Muchke Bay Seaport Transportation Complex

Sakha Transportation Company (STK) planned the development of a new seaport transportation complex on the northern shore of Muchke Bay, located approximately 5km northeast of Vanino in the Khabarovsk region of Russia. The complex was expected to comprise an export terminal for handling coal and iron ore and a container terminal, and may also include the development of vessel fuel bunkering capability on the same site.

WSP was commissioned to perform a pre-feasibility study of the proposed project to assist STK with soliciting investors. The principal goal of the study was to provide an analysis and evaluation of the prospective operations and potential financial performance associated with the anticipated phased development. The study primarily included:

• Identification of facility requirements

• Facility planning

• Financial feasibility analysis

The dry bulk terminal was anticipated to be developed in a three phased approach with a total capital expenditure at full build-out of approximately US$850 million.
The primary study results were provided to STK in April 2011, confirming the financial feasibility of the proposed development of the dry bulk terminal and potentially the container terminal (depending on the realization of potential market size). Based on the analyses laid out in the Study report, EBITDA margins are expected to be on the order of 75% to 80%, and the internal rate of return (IRR) is expected to be approximately 15% to 20%.

STK eventually used the results of the study to promote the project and sell their majority share of the project and the 100 year lease on the site.

Using PRIME, WSP’s proprietary in house suite of marine terminal throughput capacity, cost estimating (OpEx and CapEx), and financial performance models, we analyzed the financial rate of return of the project using an integrated approach to marine terminal planning.

Our services included:

• Market Analysis (Dry Bulk & Containerized Lumber)

• Dry Bulk Export Facility Planning

• Container Export Facility Planning

• Operating Strategy Analysis

• OpEx and CapEx Schedule Estimations

• Financial Feasibility/IRR Analysis

This approach helped us deliver the following:

• We identified the most efficient and optimum terminal configuration for a coal export facility on the site

• Capital and operating expenditures were estimated for the optimized terminal layout

• The internal rate of return for the project was identified at a favorable level of 15% to 20%.

• Identified the primary project risks related to competition, Trans-Siberian rail service, and site access for utilities and staffing.