Council awards Buildev Group company sand-mining lease against advice of staff

admin | 杭州桑拿
7 May 2019

Port Stephens mayor Bruce MacKenzie. PORT Stephens councillors awarded a sandmining lease over council land to a Buildev Group company against the advice of council staff and an independent expert, who recommended that it go to another company with decades’ more experience.
Shanghai night field

Castle Quarry Products, which was unveiled this year as the Newcastle Jets’ new naming rights sponsor, was issued the lease in 2013 to mine up to 6million tonnes of sand from the 175-hectare Cabbage Tree Road, Williamtown property, amid widespread publicity about the mounting financial woes of other Buildev Group companies and major shareholder Nathan Tinkler.

Criticisms have since been levelled at mayor Bruce MacKenzie for taking part in confidential council deliberations on the matter within a day of his own family sand supply company, Macka’s Sand, withdrawing from the tender process for the lease.

The issuing of the lease also followed council investigations and legal proceedings in 2009 over alleged unauthorised sandmining by another Buildev company, Buildev Properties, at Fullerton Cove.

The Newcastle Herald can reveal the proceedings were dismissed by consent, with Buildev Properties required to pay the council’s legal costs under the settlement.

But it would not agree to pay about $80,000 – the amount that the council estimated the company made from the alleged mining – into a community trust fund, as was sought by the council.

Cr MacKenzie was among councillors to back Castle Quarry Products for the Williamtown lease during a confidential vote in April 2013, because the financial return to council stood to be far more lucrative, he said.

He told the Herald that council staff got it ‘‘absolutely wrong’’ in recommending the lease go to M.Collins & Sons and had given the advice as ‘‘they were fearful of any involvement by Nathan Tinkler’’.

‘‘I wasn’t,’’ Cr MacKenzie said.

Sensing an opportunity for big earnings, the council called for tenders to mine the sand at Williamtown in 2012. It received nine responses and hired an independent specialist to help evaluate them.

According to council documents, M.Collins & Sons was unanimously recommended in February 2013 as the preferred tenderer as it had the highest overall rating against criteria that included royalties and base rent to the council, previous experience, management and technical resources and capabilities.

Councillors were advised Sydney-based Collins ‘‘has been in operation since 1975’’.

Castle Quarry Products, which company records show was registered in late 2010, had the better prices but had not satisfied tender documentation requirements.

But a majority of councillors opted to terminate the tender process on February 12, a day after councillors received a memo that Cr MacKenzie’s family company had withdrawn.

The details remain under wraps and the council has refused to release its tender evaluations, but acting corporate services group manager Carmel Foster cited ‘‘confusion’’ over the different price structures that made the tenders difficult to compare.

Castle Quarry Products and Collins were invited to give presentations to councillors.

Collins upped the royalty payment it was offering but this was still lower than Castle Quarry Products, which had increased its own prices to include annual CPI rises, according to the council.

Ms Foster said all pricing information was kept ‘‘strictly confidential’’.

Councillors voted for Castle Quarry Products in April after being advised again to accept Collins, although Cr Geoff Dingle and Cr John Nell sought to have the meeting open to the public.

Lease conditions included that the council retained intellectual property rights over documents prepared in order to obtain project approvals.

In July that year, Castle Quarry Products deposited $250,000 into a bank account as security.

Ms Foster said the deal was expected to raise more than $20million for the council – about 27per cent more than if Collins had been selected.

Nearly three years on, the mining has yet to start.

The council said the project remained on track, although advice to councillors shows the company was permitted ‘‘to delay progress’’ of an environmental impact statement because of bushfires on the site last year.

Castle Quarry Products is housed at Fullerton Cove – the same site of the alleged unauthorised mining in 2009 – where it operates another sandmine. The property is owned by a third Buildev company, BD (NSW) J001.

The site’s future is unclear, with the Herald revealing in July that receivers had been appointed to BD (NSW) J001.

Buildev co-founder Darren Williams remains a director of Castle Quarry Products, but Tinkler associate Troy Palmer pulled out in August, amid the Independent Commission Against Corruption hearings into Buildev’s and Mr Tinkler’s secret political donations and lobbying.

Cr MacKenzie told the Herald he was not afraid to justify the deal ‘‘in any setting’’ and he was ‘‘prepared to take the risk’’ for a higher return.

But Cr Dingle said ‘‘two years down the track, they haven’t even done the [environmental impact statement]’’.

Calls to Buildev were not returned.

Comments are closed.