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The news came after the Queensland government initiated discussions with users in a bid to decide the project's funding options.
The Connors River dam project, being proposed by SunWater, will include a 136km-long large diameter buried pipeline that will carry around 45,000 megalitres of water to the Bowen Basin and surrounding areas.
Importantly, the dam will serve mining companies who have proposed projects in the emerging Galilee Basin, which lacks a water supply.
The project would therefore help the increasing water supply reliability and security needs of the region’s resource sector.
Back in October, John Holland was named the preferred tenderer for the project and was expected to be confirmed as the principal contractor when the final investment decision is made by SunWater’s board next year.
However, information obtained by ILN confirms the state government has begun discussions with potential users to fund the $1.2 billion project.
The government commenced discussions after an investigation into a “commercial-in-confidence” report.
“The investigation has resulted in government engaging with users to discuss user-funding options to support the development of the project,” acting Treasurer Rachel Nolan said.
If approved, the dam could create up to 600 construction jobs and eight operational jobs.
Construction of the dam could begin in 2012, while completion for the project is expected in 2014.