The state government is expected to formally approve the $3.5 billion Oakajee port and rail project that is vital to mining developments in the Mid West region.

Premier Colin Barnett will sign a development agreement on Friday with the Oakajee Port & Rail (OPR) consortium, which has been selected to construct the long-mooted port and associated facilities.

It has been estimated the port and rail infrastructure could be operating by late 2012, supporting new iron ore mining projects proposed by Gindalbie Metals, Murchison Metals and Sintosteel subsidiay Midwest Corporation.

OPR chief executive Chris Eves said at a PricewaterhouseCooper's breakfast this week that the signing of the formal agreement was "imminent".

The infrastructure, which has been on the drawing board for decades, is crucial to the development and expansion of a number of iron ore mines in the region.

Mr Barnett has identified the project as essential infrastructure for the development of the state and has proposed a funding contribution of $339 million towards its construction.

He said the WA government would seek matching funding from the federal government's Infrastructure Australia fund to alleviate some concerns about future financing for the project. The final list of projects to receive funding from the fund will be announced at the end of this month.

OPR, which is a joint venture between iron ore miner Murchison Metals and Japan's Mitsubishi Development, won a tender in July 2008 to develop the infrastructure, beating Chinese-backed private outfit Yilgarn Infrastructure.