CHI - Q2 Conversion Project Update

Wednesday 13th July 2022

Channel Infrastructure (CHI), New Zealand’s largest fuel import terminal business based at Marsden Point in Northland, has today released its quarterly conversion project update for the three months ended 30 June 2022 (Q2 FY22).

As announced at our Investor Day on 4 July 2022, key conversion project highlights for Q2 FY22 include:

• First quarter of terminal operations successfully completed with 19 import shipments received and discharged;

• Intensive 2-month refinery decommissioning works successfully completed in May;

• Significant workforce transition with over 70% of exiting employees having their next opportunity before leaving; and

• Conversion costs tracking to budget, with approximately $74 million spent to 30 June 2022.

CEO Naomi James said “We have successfully completed our first quarter of import terminal operations and following the opening up of New Zealand’s borders are seeing jet fuel demand starting to recover. The most complex and risky part of the conversion project with the transition from refinery to terminal operations is now behind us, and the project remains on-plan and to budget.”

Overall, the terminal supplied well over half a billion litres of product to the Auckland and Northland markets. Jet fuel throughput has increased significantly and is now sitting at around half of pre-COVID demand.

The highest risk phase of the project, being the refinery shutdown and intensive 2-month decommissioning works, was completed in May – safely, to schedule and budget. The focus for Q3 is on progressing the next phase of decommissioning works, terminal upgrade works (including changes to increase tanker unloading rates and commencing the first fire system and secondary containment upgrades) and continued private storage tank related works.

The extensive workforce transition program continues with significant workforce changes occurring through Q2, following the refinery shutdown and first phase of the decommissioning being completed. Channel Infrastructure is targeting for at least 90% of employees securing a job or retraining within 6 months of leaving, and this is on-track with over 70% having their next opportunity secured before leaving.

Conversion costs are tracking to plan with $73 million spent to 30 June 2022 (31 March 2022: $20 million). The conversion spend, partly offset with positive cash flows from terminal operations, resulted in an increase in net borrowings from $173 million as at 31 March 2022 to $215 million as at 30 June 2022.

- ENDS -

2022 Q2 Conversion Project Update

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