02/03/2011 - 09:20

Barnett flags Oakajee ownership changes

02/03/2011 - 09:20

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Premier Colin Barnett has thrown the door open for a change in the ownership structure of the Oakajee Port & Rail development, after granting its proponents an extension until the end of the year to finalise their plans.

Barnett flags Oakajee ownership changes

Premier Colin Barnett has thrown the door open for a change in the ownership structure of the Oakajee Port & Rail development, after granting its proponents an extension until the end of the year to finalise their plans.

Conditions attached to the extension require the project proponents, Murchison Metals and Japan's Mitsubishi Corporation, to finalise all technical and financial studies, to enter into contracts with iron ore mines for the transport of the ore and to complete the approvals process by December 31.

The port is considered vital for the development of several mines in the Midwest, including Gindalbie's Karara, Sinosteel's Koolanooka and Murchison and Crossland Resources' Jack Hills.

The premier said he was confident the project would go ahead, but there may be some changes in the ownership structure of Oakajee Port & Rail in the near future.

"Oakajee Port & Rail has two partners, Mitsubishi, a world scale company and no one questions their capacity," Mr Barnett told reporters today.

"Murchison is a smaller Australian mining company which is also looking at contributing to its share of the infrastructure and also developing the Jack Hills mine which is in itself a very large project, so that stretches their capacity.

"I expect you might see some major balance sheet companies increase their participation either through Murchison or directly into OPR.

"A project that's going to run into perhaps $5 billion needs companies of the scale of the Mitsubishis of this world."

Mr Barnett said OPR would remain a major player in the project, but there was a distinct possibility for major Chinese investment in the port, considering most of the demand for the iron ore shipped from Oakajee stemmed from China.

"The Chinese companies are the buyers; I think you'll see some Chinese investment in the project

"The involvement of a few major players either directly or maybe through Murchison will add strength of the project.

"Bear in mind, if you look at it, you've got Sinosteel, a top 500 world company as one of the investors in the mine, similarly you've got Anchan iron and steel, one of the world's biggest steel producers involved in Gindalbie.

"So the Chinese are already there, they may also come formally into OPR in terms of the infrastructure.

The government's expectation is for construction to start in the first quarter of 2012 and the port to be operational by 2015.

"I just want to see the project get under way, there is no doubt the basic economics are sound," Mr Barnett said.

"If you take into account Gindalbie's Karara mine, they are already well into construction.

"Sinosteel also wants to go into construction, Jack Hills is probably a little bit behind, but it's a huge resource.

"The customers, mainly Chinese steel mills, are lining up to buy the iron ore, so the economics are there, the price is high, everyone wants to get on with it.

"I hope over these next few months all the final details will be resolved.

"This extension requires a commitment to proceed, there may even be some preliminary site works getting under way towards the end of this year."

Oakajee Port and Rail chief executive John Langoulant said the premier's decision to grant the extension removed any uncertainty that existed regarding OPR's authority to finalise the project arrangements.

"OPR appreciates the premier's recognition of the complexity of the project's development and his confirmation of reasonable timeframes for the development," Mr Langoulant said

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