Adbri reviews Kwinana project as costs escalate

Adbri Limited has issued an update on its Kwinana project to consolidate two existing cement production sites into a single operation serving the Western Australian (WA) market.

Following the appointment of Interim CEO Mark Irwin on 17 October 2022, Adbri accelerated its review of the project and engaged an expert engineering firm to undertake an external review. The initial findings have identified that the project cost is being impacted by a range of factors, including the escalating cost of construction in WA and constraint on available labour.

To date, Adbri has invested approximately AUD94m (US$64m) in the project. While the review is ongoing and the extent of further capital spend is subject to the review’s conclusions following further analysis, preliminary findings indicate that the remaining spend to project completion under the current scope is now likely to be in the range of AUD170-200m. Based on initial findings, a more comprehensive analysis is now underway. The project was originally budgeted at AUD199m.

Adbri is examining a range of options for the project to optimise value, including re-scoping and cost mitigation, as well as alternatives to further improve the synergies with Adbri’s existing operations and logistics network. This is consistent with the company’s capital management strategy which includes capital recycling from non-core assets.

The project will utilise the latest technologies in cement production and is expected to deliver a lower carbon footprint product compared to the existing operations. Upon completion, it will also significantly improve clinker material handling and when fully commissioned, will reduce heavy vehicle movements in Adbri’s WA operations.

Adbri expects the review of the project to be completed by early 2023.