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Essington Ltd has withdrawn from the Cape York Space Station project and the Australian Space Office is looking for a new company to take its place

RICHARD PALFREYMAN: The world's first private space pad will go ahead, despite a decision by its major backer to pull out of the project. That's the view, at least, of the Federal Government's Australian Space Office. The director of the office, Dr Bruce Middleton, who has just completed an inspection of the proposed Cape York site with US Congressman Robert Rowe, says Essington Limited's decision to pull out was expected, and it will strengthen rather than weaken the project. Anthony Fennell reports from Brisbane.

ANTHONY FENNELL: The Cape York space base proposal has never been a certainty, despite the outward confidence shown in the past by the project's major investor, Essington Limited. Right from the start, it's met a wall of opposition from conservationists and more importantly, the local Aboriginal residents themselves. Essington's decision to pull out of the project as soon as is practical may have come as a surprise to many, but not it seems, to the director of the Australian Space Office, Dr Bruce Middleton. Dr Middleton says the Essington decision was always on the cards and regardless of speculation, doesn't represent a vote of no confidence.

BRUCE MIDDLETON: The people who are familiar with the project were well aware that Essington would have to find other parties to take the thing on and indeed, Essington themselves said this in August 1988 when they bought the project.

ANTHONY FENNELL: And you will be looking now for an Australian company to take Essington's place?

BRUCE MIDDLETON: We would certainly want an Australian company or consortium to have control of the project. That doesn't preclude a foreign company talking with us and doesn't preclude foreign companies having a position, indeed we welcome that, and you'd be aware that United Technology's USBI have a preferred position as program manager and may have interest in a further perhaps investment involvement in the project.

ANTHONY FENNELL: Do you think there would be an effect on public support if a foreign company was the only company that you could find to take Essington's place?

BRUCE MIDDLETON: That would depend very much, I think, on what understandings the Government reached with a foreign company. Our major interest in this project is the economic and employment benefits and the stimulus it might provide to the Australian space industry, but it's possible to conduct the project in a sort of agency operation in which everything is brought in and taken out again. In our view, that offers Australia very little and therefore, we have very little interest in it. Given the nature of this business, if the Government had little interest in the project, it would have great difficulty proceeding, so we would need to have an understanding with a foreign control proposal that it was going to offer Australia the benefits in order for it to proceed, with the Government's assistance.

RICHARD PALFREYMAN: Dr Bruce Middleton from the Australian Space Office.