Private investors back South Australian grain export terminal with A$100m

A new facility that will export grain from South Australia has secured A$96 million of private equity and debt financing.

The terminal, at Lucky Bay on the Eyre Peninsula, is a joint venture between Infrastructure Capital Asset Management, Duxton Asset Management and Sea Transport Solutions.

The shallow-water port will operate under the brand of T-Ports, an entity owned by the ICAM Duxton Port Infrastructure Trust. The trust is targeting an IRR range of between 18 percent and 34 percent and a distribution yield of 7 percent to 13 percent for investors.

The existing port at Lucky Bay, valued at A$30 million ($24 million; €20 million), has been vended into the trust, with a further A$26 million raised from an institutional investor, family offices and high-net-worth individuals. In addition, A$30 million in debt will be provided by an institutional investor and a further A$10 million in equity is to be raised over the next eight to nine months, according to ICAM.

ICAM Duxton Port Infrastructure Trust has secured throughput incentive agreements with growers on the Eyre Peninsula for 377,000 tonnes per annum over seven years.

The growers’ share

Growers will also be able to acquire equity in the port through a scheme which will grant them A$3 of equity in the port infrastructure trust for each tonne of grain delivered. This represents up to 15 percent of the trust’s equity at the end of the seven years.

“Most growers have committed only a portion of their typical crop production, approximately 60 percent on average, indicating sound potential for further volume upside,” ICAM investment officer Robert Scammell told Agri Investor.

The port will use transshipment technology to “bring the port to the product,” Scammell said, and is partnering Sea Transport Solutions to design and build the shallow draft transshipment vessel that will use the port. This 3,500-tonne capacity vessel will be used to load Panamax ships, with grain storage capacity of 580,000 tonnes at the port and inland.

“Supply-chain costs have traditionally been one of the highest costs in grain production”
Robert Scammell, ICAM

“This type of shallow-water port has a lower build cost and a lower environmental footprint compared to deep-water ports and thus attains financial feasibility at a much lower throughput amount. The port is strategically located in the Eastern Eyre Peninsula grain catchment zone with a material cost advantage over alternative options currently available to growers in this catchment zone,” Scammell said.

The new export option for SA grain farmers could be “a turning point in the industry,” he added, which has struggled in the state in recent years.

“The grain industry in SA has just come off seven above-average years, with harvest 2017-18 beginning slightly below average,” Scammell said. “Supply-chain costs have traditionally been one of the highest costs in grain production, but construction of an alternative export solution for SA farmers has been applauded.”

ICAM is also establishing a retail investment vehicle to allow all Eyre Peninsula grain growers to invest cash into the trust.