Defending champion Dunaden will be racing in Australia for the last time in Tuesday's Melbourne Cup.

But his owner Sheikh Fahad al Thani has another Cup prospect primed and ready to take his place next year.

Sheikh Fahad said he expects Dunaden to win his second Melbourne Cup, despite having to start from barrier 16 and despite carrying a weight that no horse has won with since Rain Lover in 1969.

"He is a very special horse, one of the best I have seen," Sheikh Fahad said.

"On Tuesday he has some things against him, but I believe he can win, I believe he will win."

Dunaden has won each of his only three starts in Australia, the best of them his latest victory in last month's Caulfield Cup, for which he received a 1kg penalty.

In that race he came from the outside gate in the 18-horse field and on Tuesday he will jump from 16 of 24, three wider than in last year's narrow victory.

But neither the extra weight or the wide draw is of concern to his owner.

"He deserves the extra weight, he has earned it," he said.

"The barrier is of no concern at all, he needs cover and he will get it from there."

Sheikh Fahad, 23, has gained a reputation as one of the international racing world's most astute owners with stables in England, France and the United States.

He bought Dunaden after his father had acquired the horse as a lead pony to be used in training his Arabians.

Thanks to his three Australian successes and another in Hong Kong, he is now among the leading prizemoney winners in world racing.

Sheikh Fahad has applied his skill for identifying quality horseflesh to his search for a new Melbourne Cup horse to replace Dunaden.

"I have one for next year, but I am keeping his name quiet for now," he said.

"I can tell you I bought him last year and he is in training in England."

Dunaden is the second favourite for Tuesday's race behind 2010 winner Americain.