GRAINGROWERS are welcoming the move by a new grain export consortium to build a 1.3 million tonne capacity shipping terminal at Port Kembla in direct competition with GrainCorp.
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Logistics firm Qube has teamed up with grain businesses Emerald Group, Cargill and international trading house Noble, to set up Quattro Grain at Port Kembla where GrainCorp has been the sole bulk exporter through it's big capacity site since the late 1980s.
GrainCorp has long argued the export grain industry already has far more export capacity than it uses in an average year and poor utilisation of this infrastructure creates supply chain inefficiencies which growers end up paying for.
Qube is chaired by former Patrick port services boss Chris Corrigan, who in 1992 as head of Bankers Trust Australia was the losing bidder for GrainCorp when the business was privatised by the NSW government and sold to farmers.
Quattro's three grain partners will use Qube's rail operations on take-or-pay arrangements to freight grain to the new terminal, which will also open to other traders to supply up to 40 per cent of its export volumes.
The new facility is expected to cost around $75m to construct, with Qube now finalising a $230m capital raising from new and existing shareholders to contribute $50m directly to the project.
NSW Farmers grains committee chairman Dan Cooper said the new grain loader would improve competition in the Port Kembla port zone, but he wanted to see proof of growers benefiting from cheaper supply chain costs.
"Growers welcome competition and investment in the supply chain, but only time will tell if the investment from Qube will put dollars in growers' pockets," he said.
It was high time there was an alternative to GrainCorp's Port Kembla site, which services NSW's Central West, South West slopes and northern Riverina.
"It's the only port zone on the east coast that currently does not have competition," he said.
"It's nowhere near the level of true competition you'd see in other countries, or even domestically in the iron ore and coal industries, but it's a start."
Victorian Farmers Federation (VFF) grains group president Brett Hosking, had similar thoughts.
"Any supply chain investment is good in our book," he said, despite agreeing that market analysts already identified over-capacity in eastern Australia's shipping slots.
"We have to get that duplication and some level of over-capacity to get true competition."
Mr Hosking welcomed the partnership between grain traders.
"We like seeing industry partnerships working to fill these market gaps - it's also good from the point of view that no one business holds a dominant hand."
The grain terminal is scheduled to be finished by the 2015-16 harvest.
Its potential export capacity looms as another new threat to GrainCorp, which has just seen 60,000 tonnes of potential bulk export competi- tion emerge in the form of the newly-opened Newcastle Agri Term-inal.
Port Kembla has been the hub for GrainCorp's southern NSW exports for 20 years since it's Glebe Island wheat loading facilities in Sydney were closed.
For its part, GrainCorp said the Quattro plan further supported its claims made during the debate over Archer Daniles Midland's controversial $3 billion takeover bid for the company that good competition already existed in the east coast grain export sector.
GrainCorp's corporate affairs manager Angus Trigg said the move highlighted the need for an overhaul of GrainCorp's requirement to have port access undertakings in place.
"There will be over 3m tonnes of unregulated alternative bulk export capacity in eastern Australia, while GrainCorp's ports remain subject to regulation," he said.
Meanwhile, Emerald Group, recently acquired by the Japanese commodities giant Sumitomo, will link back to the Quattro Grains facility by investing in up-country storage in the Port Kembla port zone.
