of 1.3 million tonnes of export grain per annum. As part of the proposed joint venture, Noble will commit to use the facility and acquire rail services from Qube Logistics for the transport of grain to the new facility on a ‘take or pay’ basis.
To further support the establishment of the proposed joint venture and new facility, Qube and Noble have granted call options to each of two major grain marketing businesses, Emerald and Cargill. If these options are exercised in full, Qube's and Noble's interest in Quattro Grain will be reduced to 30% each. Both Emerald and Cargill own existing regional grain storage sites that will service the facility, and have made similar commitments to use the facility and to acquire rail services under ‘take or pay’ arrangements.
The proposed new facility will have capacity to provide services to other grain customers on an open access basis.
Qube is expected to invest up to $50 million in the facility and rail equipment. The new facility is expected to be operational in early FY 2016. The rail haulage agreements to transport grain to the new facility will significantly build upon the rail agreements with Noble, Emerald and Cargill, which commenced operation earlier this year.
NSW Ports will extend and deepen the berth at Port Kembla to accommodate Panamax vessels.
The transaction provides Qube with significant growth opportunities and further diversification of its earnings.
Qube Managing Director Maurice James comments that the investment is consistent with Qube's strategy to invest in port infrastructure that aligns with its operations. Describing the facility as a significant strategic project that is expected to alter the dynamics of the tightly controlled grain handling market, he said that the joint venture looks forward to supporting grain producers by providing high levels of service and modern infrastructure to customers seeking to export grain from Port Kembla.