Gindlabie Metals says the timing of its Karara iron ore project will not be affected following the state budget's omission of an upgrade for the Perth to Geraldton transmission line.
Gindlabie Metals says the timing of its Karara iron ore project will not be affected following the state budget's omission of an upgrade for the Perth to Geraldton transmission line.
In last week's budget, the government did not allocate funds towards a proposed upgrade of the transmission line to 330 kilovolts (kV). The line will pass through Eneabba and then to Geraldton.
In an Open Briefing interview, Gindalbie managing director Garret Dixon said the omission will not impact on the Karara start up operation, which is a joint venture with China's AnSteel.
"Under our power solution for Karara, we have signed a 15-year supply deal with the State Government's power generation arm Verve Energy," said Mr Dixon.
"This contract will provide for our initial 10mtpa (million tonne per annum) start up plus go a long way towards the first of possible expansions to 16mtpa of iron ore production."
Gindalbie plans to build a 330kV line from Karara to Eneabba which will give the project capacity to expand to 30mtpa.
"Our current plans for that 330kV line still remain and we will simply connect into the power grid at Eneabba," Mr Dixon said.
"The existing power grid should be able to provide all the power we need for our 10mtpa start up, although we may need to look at having some temporary additional generation on site to cater for period of high demand from the power grid."
Mr Dixon added that the additional power generation will be an extra cost to the overall project, however it was "minimal in the scheme of things".
He said he was confident the proposed 330kV upgrade to Geraldton will happen, adding that it was a critical piece of infrastructure in the development of the Mid West.
"Given the current economic environment we are not surprised at the Government's decision to defer the upgrade, but we are confident it will go ahead and in a timeframe that suits our own plans to expand output at Karara."
Gindalbie is appealing against some recommendations handed down by the Environmental Protection Authority over the $1.8 billion Karara project.
The company said environmental approvals process should take around 16 weeks, in which case hematite production can start in the December half of 2010.
Gindalbie is still waiting on Chinese regulatory approval for AnSteel's $162 million share placement, with the Foreign Investment Review Board recently giving it the green light.
Shares in Gindalbie were down three cents to 68.5c at 12:59 AEST.
