Proposed Multi User Iron Ore Facility



Project Description


Progressing MUIOF

Procurement Process

Further Information


Above: Esperance Port

Project Description

The Esperance Port Authority, trading as Esperance Ports Sea and Land, has commenced a process to identify a proponent to design, finance, build and operate a Multi User Iron Ore Facility (MUIOF) at the Port.

The facility will cater for the export needs of a number of iron ore mining companies with tenements in the Yilgarn Region of Western Australia. The MIOUF has the objective of increasing Esperance Port’s iron ore handling capacity from the current 11.5 million tonnes a year to more than 20 million tonnes a year.

Aerial view of Esperance Port with Cape class vessel alongside Berth three loading iron ore.


Iron ore mining companies wanting to export their products through Esperance Port was the genesis of the project. The Department of Transport subsequently undertook an analysis of forecast demand for iron ore export facilities at Esperance and Kwinana. This study revealed that there appeared to be significant demand for additional iron ore port export facilities and that most miners in the Yilgarn Region preferred Esperance Port as the site for these additional facilities.
The study recommended a Market Sounding exercise to enable an overall assessment of the market's appetite for investing in additional Port capacity
Esperance Port has been exporting iron ore since 1995. From small initial shipments of 1.5 million tonnes a year, exports have increased over the years and in 2011-12 the Port handled about nine million tonnes. This is expected to increase to about 11.5 million tonnes in 2012-13, the limit of the Port’s current environmental operating licence.
From an environmental perspective, infrastructure for handling iron ore at Esperance Port is considered world's best practice. The product is stockpiled in pressurised sheds and moved in a fully enclosed conveyor circuit from the rotary car dumper to the storage sheds and then to the berth for loading. The circuit, however, is limited in its ability to handle large volumes of iron ore. Storage capacity, conveyor speeds, and a single berth with a low ship loading rate contribute to this.
Esperance Port is the deepest port in southern Australia and is capable of handling cape sized vessels that are most suited for the iron ore trade. New facilities can be built relatively cheaply and quickly at Esperance Port compared to building a new port. The Port is connected to the mining regions to the north by the Leonora-Kalgoorlie-Esperance standard gauge railway line and to the east-west transcontinental railway line at Kalgoorlie. Mining tenements in the Yilgarn Region can, therefore, be linked to the existing rail network making the cost of transporting their product to Port much less than it would be if a new rail network had to be built.

Cape size vessel manoeuvring to berth

Currently the Port handles the product of only one iron ore exporter, Cliff’s Natural Resources. Cliffs’ mine sites are located north of Southern Cross at Koolyanobbing, Windarling and Mt Jackson in the Yilgarn Region. Koolyanobbing is located on the east-west transcontinental railway line.

MUIOF Project Objectives

The EPSL has the following Objectives for the MUIOF Project:

  • Develop additional Port capacity at Esperance to meet projected demand for iron ore export facilities from 'junior' iron ore producers based in the Yilgarn Region of Western Australia.
  • Identify third party infrastructure providers who are prepared to develop the Port and associated infrastructure on acceptable terms.
  • Enter into legally binding agreements with an infrastructure developer who is prepared to design, build, finance and operate additional Port facilities for the handling of iron ore.
  • Construct and operate Port facilities that are commercially viable and do not require government funding support.
  • Establish pricing and access regimes that are appropriate for a facility that is expected to service products from a multiplicity of mining companies.
  • Provide port and materials handling facilities that provide solutions to transport logistics that are both economically sound and environmentally and socially effective and which maintain community amenity.
  • Implement a project that is consistent with EPSL's functions to facilitate trade within and through the Port, plan for future development that is conducive to the safe, efficient and environmentally responsible operation of the Port.

EPSL aims to progress the MUIOF Project to achieve an increase in throughput capacity at the Port as soon as possible, recognising that increases in Port capacity may be developed incrementally. If a suitable proponent can be appointed and the project goes ahead, the MUIOF will be developed so as not to constrain any further additional long-term capacity or unreasonably interfere with current operations and Port customers.

A Project Team was established to progress the MUIOF Project.

Progressing the MUIOF

Many steps must be undertaken before additional iron ore handling facilities can be built. These are summarised below.

Market Sounding Process

EPSL embarked on a Market Sounding exercise in the second half of 2012 to:

  • identify the extent of private sector interest in developing the additional capacity;
  • engage with miners, financiers and potential infrastructure providers;
  • determine the likely commercial viability of those mining companies that have indicated that the Esperance Port is their preferred port for the export of their iron ore;outline the proposed approach to any tender process used to select a proponent.
  • establish the likely feasibility of proceeding to the procurement of private sector to develop multi-user iron ore facilities at the Esperance Port; and, if considered feasible,
  • establish the preferred model and arrangement for the procurement of a proponent.

An advertisement was published in the National and State media on Saturday, 26 June, 2012, seeking private sector interest in participating in this project by Friday, 6 July, 2012. Engagement with those companies identified as suitable followed.

Further, to determine the likely commercial viability of the mining companies the Project Team sought information on the -

  • quality of each of the miner’s reserves and the likelihood that its ore will be ready for export on time and in the quantities expected;

  • willingness of the miner to enter into a suitable take or pay agreement* in respect of the MUIOF; and

  • credit worthiness of the miner and its financial ability to support take or pay agreement commitments.

(* A take or pay agreement relates to a company providing an agreed quantity of iron ore to the MUIOF over a specific contract period, and if that amount cannot be achieved the company still pays for the provision of the facility’s services.)

Market Sounding Findings

The Project Team analysed responses from miners, prospective infrastructure providers and other potential MUIOF participants. The Market Sounding established that the private sector was interested in participating in the process, established the likely feasibility to proceed to procure a preferred proponent to design, finance, build and operate the new facility. Procurement model options were identified and a preferred model recommended.

The Market Sounding also identified those mining companies likely to be in a position to proceed to export and/or enter into suitable financial arrangements with the successful MUIOF proponent. Key project risks were also identified.

The exercise found that a likely increase in export infrastructure to handle between 10 and 12 million tonnes a year would be required in the shorter term, and noted that further Port capacity may be required in future years if more mining tenements in the Yilgarn Region were brought into production.

Iron Ore wagons entering the port for discharge into the rotary car dumper


  • Develop and reach a consensus on the commercial framework which will define the relationships between the stakeholders of the MUIOF.
  • Select an optimal Proponent to design, finance, build and opSelect an optimal Proponent to design, finance, build and operate the MUIOF at the end of the Procurement Process.
  • Draft and finalise the commercial documents necessary to reaDraft and finalise the commercial documents necessary to realise the agreed commercial framework and the completion of the RFP Phase prior to contractual negotiations.



EPSL has identified the following Procurement objectives:

  • Ensure a transparent process that canvasses the market.
  • Conduct an efficient and effective Procurement Process that will deliver outcomes within the agreed timeframes and budget.
  • Identify potential Proponents to undertake the RFP Phase and thereby create and maintain a level of competitive tension to deliver value for money to the State Government, the Port and participating mining companies.
  • Mitigate Project risks and develop an effective risk management strategy through a comprehensive Procurement Process.
  • Develop and reach a consensus on the commercial framework which will define the relationships between the stakeholders of the MUIOF.
  • Select an optimal Proponent to design, finance, build and operate the MUIOF at the end of the Procurement Process.
  • Draft and finalise the commercial documents necessary to realise the agreed commercial framework and the completion of the RFP Phase prior to contractual negotiations.

EPSL's role in the Procurement Phase

In regards to the Procurement Process, EPSL will:

  • Conduct a tender process to select a preferred proponent that has the ability to confirm the bankable demand from the mining companies seeking export infrastructure at the Esperance Port, and then design, finance, construct, and operate the facility, and otherwise meet the Project Objectives;

  • Facilitate the flow of information from all miners to proponent tenderers through a project data room to maximise the ‘multi-user’ opportunity presented by the Project;

  • Ensure clear communication with the market to manage expectations about the process, risks and constraints;

  • Give miners the opportunity to remedy their financial position to enable them to participate; and

  • Monitor the procurement phase until financial close.

EPSL will not:

  • fund or be the principal of the infrastructure development, or
  • broker any deals between miners and the private sector.

EPSL is committed to a fair and competitive selection process and the procurement process will be conducted in a manner to ensure the best possible outcomes for potential users of the facility as well as the State Government.

Business Case and Procurement Plan

The Business Case was developed following the Market Sounding to answer the questions of whether the Project stacks up and whether proceeding to procurement could be justified. This meant having regard to project risks and the possibility that Government may not recoup its considerable transaction costs in the event EPSL is not able to achieve contractual close with a proponent.

A Procurement Plan was developed detailing the proposed approach to procurement and how project risks and procurement risks could be managed.

EPSL proposes to use a build, own, operate and transfer (BOOT) public private partnership (PPP) procurement model for the MUIOF in line with the findings of the market sounding.

Loading Iron Ore into a ships hatch

A four-phase Procurement Process is proposed:

Phase One – Registration of Interest and Prequalification (ROIP) phase, including short-listing of potential Proponents.

Phase Two – Interactive Request for Proposals (RFP) phase leading to the selection of a preferred Proponent.

Phase Three – Negotiations between the Preferred Proponent and EPSL leading to contractual close.

Phase Four – Settlement of outstanding conditions and precedents and contractual close between the Proponent and Miners which will culminate in financial close of the MUIOF.

The Business Case and the Procurement Plan were reviewed by a Steering Committee comprising representatives from EPSL, Treasury, and Department of Transport. This was approved by the ESPL Board, and culminated in a recommendation to proceed to procurement which was approved by the Minister for Transport and the Minister for Planning on behalf of the Treasurer on January 28, 2013.

ROIP Phase of the Process

The ROIP phase of the project attracted considerable interest from the private sector when if was launched on 31 January, 2013, and five consortia registered their interest in prequalifying to be considered for short-listing for the Request for Proposal (RFP) phase when applications closed on 15 March.

A four-member evaluation panel was established supported by specialist advisors to assess the applications.

The Panel considered each consortias experience and capacity to deliver the operational elements of the project, their financial capacity to access funding and deliver the project, determine their understanding of the MUIOF requirements, and determine their experience to meet the design and construction requirements of the project.

The Panel delivered its findings in a report to the Esperance Port Authority Boarc that outlined each respondents ability to meet the MUIOF objectives, and recommended a ort list of two consortia to proceed to the RFP phase.

The Board accepted the recommendations and sought Ministerial approval to proceed to announce the successful shortlisted consortia.

Iron ore carrier departing Esperance Port for Asian markets

RFP Phase of the Process

Following approval by the Minister for Transport on 11 June, 2013, the Esperance Port Board announced on  that the that two consortia had been short-listed to prepare bids along similar lines to a tender process to design, finance, build and operate new iron ore export infrastructure at the Port.

The two consortia are:

1. Qube Bulk Pty Ltd and Brookfield Infrastructure (Australia) Pty Ltd; and

2. Yilgarn Esperance Solutions (YES) Limited. (YES is a consortium comprising McConnell Dowell (Aust) Pty Ltd Constructions, Asciano and Marubeni Corporation).

During the RFP process, the two consortia will determine the scope and capital costs of the project that will be based on the level of commercially viable and sustainable demand for iron ore export capacity required at the Port.

The consortia will determine the commercial and financial ability of those companies seeking to develop their tenements and wanting to use export infrastructure at the Port to be in a position to sign take or pay contracts.

The RFP phase is expected to be completed by the end of 2013, which will be followed an evaluation of the two tenders and the appointment of a preferred proponent to proceed with the project.


RFP Closure

The two consortia shortlisted as potential proponents for the MUIOF project | Qube-Brookfield and the Yilgarn Esperance Solution submitted their Request for Proposal (RFP) tenders by the Friday, 22 November, 2013, deadline. The RFPs indicate what each consortia believe would be a commercially viable model for the MUIOF Project.

During the RFP Phase YES advised that the construction contractor McConnell Dowell (Aust) Pty Ltd had withdrawn from the Consortium.

An independent panel will now evaluate the RFPs. The panel will recommend a preferred proponent to the EPSL Board followed by Ministerial approval by March 2014. EPSL will finalise MUIOF financial and contractual close before the proponent commences developing the new facility.


Preferred Proponent Announced

On Wednesday, 7 May, 2014, the Yilgarn Esperance Solutions (YES) was named as the preferred proponent to design, build and operate a new Multi User Iron Ore Facility at the Esperance Port.

The YES consortium is led by Asciano Ltd, which has a proven track record in developing and operating ports in Australia and internationally.  It was one of two consortia shortlisted to submit a proposal to develop the facility.

The announcement was based  a recommendation from the EPSL Board which followed an extensive procurement process undertaken by the MUIOF Project Team, independent expert engineering, commercial and legal advisors and an independent evaluation panel.

 The consortium will now enter into contract negotiations with the Esperance Port and potential users of the new facility. The new facility is expected to almost double the Port's export capacity – from about 11 million tonnes to more than 20 million tonnes.


Companies interested in tendering for work or providing supplies for the Multi User Iron Ore Facility (MUIOF) project are advised that work will not start until contractual and financial closure is completed.

Only then will the preferred proponent be able to scope the project.

Once this stage is achieved, Esperance Port will provide contact details to enable contractors and supplies to notify their interest in the project.


Contractual Close

Contractual close is expected to be followed by a period in which the successful consortium will attempt to reach financial closure with financiers.


Further information can be obtained from:
Business Enquiries: (08) 62177184
Community and Media Enquiries: 0418 789 318

Weekend West  - Saturday 2nd February 2013