16/04/2014 - 12:24

Clear path for CITIC at Oakajee

16/04/2014 - 12:24

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Finally, after decades of dithering and empty promises there is hope the ambitious Oakajee port and rail plan in the Mid West will move beyond the drawing board, not that there will be a ground-breaking ceremony for a few more years.

Clear path for CITIC at Oakajee
Padbury Mining is aiming to build a deepwater port north of Geraldton, at the same location favoured by Oakajee Port & Rail. (Picture courtesy of OPR)

Finally, after decades of dithering and empty promises there is hope the ambitious Oakajee port and rail plan in the Mid West will move beyond the drawing board, not that there will be a ground-breaking ceremony for a few more years.

China’s involvement through CITIC Group, the same company that has struggled to develop the Sino Iron project near Karratha, should be the key to unlock a stalemate, which has had as much to do with politics as demand for iron ore.

What’s needed now is for the Western Australian Government to quickly clear the way for CITIC to get on with the job at Oakajee and that means burying the past and shoving the latest pretender, Padbury Mining, out of the way.

Given clear air and appropriate government support, CITIC should be able to deliver a prize project for WA, which will bring overdue benefits to Geraldton and the small farming and mining communities that dot the Mid West.

The key reason for optimism about Oakajee after the project’s multiple false starts, is that this time it has actually attracted the attention of a company with the financial firepower to make it happen, as well as being a company, which will have learned from its past mistakes.

CITIC’s monumental blunders at the Sino Iron project will have prepared it for the challenge of making engineering and financial sense out of Oakajee.

But, the most important asset CITIC brings to Oakajee is the involvement of a company (and country) which has the capacity to deliver.

Previous proponents of Oakajee have lacked most of the necessary requirements to successfully develop a major mine, port and rail project, being deficient in capital, organisational and technical skills and an ability to pick the right partners.

Kingstream Mining, the company which championed Oakajee in the 1990s, failed on many levels. Not only was it relatively small and lacked financial punch but it became politicised on two levels.

Locally, Kingstream was closely associated with the Court family with its chairman, Ken, the son of one former premier (Sir Charles) and brother of another (Richard).

Internationally, Kingstream chose a struggling Taiwanese steel maker, An Feng, as a partner, a company which could never deliver on its promises – and did not.

Oakajee Mark II suffered a similar fate, this time with another small Australian company, Murchison Metals teaming up with Japanese partners, a decision which triggered a Chinese walkout, an event which surprised Australian financiers and engineers but not historians who understand the deep animosity between the two Asian countries.

Now, finally, there is a company (and country) involved with the capability of turning a concept into reality because CITIC does know how to build and fund projects.

It has the battle scars from the Sino Iron project attached to its credentials, which, perversely, add confidence to the belief it will get it right this time around.

Details, always the devil in a deal, will need to be resolved by Premier Colin Barnett, who was never happy with the original Kingstream proposal and annoyed when the Murchison deal with Japan’s Mitsubishi fell over.

As a priority, the premier needs to get Padbury out of the way because the last thing Oakajee needs is another small Australian company muddying the waters of a big deal in the way Kingstream and Murchison did in previous attempts to launch the port and rail plan.

The next job for Mr Barnett will be to finalise a State Agreement with CITIC over Oakajee, which encourages (but does not demand) Australian involvement in the port and rail infrastructure.

When the structure is finalised, a third job for the premier will be to get the many existing and potential iron ore producers active in the Mid West to join the party, a job that will start by demanding that old ambitions be dropped and a new cooperative approach be adopted, a challenge straight from the book titled “Herding cats”.

For too long Oakajee has been a plaything of people who can see the prize of a major port development on the Mid West coast but who also lack the skills, contacts and financial muscle to deliver.

This time around, assuming the past can be buried, Oakajee should become a reality.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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