Grant to help establish Darkan leather tannery

13/1/94

The State Government will provide a grant of up to $215,000 to help a Western Australian company establish a new leather tannery at Darkan in the State's South-West.

Deputy Premier and Minister for Commerce and Trade Hendy Cowan said the grant - to Australian Leather Holdings Ltd - would boost significantly the chances of the project proceeding here rather than interstate.

Mr Cowan said the grant was consistent with the Government's policy of providing industry investment incentives and encouraging new industries to regional areas.

"It is exactly the sort of project that is required to generate jobs in regional areas of the State," he added.

Mr Cowan said the $5 million 'wet blue' (first stage of processing) tannery would help provide Western Australia with a fully integrated leather processing operation and, as such, represented a new industry for the State.

The grant recognised the extra infrastructure costs involved for the company in establishing the tannery operation in Darkan, as opposed to Perth or another identified site in Queensland.  These extra costs amounted to more than $600,000.

A substantial component of the high infrastructure costs was the relatively higher cost of power and water supplies in the country.

"It is unlikely the project would proceed without the incentive and will undoubtedly provide net benefits to the State," Mr Cowan said.

"It is a new industry which will be the only one of its kind in the State.  Therefore, it will not be competing with any existing local industry.

"It is anticipated that 30 new jobs will be created at the tannery itself, with another 15 jobs at the company's crusting facility at Hamilton Hill.  A further 50 people would be employed during the construction phase which, in turn, would generate additional jobs in the region.

"The project also represents downstream processing of a local primary product.

"The company will export half of its total production, with the other half being sent to Perth for further processing, replacing currently imported product.

"In addition, the company will be spending millions of dollars locally on land, buildings, plant and equipment."

Mr Cowan said a wet-blue tannery processing 240,000 hides per year would absorb about half of the State's total supply of hides from local abattoirs.  Currently, almost all bovine hides were dry salted and exported unprocessed.

He said the grant - $150,000 of which would be made available in the first year - would be offset by stamp duty and payroll tax subsequently collected from the company.

Media contact:  Peter Jackson 222 9595