John Durie: Victorian firm bidding to build 122 wind towers faces stiff Chinese competition

Victorian engineering firm Keppel Prince is attempting to tap into the wind power boom by winning a contract to build the towers that support turbines and blades on the $12 million-a-piece giants.

The battle hits a crucial stage next month when contractor Danish giant Vestas will conclude tenders for 122 towers planned for the $3 billion Victorian Golden Plains wind power project near Geelong.

Vestas is one of the world’s big three wind operators, along with Siemens Gamesa and GE.

Keppel Prince is a subsidiary of the listed Singapore infrastructure company Keppel Corporation, so it has some muscle behind it, but in this battle it is up against the rest of the world — and in particular China — as global governments attempt to create renewable energy powerhouses.

Keppel is supplied by local businesses around Portland, southwestern Victoria, so the creation of a new industry in town will help small businesses in the region.

The wind towers are typically made from locally produced steel, but a combination of COVID-19 costs and import competition has kept Keppel out of the game for five years.

It comes as some argue Australia should develop industries locally to replace imports in the wake of COVID-19 supply chain problems to boost jobs in booming sectors through value add products, as sluggish global demand and higher costs result in wind industry job cuts around the world.

Keppel Prince is the only local supplier of the towers and it faces import competition from China, where manufacturers can land towers into Australia at $800,000 against the $1 million it costs Keppel to build.

The federal government imposes dumping duties on imports of wind towers into Australia in part to help the local industry.

Dumping is when goods land in Australia at below the normal cost in the country of origin and cause injury to the local industry.

In this case, the injury is easy to establish because Keppel Prince has no business because it cannot compete with imports from China.

The company currently employs around 300 people in Portland, mainly working on maintenance jobs for the neighbouring Alcoa aluminium smelter.

But its parent company in Singapore is a leading player in the renewable space — including wind towers — and it would like to tap into the growing market in Australia.

Whether it can depends on whether it can win the Vestas tender next month and whether Industry Minister Ed Husic agrees to let Chinese manufacturers enter the market by paying dumping duties.

Exporters can seek exemptions if they can show they were not exporting when the original duties were lowered and are not selling at below-normal costs.

China now accounts for 54% of global wind turbine installations, up from 37% in 2018. Husic has delayed final decisions on whether to allow the Chinese exports.

When it commences next year Victoria’s Golden Plains wind farm will be the biggest wind turbine project in the southern hemisphere, although other projects in the Pilbara, NSW and elsewhere will soon be as big or bigger.

The 3000-gigawatt project near Geelong will be enough to power 350,000 homes.

Keppel Prince’s executive director Stephen Garner is hoping a combination of the right government decisions and a competitive bid process will convince Vestas Golden Plains to select Keppel as a supplier for the project.

This may well open the doors to being a major supplier to the Australian industry and in the process to local suppliers around its Portland base.