Allens

Infrastructure & Transport

Client Update: Breaking Ground

12 October 2012

In brief: Breaking Ground is a regular publication by the Allens Infrastructure and Construction group to keep you informed of the latest news and developments in this area. For more information or for legal advice, please contact one of the Partners listed below.

Breaking news

Construction industry
St Hilliers asks creditors not to push the company into liquidation – 4 October 2012

National builder St Hilliers is expected to send out deed of company arrangement documents, asking creditors (including staff and subcontractors) to agree to allow the company to trade out of voluntary administration, rather than voting to push it into liquidation. Administrators were appointed to St Hilliers in May.

Source: Lisa Allen, 'St Hilliers pushes for rescue deal', The Australian, 4 October 2012

Arrium rejects unsolicited takeover bid – 1 October 2012

Arrium, formerly known as OneSteel, has rejected a $1 billion unsolicited takeover bid from an Asian consortium led by Hong Kong's Noble Group. Arrium said that its board and advisers had carefully reviewed the proposal but believed it was not in the shareholders' best interests because it undervalued the company, was highly conditional and carried significant risk.

Source: Paul Garvey, 'Arrium stock soars 30pc after Asian consortium offers $1bn for steelmaker', The Australian, 1 October 2012

Sale of Thiess Waste Management to Remondis AG & Co KG – 28 September 2012

Leighton Holdings has completed the sale of Thiess Waste Management to Remondis AG & Co KG, for a total purchase price of $218 million. The sale was subject to certain conditions, including the novation of major customer contracts.

Source: Leighton Holdings media release

Energy and Resources
$500 million worth of contracts awarded in relation to Wheatstone LNG project – 4 October 2012

Apache Energy has awarded three major contracts, collectively worth about $500 million, for the Julimar development project that will feed gas into the Wheatstone LNG project. Allseas Construction Contractors won the pipelines transport and installation contract, Oceaneering International Services has been awarded the contract to build and supply the umbilical, and Subsea 7 Australia Contracting has won the subsea equipment transport and installation contract.

Source: 'Apache gets Julimar contractors', Energy News Bulletin, 4 October 2012

Transfield Services and Clough Ltd Joint Venture awarded Curtis LNG contract – 4 October 2012

Transfield Services and its joint venture partner, Clough Limited, have been awarded a construction contract as part of QGC Pty Limited's Queensland Curtis LNG project. The contract is worth an estimated $80 million.

Source: Transfield Services news centre

Expansion of Gorgon LNG project, Chevron plans fourth production train – 26 September 2012

Chevron is planning to bring forward development of two offshore WA gas fields, in a $10 billion-plus expansion of the Gorgon LNG project being built on Barrow Island. Chevron announced that it planned to source gas for a fourth LNG production train at Barrow Island from the Gervon and Chandon fields.

Source: Matt Chambers, 'Chevron to develop fourth train for Gorgon', The Australian, 26 September 2012

Mining
Macmahon Holdings awarded extension of contract for Olympic Dam project – 28 September 2012

Macmahon Holdings Ltd has been awarded a $200 million extension of its Olympic Dam contract with BHP Billiton. The three-year extension will allow Macmahon to continue current activities across the site, including underground development works; the installation of ground support, including shotcreting and cablebolting; and load and haul operations. The three-year contract includes an option of a one-year extension.

Source: Macmahon ASX announcement

Leighton Contractors wins $1.44 billion contract – 25 September 2012

Leighton Contractors has been awarded a $1.44 billion contract by Fortescue Metals, to oversee mining at its Firetail iron ore deposit in the Pilbara. Leighton Contractors will manage the mine for five years under the newly signed contract, operating the open-cut mining fleet and handling plants and associated infrastructure.

Source: 'Fortescue inks $1.4b mine deal with Leighton', Sydney Morning Herald, 25 September 2012

Rail
North West Rail Link can now be constructed – 1 October 2012

The New South Wales Government has given planning approval to the North West Rail Link. Approval to start construction of the 15.5km twin tunnels and the 4km skytrain has also been given.

Source: Transport for NSW media release

Queensland Government finalises terms of reference for Alpha Coal and Rail project – 25 September 2012

The Queensland Government has finalised the terms of reference for the proposed rail corridor in central Queensland (part of the Alpha Coal and Rail project) from the Galilee and Bowen basins to ports at Abbot and Hay Point in the state's north. The terms of reference will be used to prepare the environmental impact statement for the $2 billion project.

Source: William Roll, 'Central Qld rail corridor plan edges closer', ABC News, 25 September 2012

Roads
Consortium selected for Gateway WA project – 4 October 2012

A contractor consortium has been chosen to deliver the Gateway WA project – a billion-dollar improvement to WA's road network. The Gateway WA consortium comprises Leighton Contractors, Georgiou, GHD, AECOM and BG&E. The upgrade is expected to be completed by 2017.

Source: Supply Chain Review, 'Consortium chosen for WA Gateway project', 4 October 2012

Ports
Port Hastings expansion to continue despite scaled-back operations – 1 October 2012

The Victorian Government will continue with the $12 billion expansion of Port Hastings, despite BlueScope Steel closing its wharf next month and Patrick Stevedores winding back its operations from November.

Source: Marika Dobbin, 'Baillieu barges ahead with port expansion', The Age, 1 October 2012; Josh Gordon, 'Hastings port expansion in doubt as Patrick pulls plug', The Age, 28 September 2012

Stadiums
Planning phase of new Perth Stadium complete – 24 September 2012

The 12-month-long planning process for the new Perth Stadium has been completed and the Project Definition Plan (PDP) has been released. The procurement phase will now commence. The PDP estimates the base cost of the project will be $690 million, with the surrounding sports precinct costing an additional $70.2 million. A further $142.4 million has been allowed for escalation through to the project's expected completion in 2018. Tenders for pre-construction works will be advertised next month, and the Western Australian Government is expected to call for expressions of interest for the main construction contract by the end of the year.

Source: WA Australian Minister for Sport and Recreation; Racing and Gaming ministerial media releases

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Published reports and articles

Mining in NSW – Statistical indicators – October 2012

The NSW Parliamentary Research Service has published Mining in NSW – Statistical Indicators. The paper provides a statistical snapshot of indicators relevant to mining in NSW. The indicators discussed include: quantity and value of mineral production, mineral consumption, mining export data, employment in mining, mineral income and royalties, major mining projects, mining lease entitlements, mining safety statistics and mining businesses.

Source: Nathan Wales, 'Mining in NSW (October 2012) Statistical Indicators 7/12', NSW Parliamentary Research Service, October 2012

Housing Industry Association-Cordell Construction 100 – 27 September 2012

The Housing Industry Association (HIA) has released its publication Housing Industry Association-Cordell Construction 100, which can be ordered on its website. The report contains in-depth analysis of both the engineering construction and non-residential building sectors. It profiles the largest 100 companies working in these sectors, analyses market share, and identifies companies expanding or reducing their operations. According to HIA's media release, the John Holland Group topped the Construction 100 list, with contracts for construction work worth $7.09 billion awarded during the year, while Leighton Contractors was the second-largest contractor and Theiss the third largest.

Source: HIA, 'Housing Industry Association-Cordell Construction 100', 27 September 2012

Taxable payments reporting in the building and construction industry – 21 September 2012

The Australian Taxation Office has issued a media release to the effect that, from 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. The stated aim of this system is to improve compliance by those contractors who are not currently meeting their reporting obligations.

Source: ATO website, 'Taxable payments reporting – building and construction industry', 21 September 2012

Building Industry Economic Survey predicts Victorian building industry will be hit hard over the next quarter – September 2012

The July 2012 quarterly Building Industry Economic Survey (BIES), the 10th such survey, has been conducted. Major businesses in the building industry were invited to participate, by providing their Victorian work and employment forecasts and business impact expectations from July to December 2012. The survey predicts that the Victorian building industry will be hit hard this quarter, with the value of work and employment levels expected to fall, due to the cost of building materials, the carbon tax, lack of credit availability and decreased consumer confidence.

Source: Building Commission, 'July 2012 Building Industry Economic Survey report', Pulse Today, issue 31, September 2012

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Industry standards

National occupational licensing draft legislative package for consultation – September 2012

The National Occupational Licensing Authority has released a draft legislative package that reflects policy proposals for the national licensing of the electrical, plumbing, gasfitting, property, refrigeration and air-conditioning industries. The Council of Australian Governments National Licensing Steering Committee is seeking input on it from stakeholders and the wider public, until 12 October 2012.

Source: National Occupational Licensing Authority, 'Consultation Legislative Package,' September 2012

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Recent legislation

Commonwealth
NSW
Queensland
Tasmania

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Allens publications

Client Update: Refreshing user charges in infrastructure funding – 10 October 2012

A burgeoning national infrastructure deficit, and a growing, ageing and rapidly urbanising population, is causing a rethink about the role of user charges in funding Australia's infrastructure. Partner David Donnelly and Lawyer Fiona Borrelli report.

Focus: Dispute resolution clauses – follow the Yellow Brick road – 5 October 2012

The Queensland Supreme Court has confirmed in Downer EDI Mining Pty Ltd v Wambo Coal Pty Ltd, where possible, it will hold parties to the dispute resolution procedures in a construction contract before it allows recourse to legal proceedings. Partner Adrian Baron and Lawyer Laura Nagy report that the case reinforces the need for parties to ensure that they are comfortable with the dispute resolution procedures in their construction contracts and to further ensure that, practically, these procedures are achievable. It does not appear likely that a court will interfere and allow recourse to legal proceedings without the parties first attempting to resolve a dispute according to the procedures agreed in the contract.

Client Update: NSW infrastructure plan for the future – 4 October 2012

Infrastructure NSW has released its State Infrastructure Strategy for the years 2012 to 2032. In an attempt to stem declining productivity in NSW, the report recommends more than 70 infrastructure projects that will cost around $30 billion, of which $10 billion would be funded by user payments. Partner Nigel Papi, Senior Associate Lixian Liang and Lawyer Tanvir Ahmed report.

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Meet the team

Get to know Partner Anthony Arrow and Senior Associate Fiona Potter

Partner Anthony Arrow specialises in infrastructure and construction law. Recognised for his commercial and solution-focused legal advice, Anthony's in-house infrastructure and construction expertise is invaluable to the management and delivery of major projects. We asked him to share some personal and professional insights.

What are some recent projects/matters in which you've been involved?

Most recently, I've been involved in the acquisition of the Sydney Desalination Plant by Hastings and OTPP; a large tender for Plenary in relation to the Sydney Convention Centre PPP; and have been working with First Solar on its successful tender for the Commonwealth Solar Flagships Program, which will see the construction of Australia's largest utility-scale solar power plants in NSW.

What's something interesting about you that we won't find on your CV?

My favourite thing to read is 'Epicure' in The Age each week! I must confess that I am a 'foodie', marginally obsessed with finding the latest and greatest places to eat out. Thank goodness there is no shortage of great places to eat here in fabulous Melbourne!

Senior Associate Fiona Potter has particular expertise in construction and major project disputes. Her experience includes time and cost claims, variations, defective work claims and performance bond claims, both in a contract administration and a contentious context (including international arbitrations, expert determinations, litigation and mediations). We asked her to share some personal and professional insights.

What do you find most interesting about your areas of practice?

Being a projects lawyer based in Perth means the projects I work on not only span the resources and infrastructure sectors but also WA and Asia. Some recent examples of these are power stations in the Pilbara, oil and petrochemical refineries in Vietnam, and cement plants in Indonesia.

Could you please give us a quick snapshot of your background (ie where you have worked, overseas stints, secondments)?

I took a leave of absence for three years and spent it working for Freshfields in the Middle East, based in Dubai. The most memorable project for me there was working on developing the Qatar Bahrain causeway to connect the two countries by a 42km road and rail bridge. As a side job, I was a hotel reviewer for a UK website. So, if I weren't a lawyer I would take up travel and reviewing hotels on a full-time basis.

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