Boral Cement fly ash offtake agreement at Tarong Power Station

Boral Cement and Stanwell Corporation Limited have entered into an Offtake, Operation & Maintenance Agreement (OOMA) pursuant to which Boral Cement will have the exclusive right to take and purchase fly ash from Tarong Power Station (Tarong PS). Under a separate agreement, Boral Cement is designing and constructing a facility for this purpose (Design and Construct Contract, the DCC) and the exclusive rights under the OOMA are conditional on the practical completion of the facility.

Boral Cement submits that it plans to enter the market for the supply of fly ash, taking and supplying Tarong PS fly ash (which it submits is not currently available to the market). Boral Cement submits that there is currently no fly ash facility at Tarong PS that enables fly ash to be taken or sold.  Fly ash from Tarong PS is currently treated as a waste product which is stored on site or at the adjacent Stanwell-owned Meandu Mine. Boral Cement submits the arrangement will increase the supply of fly ash within South East Queensland, enhancing competition in this market as well as downstream markets.

Boral Cement submits that it will be able to satisfy its own fly ash requirements through the OOMA. In addition, Boral Cement submits that it is strongly incentivised to maximise sales to third parties without discrimination, including because its own downstream requirements are below the minimum take or pay volumes contracted under the OOMA.

Boral Cement seeks authorisation for itself and on behalf of Stanwell to give effect to the OOMA for 10 years commencing from the Offtake Commencement Date (which is when all the conditions have been satisfied or waived and is likely to coincide with the practical completion date under the DCC). Boral Cement anticipates that the Offtake Commencement Date will be 15 March 2021.

On 22 October, the ACCC issued a draft determination proposing to grant conditional authorisation to Boral and Stanwell for five years, subject to a condition that Boral comply with clause 9.1 of the OOMA which imposes certain obligation on Boral in relation to its supply of fly ash to third parties.

On 26 November 2020, the ACCC issued a final determination granting authorisation subject to the same condition proposed in the draft determination, for five years. If no application for review of the determination is made to the Australian Competition Tribunal, the authorisation will come into effect on the OOMA Offtake Commencement Date.

A timetable is set out below for your information: