Queensland government calls for EOI in it’s lucrative bauxite leases

The Queensland government has called for expressions of interest in its lucrative bauxite leases in far north Queensland, but with a twist, the private sector must come up with initiatives to financially benefit Cape York indigenous communities. Initiatives could include traditional owners being given direct equity in the project, a cash payment or jobs and business opportunities on the mine.

Pechiney of France originally held the leases offered by the government, but these were removed from them in 2004. The tender for the Aurukun leases was later won by Chinese group Chalco, which agreed to the condition that it establish an alumina refinery at Abbot Point. The refinery was not economically viable, however, and the Queensland government again took the leases back.

With much of the same profitability issues that hampered Chalco’s refinery development in 2010 still in existence (weak macro economic conditions, low metal prices and a strong Australian dollar), it is unsurprising that the new Queensland government has decided to offer the leases without the requirement that the bauxite be refined in Queensland.

Premier Campbell Newman stated that “the Bligh Government ran a strategy whereby it would lease the bauxite to a company under the condition it established a refinery or expanded refinery capacity. Their strategy of leasing the bauxite under the conditions of establishing a refinery simply will not work.”

Despite the fact that Aurukun’s bauxite ore is not as high quality as Rio Tinto’s Weipa or that at the South of Embley project, there is still expected to be significant interest in the leases. Mr Newman further stated that

“… over the coming months we will now go to the market and seek fresh expressions of interest and by April next year we expect to shortlist bidders to participate in a tender process for the right to develop the resource.”

A decision is expected by the end of 2013.