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Tuesday, 26 February 1985
Page: 178

Senator McINTOSH —Has the attention of the Minister for Resources and Energy been drawn to Press reports suggesting that the proposed smelter at Kemerton in south-west Western Australia is in doubt? What impact would the failure of this project to proceed have on the current discussions being held between the North West Shelf joint partners and the State Energy Commission in Western Australia with regard to the Domgas contract?

Senator GARETH EVANS —I am aware of recent Press reports indicating that the KUKJE-ICC group in Korea has just been broken up but that the South Korean Government has proposed forming a partnership to take up the group's equity share. The Korean Heavy Industries Corporation, it seems, may also be prepared to take up a share. Given these various circumstances, we are advised that the Western Australian Government remains confident that the project will still go ahead.

The State Energy Commission in Western Australia, SECWA, is contracted, as we know, to purchase gas from the North West Shelf. Generation of electricity for this smelter would come from the Western Australian grid, using coal/gas generating plant within the SECWA system. While it would obviously be helpful for SECWA for the Korean-backed smelter project to proceed, I should say that the implementation of that project is, in my understanding, not in itself crucial to the future of the North West Shelf project.

On the larger question of the Domgas negotiations now taking place, it is the case that negotiations between SECWA and the North West Shelf joint partners are currently taking place to consider aspects of the contract. Although the terms of the original Domgas contract have given rise to some difficulties for all those concerned, the Commonwealth, which has been monitoring the progress of the discussions taking place in recent weeks, is confident that the two parties will be able to reach agreement.