To establish the proposed joint venture, Noble will commit to use the facility and acquire rail services from Qube Logistics for the transport of grain to the new facility, in each case, on a "take or pay" basis.
To further support the establishment of the proposed joint venture and new facility, Qube and Noble have granted call options to each of two other major grain marketing businesses, Emerald and Cargill. If these options are exercised in full, Qube's and Noble's interest in Quattro Grain will be reduced to 30% each. Both Emerald and Cargill own existing regional grain storage sites that will service the facility and have made similar commitments to use the facility and to acquire rail services under "take or pay" arrangements.
The proposed new facility will have capacity to provide services to other grain customers on an open-access basis.
All of the above arrangements are conditional on receiving any necessary authorisations and approvals.
The investment from Qube into the facility and rail equipment is expected to be up to $50 million.
The new facility is expected to be operational in early FY 2016. The rail haulage agreements to transport grain to the new facility will significantly build upon the rail agreements with Noble, Emerald and Cargill which commenced operation earlier this year.
NSW Ports will extend and deepen the berth at Port Kembla to accommodate Panamax vessels.
The transaction provides Qube with significant growth opportunities and further diversification of its earnings.
The investment is expected to generate attractive financial returns with significant risk mitigation through take-or-ay arrangements with quality counter parties, and is expected to be earnings accretive from FY 16 once operations commence.
Marice James, the Managing Director of Qube said, "The investment is consistent with Qube's strategy to invest in port infrastructure that aligns with Qube's operations.
"This is a significant strategic project which we beliebe will alter the dynamics of the tightly controlled grain handling market. The joint venture looks forward to supporting grain producers by providing high levels of service and modern infrastructure to customers seeking to export grain from Port Kembla. "
Further Inquiries: Paul White +61 417 224 920