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SACOME Joint Electricity Purchasing Group awards long-term supply contract to Sanjeev Gupta’s SIMEC ZEN Energy

The South Australian Chamber of Mines and Energy (SACOME) has today [June 8 2018] awarded an eight-year electricity supply contract to renewable energy retailer SIMEC ZEN Energy, part of Sanjeev Gupta’s GFG Alliance, to significantly bring down the cost of electricity for their members.

  • SIMEC ZEN Energy has been awarded SACOME Joint Purchasing Electricity Buyers’ Group contract
  • Significant cost savings across the buyers’ group
  • Supports new dispatchable renewable energy generation to replace the Northern Power Station

The contract represents a successful outcome for the bulk-buying consortium masterminded by SACOME for its members in 2016, in the face of soaring energy costs and supply reliability concerns in the state.

Sanjeev Gupta, Chairman of SIMEC ZEN Energy, said,

“This outcome demonstrates what can be achieved when businesses decide as a collective that the status quo is not acceptable

“Ultimately what is needed to fix the energy market in this state is more competition in wholesale generation and retailing – this result delivers both.

“While delivering SACOME members with electricity at a price below what could be achieved through a standard market tender, this contract also allows SIMEC ZEN Energy to fast track our own plans to replace the capacity lost when the Northern Power Station closed two years ago.

“This capacity will be a mix of generation assets suited to the new energy landscape, such as the Cultana Solar Power Station and our other projects in the Upper Spencer Gulf.

“The contract also continues the recent successes of SIMEC ZEN Energy – adding to the South Australian Government awarding us its electricity supply contract in late 2017 – as we continue to look for other large energy users to add to our portfolio.” Mr Gupta said.

South Australia has the most volatile and expensive wholesale electricity market in Australia and is one of the most expensive electricity markets in the developed world. This agreement brings electricity prices down significantly for members of the SACOME group. This is a landmark deal – a first of its kind- and is expected to inspire a host of similar initiatives across the country.

The SACOME bulk buying consortium arose out of discussions amongst its members on how to respond to the doubling in electricity costs experienced after the closure of the Northern Power Station. This consortia approach made sense; by aggregating load, members improved their individual bargaining position. The platform provided an aggregated and definite load, enabling SIMEC ZEN to back this demand with its anticipated new renewable power generation, hence making it possible to offer lower pricing.

With electricity representing up to 40 percent of input costs for members of the group, the redistribution of these savings will flow through to new investment opportunities for the South Australian economy.

SACOME CEO Rebecca Knol said,

“This cross-sectoral collaboration has delivered affordable power to some of South Australia’s largest energy users and underpinned the development of new supply for the collective benefit of State.

“Following the Australian Competition and Consumer Commission’s (ACCC) green light in May 2017, SACOME’s flagship joint-purchasing electricity group banded together to leverage their strength in numbers and bring down electricity prices for their businesses.

“Following the Australian Competition and Consumer Commission’s (ACCC) green light in May 2017, SACOME’s flagship joint-purchasing electricity group banded together to leverage their strength in numbers and bring down electricity prices for their businesses,” Ms Knol said.

“The group’s approach to this complex commercial negotiation in a fast-changing electricity environment has been inspirational. The outcome is a credit to the stamina and commitment of our participating members* who represent a diverse slice of South Australian business,” said Mrs Knol.

The Members Of The Joint Purchasing Agreement

 

Viterra operates a storage and handling network spanning key growing regions in South Australia and western Victoria with a total storage capacity of over 10 million tonnes. The network includes upcountry sites, strategically located port terminals and container packing facilities providing an efficient and reliable supply chain to meet the needs of our grower, domestic user and export customers. Our facilities service more than 5,000 grower customers with around 40 buyers purchasing grain directly from growers through the Viterra system. With nearly 800 permanent employees and up to 2,000 additional employees during harvest, predominantly in regional areas; we are a major employer in South Australia.

Tim Krause, General Manager said,

“Being able to secure electricity pricing for the next eight years is extremely beneficial. Having certainty of pricing for one of our single largest costs allows us to confidently operate in our business and connect our 5000 grower customers across South Australia with domestic and international markets, benefiting our customers and South Australia more broadly.”

Central Irrigation Trust is the largest irrigation infrastructure operator in South Australia, managing and operating twelve grower owned irrigation districts servicing a total area in excess of 14,000 hectares. Water is sourced from the River Murray and delivered through pressurised pipeline systems to nearly 1,200 irrigation customers producing predominantly wine grapes, citrus, nuts, and stone fruit. Water is also supplied to more than 3,500 household and industry customers.

Gavin McMahon, CEO said,

“We are pleased to be able to pass on considerable reductions in electricity costs over the long term, supporting our customers as they compete in both domestic and international markets with their produce.”

Hillgrove Resources Limited is an Australian mining company listed on ASX focused on developing its flagship Kanmantoo Copper Mine and associated regional exploration targets, located less than 55km from Adelaide in South Australia. Hillgrove employs approximately 245 employees and contractors and is presently mining at the rate of approximately 20 million tonnes per annum and produces up to 24,000 tonnes of copper per annum. Annual export earnings are in a range of $140 million to $220 million per annum.

Steven McClare, CEO and Managing Director said,

“Hillgrove is pleased with the SACOME electricity consortia outcome that provides electricity purchase security during unforgiving price peaks. This stability enhances the role that Hillgrove can play in growing South Australia’s cooper production.”

Both local and independent, Foodland Supermarkets have been servicing South Australians for over 50 years.

With 123 stores and employing over 9,000 South Australians, Foodland has established itself as an iconic brand in the South Australian retail sector.

Foodland Supermarkets retail market share is 26%, which is the highest state market share for independent supermarket operators in Australia. With a 96% SA awareness rate, Foodland has a strong presence in the South Australian business sector.

Con Sciacca, CEO said,

“As the Mighty South Aussies, we are pleased to be joining other South Australian organisations in having the opportunity to save on our electricity bill. A household name, Foodland employs thousands of South Australians across the state. This opportunity enhances the sustainability of our brand in an ever-increasing competitive landscape.”

Adchem (Australia) Pty Ltd operates the world’s largest combined production facility for Black Copper Oxide (Cupric Oxide) and Basic Copper Carbonate.

These high purity chemicals are manufactured at the company’s processing plant for supply to global markets.

Managing Director, Mark Woodhead said,

“Electricity costs are a substantial portion of our total cost to manufacture value-added copper chemicals on a large scale. This contract represents a positive long-term outcome to secure electricity supply at a competitive price.”

The South Australian Chamber of Mines and Energy (SACOME) is the leading industry body representing the resources sector in South Australia.

SACOME facilitates opportunity, drives debate and advocates on behalf of its members; to ensure that the inextricable link between the sector and the state’s future prosperity remains front and centre.

 

SIMEC ZEN Energy is a new electricity retailer in the National Energy Market (the ‘NEM’) committed to delivering affordable, sustainable energy solutions to its customers. In late 2017 it was awarded a contract to supply all of the South Australian Government’s electricity requirements.

The company, which is part of the global energy, metals, engineering and financial services group the GFG Alliance owned by Sanjeev Gupta, aims to lower electricity prices by using new technologies and Australia’s exceptionally high-quality renewable energy resources. The company supplies energy to GFG’s rapidly growing portfolio of mining, metals and industrial companies, as well as the broader customer market.

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