The federal government will provide a $220 million loan to chemicals company Perdaman to build what will become the country’s largest urea plant in Western Australia, as it seeks to boost domestic fertiliser supply.
Resources minister Madeleine King announced the low-interest loan from the Northern Australia Infrastructure Facility (NAIF) on Friday, bringing total government support for the $4.5 billion Perdaman Urea Project to $455 million.
The loan comes a month after Environment minister Tanya Plibersek rejected an application to block the construction of the plant over concerns about its impact on ancient indigenous rock art.
The government will, however, seek to conduct an independent cultural heritage assessment of the area after receiving a different application under Aboriginal heritage protection law.
The Perdaman plant, located 20 kilometres north-west of Karratha, is expected to produce around two million tonnes of agricultural grade urea each year when fully operational.
Just under half of the urea produced will be kept in Australia, with the remainder to be shipped to the Asia-Pacific, Brazil and the United States.
Australia currently imports 2.4 million tonnes of agricultural urea annually, which makes up more than 90 per cent of the country’s urea fertiliser use.
Urea used in fertiliser is different to technical grade urea used in truck diesel additive AdBlue.
Ms King welcomed NAIF’s investment in the project, which she said will be “transformational for Western Australia”, providing an “$8.5 billion public benefit” over its 40-year lifespan.
“The Perdaman project will have the capacity to reduce imported volumes and secure local farmer’s access to fertiliser that is vital to ensuring food security,” she said.
The funding, which will only be released once all “regulatory approvals and financing conditions have been met”, builds on $255 million in NAIF loans for supporting infrastructure earlier this year.
The bulk of the funding went to the Pilbara Ports Authority for the construction of a new multi-user wharf at the Port of Dampier to facilitate exports.
The Water Corporation, meanwhile, was loaned $95 million to expand a seawater supply and brine disposal scheme that will connect to the urea plant.
NAIF chief executive Craig Doyle said the project was a “strong strategic fit” for the financier and will “support the diversification of the Pilbara economy”.
“We are delighted to build on NAIF’s previous support for the project, and playing a key role in the creation of a new industry, supporting significant domestic manufacturing and creating thousands of regional jobs,” she said.
NAIF will also work with Perdaman on “delivery of their indigenous engagement strategies to ensure positive indigenous employment and cultural outcomes are achieved”.
