Australian steel suppliers ‘didn’t pass’ the Snowy Hydro 2.0 test

Joseph Brookes
Senior Reporter

The head of Snowy Hydro and independent Senator Rex Patrick clashed in Senate Estimates Monday over the use of foreign-manufactured steel and a lack of transparency within the “nation building” 2.0 project, after it was revealed much of the material is coming from Italy.

@AuManufacturing last week reported that the $5.1 billion Snowy 2.0 scheme will be built without using Australian-made steel for some of its most massive and important components. The article was reprinted by InnovationAus. Documents showed an Italian company is supplying the steel for the six large penstocks which feed water into the Snowy Hydro 2.0 generating units.

According to the publication, the foreign sourced steel is a contravention of the original tender for the overall project, which was given to the specifically created Snowy Hydro 2.0 joint venture Future Generations with a condition that all steel plate be sourced from Australian suppliers.

Senator Rex Patrick clashed with Snowy Hydro officials in Estimates over the supply of foreign-made steel

Snowy Hydro officials on Monday confirmed Future Generation joint venture – made up of Italian industrial group Webuild, Australian-based Clough and US-based Lane Construction – had contracted Italian company ATB Riva to supply 6,960 tons of penstock steel for the high-pressure sections of the waterway.

According to a briefing note prepared for the officials, ATB Riva was awarded the contract after a competitive tender process where several Australian bidders participated but were unable to fulfil the full steel plate supply requirements, either in amount or specifications.

South Australian independent senator Rex Patrick pressed officials about the use of an overseas supplier and an apparent lack of leadership on building the domestic industry.

“No one’s driving this from an Australian perspective,” he told the hearing. “No one’s caring about Australian industry and investing in Australian industry.”

Snowy Hydro chief executive Paul Broad said he “took offence” to the line of questioning, and backed the use of the experienced foreign supplier.

“I’ve insisted [Future Generation] give the Australian content a good go. As I understand it, these contractors, they had Australian bidders [but] they didn’t pass, they didn’t past [the] test,” Mr Broad said in a tense exchange.

“The one who won that one [ATV Riva], the high-tension steel, was one that has been operating for 50 years on 700 similar contracts so they can do pretty good at it. So no, I reject the suggestion that we’re not pushing for Australian workers, Australian contracts, Australian skills.”

Mr Broad said 83 per cent of the projects total steel came from local suppliers.

Officials took on notice Senator Patrick’s request for the original tender document which reportedly includes a mandate for Australian made steel plate but added “commercial in confidence” considerations may prevent them from providing it.

The excuse was barely tolerated by Mr Patrick, who said it was unlikely a public tender document could be considered commercial in confidence.

“This is the sort of stuff I have to deal with: officials making ambit claims which are actually clearly ridiculous.”

The South Australian senator also took issue with Snowy Hydro’s failure to provide him with a full delivery schedule at his explicit request last year.

“We thought you wanted the key ones, so we gave you the key ones,” Mr Broad said.

The Snowy Hydro agreed to take on notice the full schedule, but Mr Patrick was not assuaged.

“This project is paid for by the public. And they are entitled to details about this project; the amount of steel that’s being made, the amount of Australian content, the schedule for the project, the risks that the Commonwealth are exposed to. That’s all stuff that the Australian public is entitled to,” Mr Patrick said.

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  1. Surjan 2 years ago

    If the tender specifications clearly outlined from the beginning that only local suppliers ( Australian based Steel Mfrs and suppliers to be used ) then that will be a good point to argue for local suppliers. But stating ‘only local suppliers n mfrs ‘ can also result in Snowy Hydro facing the risk of receiving highly inflated price submissions. So the onus was for Snowy Hydro to go back to the Aussie Bidders and get them to accept the quality and price schedule as per the Italians bid submission (to give them a first right of refusal). Failure to meet this by the Aussie bidders can then be a good reason/practise to go ahead and award it to the Italians. The point here (what the Senator seems to be making) is that nobody actually is even doing this to promote/ protect local industry and suppliers. And the irony is that there is a high chance that the Italians are sourcing this steel plates from Easten European or Chinese Steel Mills. The mill certificate of origin and quality documents will verify this…European prices and logistics cost will be actually high for overseas bidders. ..(unless the Aussie bidders were to

  2. If the fixed price contract, arrived at after a competitive tender process, requires 100% Australian steel then Snowy Hydro should enforce it.

    But specifying 100% Australian steel in the RFT, is bad for Australian taxpayers, if Australian steel suppliers are higher cost, higher risk or lower quality than foreign steel suppliers.

  3. Enzo fable 2 years ago

    Why isnt the Minister responsible asking these questions?

    Will he be fronting Senate Estimates to answer the same questions? He should.

    • This is happening all the time and the worst offenders are state and federal government agencies. Any other country will give preference to local suppliers. The problem is the people that make these decisions are not impacted. They have a secured job and naive of the global market reality

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