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Downer Signs Five-Year Deal

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Downer EDI will continue mining coal for the Tarong and Tarong North power stations after negotiating a new 5-year contract with Stanwell (Photo: Stanwell)

January 22, 2020

Downer EDI will continue mining coal at Meandu for the next five years after the successful negotiation of a new contract with Stanwell.

The $600 million deal, which starts in July, will mean cheaper coal for the Tarong and Tarong North power stations.

The contract includes full mining services and operation of the mine’s coal handling and preparation plant.

Downer has been the Meandu contractor since 2013. It initially negotiated a 5.5 year contract which was then extended for another two years to end in June 2020.

The announcement on Wednesday follows a 12-month tender process by Stanwell.

Stanwell CEO Richard Van Breda said the new contract would deliver substantial benefits to both Stanwell and Downer EDI and would improve the competitiveness of the power stations in the National Electricity Market.

“Over the next five years, significant changes will occur within the National Electricity Market and it is important we are in a position to respond to these changes,” Mr Van Breda said.

“The cost of coal is a significant portion of the total cost of running the Tarong power stations. It is therefore important for us undertake these market reviews to ensure we are operating as cost effectively as possible for the benefit of Queensland electricity consumers.

“After undertaking a rigorous tender assessment process, Stanwell selected Downer EDI for its ability to deliver the best combination of safety, environmental, community and commercial outcomes for Stanwell and Meandu Mine over the long-term.

“Downer’s reappointment supports the long-term future of Meandu Mine and the Tarong power stations and enables the site to continue to provide local jobs and investment in the South Burnett and Toowoomba regions.

“In recent years, we have invested in new haul trucks, excavators, ancillary fleet, dragline overhauls, infrastructure and enabling technology. Our ongoing investment underpins improvements in the productivity and efficiency of Meandu Mine, directly contributing to the continued viability of the Tarong power stations.”

Mr Van Breda said the new agreement with Downer would begin in July 2020 following a transition process.

“We will use the period between now and the commencement of the new contract to build on lessons learnt between Stanwell and Downer over the last seven and a half years,” Mr Van Breda said.

“The transformation process will be a critical step in effecting real change in the way we do business together.”

[UPDATED]


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