"An initial $50 million capital investment will be made over the coming year," Mr Moore said. "In the 12 years after start-up, the project is expected to contribute $2.9 billion to Australia's GDP, up to $1.4 billion to our Balance of Payments, and create over 3,000 person-years of employment, primarily in regional South Australia. This is very good news," said Mr Moore.

"Kistler plans to use its two-stage, re-useable space launch vehicle - the K1 - to capture a share of the lucrative communications satellite launch market," Mr Moore said.

As the first, fully re-useable commercial launch vehicle, the K1 represents leading edge, cost-effective satellite launch technology. Both stages of the K1 return to the launch site at Woomera, landing safely with the assistance of parachutes and airbags. The vehicle is then reconditioned and can be re-used up to a hundred times. This presents major cost advantages over expendable launch vehicles.

The K1 currently is under construction in the United States, and Kistler expects to launch its first commercial payloads in 1999.

Kistler says it was attracted to Australia because of the availability of relevant infrastructure, and launch sites with overland flight paths in unpopulated areas. The company says Australia also won this major, long-term project because it was prepared to move efficiently to establish an appropriate regulatory regime which allowed Kistler to meet its operations schedule.

The Agreement was negotiated by the Department of Industry, Science and Tourism, which will regulate the space launch industry in Australia. The Department of Defence, which controls the Woomera Prohibited Area defence range, is also a partner to the Agreement.

The space launch project has already received the required environmental approvals and it is expected that all project approvals will be received in time to allow construction to begin at Woomera by mid-1998.