Concerns still remain as Northern Water names site for $5bn desal plant

The South Australian government has identified a vast swath of land 20 kilometres south of Whyalla as the preferred site for its Northern Water project's proposed desalination plant.

The site, Mullaquana Station, was chosen as most suitable through a "multi-criteria" analysis comparing it and another potential location at Cape Hardy, on the eastern Eyre Peninsula.

The government also announced it had shortlisted two consortia of companies — WaterConnector and Watermark — to deliver the project and has requested both to file bids with design, operation and maintenance outlines.

The government said a final investment decision on those bids would come in the 2026-27 financial year, and has allocated more than $5 billion to get the project up.

The announcement represents a "major milestone" for the Northern Water project, which proposes constructing the plant on the Spencer Gulf and connecting it to a new water pipeline.

The pipeline would stretch 600km across the state, where it would boost BHP's water-intensive copper mining operations at Olympic Dam.

A $200 million pre-feasibility study — mostly funded by the state government and BHP — is still assessing the project, and a final decision on whether it will proceed is due next year.

'Massive' for Whyalla — if it happens

Premier Peter Malinauskas said the location was "potentially" monumental for Whyalla.

"[The] Whyalla steelworks could not only be saved, but be given the opportunity to thrive," Mr Malinauskas said.

"This new water supply is poised to become the next big opportunity for the Upper Spencer Gulf region."

Whyalla Mayor Phill Stone welcomed the news but was wary of the government's promises during the very early stages.

"This isn't saying it is going ahead, and it doesn't say construction is going to start," he said.

"It has to come up with the right business case, it must be feasible, sustainable, and that's still going to be a couple of years away.

"It certainly would revitalise [Whyalla] again … and economic opportunities will come out of this."

The state government said the project would support more than 4,000 jobs per year during construction and could create billions of dollars of investment in the region.

But the choice of Mullaquana has come with questions.

The government's initial preferred location was Cape Hardy, 200km south of Whyalla, a site endorsed by the Infrastructure SA report.

Environmental studies and stakeholder engagement found Cape Hardy offered "superior benefits" to three other assessed sites, including Mullaquana.

"This option [of Cape Hardy] is supported by research and analysis undertaken by [the South Australian Research and Development Institute] SARDI," the business case said.

"Cape Hardy offers advantages by lowering construction risks related to marine intake and outfall pipes."

But an agreement to purchase the land from a private company lapsed in April, although the government has maintained it was still on the table.

Asked why the government had selected a different site to the one identified by Infrastructure SA, which is a government agency, Mr Malinauskas said a range of factors were considered, including complex geotechnical works and environmental factors such as the "length of the pipelines for both inlets and discharge".

"One of the challenges with Cape Hardy is the [typography] informs the cost of the infrastructure," he said.

"When all these things are assessed in a lot of detail, the Mullaquana site comes up trumps and hence the decision that's been made."

Minister for energy and mining Tom Koutsantonis said the site was chosen for its proximity to Whyalla's "ready workforce", airport and infrastructure.

"It's also, of course, 200km closer to Olympic Dam than Cape Hardy, which saves a tremendous amount of money," Mr Koutsantonis said.

That money-saving decision was made in the wake of news that taxpayers may be footing billions in construction costs for much longer than was first anticipated when the project was announced.

The completion of the project has been gradually pushed back by at least three years, with the desalination plant and water pipeline now forecast to be operational by 2032.

The cost of the project will be initially covered by the state government but later fully recovered under long-term agreements with BHP and any other potential customers.

The government has previously said it would ensure taxpayers did not lose out due to project delays.

Environmental concerns

Elsewhere, the announcement also met with scrutiny, particularly regarding Mullaquana's nearness to the rare giant cuttlefish breeding grounds of the Upper Spencer Gulf.

Point Lowly, north-east of Whyalla, was a previous contender for a desalination plant but was scrapped when conservation groups flagged it could negatively impact giant cuttlefish breeding grounds.

At the time, in 2009, a bipartisan Environment Resources and Development Committee concluded in its final report that brine from the plant could cause serious damage to the marine ecosystem.

According to the report, evidence suggested the brine would not properly disperse as a result of the marine conditions in the Spencer Gulf.

Now more than a decade later, Mr Koutsantonis was quick to attenuate those concerns, pointing to the 40km distance between Point Lowly, where that report had focused on, and Mullaquana.

"I think it's far enough away from sensitive areas," he said.

"But look, there will always be people who are upset about desal plants — no matter where they are."

Mr Stone said there was sure to be investigation and research done in the coming years regarding the plant's potential environmental effects.

He said people would be looking at what the project would mean for the gulf.

"People immediately [are] assuming the gulf is going to be ruined, the fisheries will fail," he said.

"But we need to see the facts.

"There will obviously be a lot of environmental issues reports, studies, and we welcome all that for us to make that final decision."