Adbri reviews ballooning cost of Kwinana upgrade

Building products group Adbri has accelerated the review of the ballooning cost of its $199 million investment in upgrading its Kwinana cement plant in Western Australia.

The project will consolidate Adbri’s two existing cement production sites into a single operation serving the WA market, however it is being reviewed following the appointment of Interim CEO Mark Irwin in October.

The Adelaide company has now 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 $94 million in the project, according to a statement.

While the review is ongoing, preliminary findings indicate that the remaining spend to project completion under the current scope is now likely to be in the range of $170 to $200 million.

“Based on initial findings, a more comprehensive analysis is now underway.

“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.

Adbri expects the review of the Project to be complete by early 2023.

The Kwinana plant will utilise the latest technologies in cement production and is expected to deliver a lower carbon footprint product compared to the existing operations.

The project also aims to significantly improve clinker material handling process and when fully commissioned, reduce heavy vehicle movements in the company’s WA operations.

Image: Adbri/Kwinana upgrade