INVESTORS behind the construction of a proposed abattoir situated near York have blamed rising costs and government red tape for the decision to put the project on hold.
Integrated Livestock Industries (ILI) said it waited three years to receive environmental approvals to build the abattoir. In the meantime the cost of construction went from $15m to $38m due to a rising dollar and increased fuel and steel prices.
The abattoir was expected to have the capacity to process 540,000 lambs a year.
ILI director Tony Boyle, on whose property the abattoir was to be located, said the group were also initially told they would have to pay $9m up front for a water licence to supply the abattoir.
Mr Boyle said negotiations to construct the abattoir began in 2005 and at the time the group estimated it would take 12 months to gain the required environmental approvals and then another 12 months to build the abattoir.
"Everything was in place to begin construction, but when we revisited the numbers ILI decided to hold back the money because of the economic circumstances," he said.
"The up-front water tax, which we were initially told would be as a high as $9m, decreasing stock numbers, increasing fuel and shipping costs and the labour shortage have all combined to blow the budget out.
"The rising Australian dollar is another big barrier.
When we first started planning this, the Australian dollar was sitting at 71c - this week it hit 96c."
Mr Boyle said he was frustrated with the delay in the approvals process because the abattoir should have been up and running by now.
"Three years is a long time to sit and wait and as we have seen a lot can change in that time," he said.
"Considering back in 2005 we were hoping to have the abattoir operating within two years, it is very frustrating. We could have had the abattoir operating before the squeeze began."
Mr Boyle said he was also surprised by how high the water license fee was.
"Originally we were told it would be $9m, but after much protesting and meeting with the Minister we were able to get it down to $2m, but it is still a significant cost that wasn't factored in to the original costings," he said.
Mr Boyle said ILI investors were looking at other investment opportunities.
"They can invest far more wisely in other ventures at the moment and get an immediate return rather than having to wait two years from when we get the go ahead.," he said.
"The whole project is being marketed overseas to see if some interested parties from countries such as Japan or China want to come in and take it on, especially now that the approvals process is finished."
Mr Boyle said there was a large amount of community support for the project.
"It is disappointing for the Shire of York, because it would have created 85-100 extra jobs and local farmers wanted it in place to bring extra competition to the marketplace," he said.
"There is definitely room for another abattoir in WA.
"Farmers may be selling off sheep at the moment, but fertiliser and fuel costs are taking the edge off cropping and there will be a swing into sheep in two or three years.
"Competition is required, particularly in the lamb industry."