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Dalrymple Bay to make $1.2b port expansion decision next year

Business

Dalrymple Bay Infrastructure will make a decision next year on its $1.2 billion expansion as it also announced a buy back up to 10 per cent of its shares following a 20 per cent plunge since its float late last year.

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The expansion will depend on determinations from the Queensland Competition Authority over pricing. QCA also has to make a final decision on whether it would move to a light-handed regulatory regime which will allow negotiations to happen with customers.

The expansion, known as 8X would deliver 99 million tonnes of capacity for the port, slightly more than contained in the prospectus.

Chief executive Anthony Timbrell said a final feasibility study on the expansion would start soon and take 18 months. He expected existing port users would oppose the expansion because it would increase costs.

If we end up with light-handed framework it will make the expansion more likely because it would allow DBI to sit down with customers point out the benefits of the expansion.

He also predicted the bigger users of the port would potentially walk away from collective negotiations and try to use their size as leverage over pricing.

The Queensland Government owns 9.9 per cent of the company through QIC and that stake has fallen $25 million since the float.

Timbrell said neither the board or the management believed the current share price reflected the value of the company.

The decision to buy back 10 per cent of the company could potentially lift its share price but at a cost of $100 million based on today’s share price.

Timbrell said before the buy back started the company would have to investigate its liquidity position.

“We are not saying it’s the best use of cash, it’s just an option we want to reserve for ourselves,” Timbrell said.

 

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