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KI timber firm signs contracts for controversial, unapproved port

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The timber company behind a controversial port development on Kangaroo Island’s north coast has signed a construction contract for the work – despite the project not being approved.

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Kangaroo Island Plantation Timbers (KIPT) says it has an Early Contractor Involvement Agreement (ECI) with Port Adelaide-based Maritime Constructions and other partners, including global leading civil and maritime construction companies KBR and WGA.

But a neighbour and major opponent of the port plan has labelled the agreement as presumptuous and potentially a waste of time and money.

The proposed port at Smith Bay is about 20km west of Kingscote on the island’s north coast and is still awaiting a final decision from the state government.

The final documentation for the $40 million jetty and handling facility – the Kangaroo Island Seaport  – was put to the state government in March and a further response document lodged in June.

The development was given major project status by former planning minister Stephan Knoll 12 months ago.

The final decision, which now rests with new planning minister Vickie Chapman who filled the role following Knoll’s resignation last month, is yet to be announced.

The company says the port will be crucial to ship 4.5 million tonnes of bushfire-affected timber that could still be salvaged and sold before it begins to rot.

The company has estimated it has a window of about two years before its burnt softwood pine trees rotted while the hardwood blue gums could potentially last up to five years.

KIPT is also expecting submissions from a number of contractors expressing their interest in significant contracts for timber harvest and haulage on the island.

It says this is essential to salvage the softwood logs, which are at most risk of deterioration if not harvested soon.

The ECI Agreement establishes an Alliance Agreement model, under which the Contractor will build a deep-water wharf at Smith Bay, Kangaroo Island.  The Alliance Agreement itself will now be prepared under the ECI Agreement terms and conditions.

Maritime Constructions has been responsible for several major projects in South Australia in recent years including the new Whyalla jetty, which was completed this year and a 20ha man-made oyster reef off the coast of Ardrossan.

KIPT has employed experienced engineer Alan Braggs as its KI Seaport Manager to work directly with MC on the project and the associated agreements and contracts.

KIPT Managing Director Keith Lamb said the Alliance Agreement model would allow KIPT and Maritime Constructions to share the financial risks and rewards of building the KI Seaport.

“We respect the skills and experience of Maritime Constructions and we are pleased that this ECI has the practical effect of establishing them as our development partner for the KI Seaport project,” he said.

“Alan comes with almost 30 years of experience in civil engineering in Adelaide, Perth and Singapore, and expertise in marine structures.

“We are very pleased to have him on board and he has already brought significant value to the project and our shareholders.”

Yumbah Aquaculture has been in Smith Bay for more than 20 years and grows green lip abalone predominantly for export.

Earlier this year, the aquaculture company flagged a multi-million-dollar expansion of its own at Smith Bay, but only if the KIPT port project does not go ahead.

Yumbah general manager David Connell told InDaily the agreement was likely to be costing KIPT money and was “probably a bit presumptuous”.

“If they don’t get approval then all of it will have been in vain – you’d think the commonsense thing to do would have been to wait until they had been given approval,” he said.

“We’re very much against it – this is directly next door to us so biosecurity is the biggest concern and there are a whole number of things to protect our business that haven’t been properly addressed.”

Connell said he hoped a decision would be made soon as the uncertainty around the port project had disrupted Yumbah for the past four years.

He said a win/win could still be achieved if the port was moved to another location.

“We had great plans for this site and that’s all had to stop so we’re definitely hoping for a decision soon because we want to get back to business as usual, start employing people and expand production from Kangaroo Island,” he said.

“The trees are something that all Islanders would like to see removed but to do it at this end of the island is just madness and impacts on tourism and impacts on our business.

“We can achieve a port by simply moving it somewhere else and we can get a win/win out of this where we can have aquaculture and a timber industry but we just need to separate them.”

KIPT has so far received more than $55 million in insurance payouts following the December and January fires that damaged 95 per cent of its crop, which is predominantly on the western half of the island.

It is still negotiating for further payouts worth more than $15 million.

In another step forward, the company is also expecting submissions from a number of contractors expressing their interest for significant contracts for the provision of harvest and haulage services on the island. This is essential to salvage the softwood logs, which are at most risk of deterioration if not harvested soon.

Lamb said the publicly-listed company welcomed the announcement last week of the federal government’s $10m Salvage Storage Fund – Securing Forestry Resources for Economic Recovery.

He said the fund, to help establish storage facilities for bushfire-affected timber, was timely for KIPT as its salvage harvest loomed, and could benefit Australian mills.

“Kangaroo Island has received two major setbacks this year with the devastation of the fires, and now the COVID-19 pandemic, both of which have had a major impact on the lives and prosperity of Island residents,” Lamb said.

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