THE state government has denied it has done a backflip over a planned cap on future iron ore exports from the Geraldton Port.
THE state government has denied it has done a backflip over a planned cap on future iron ore exports from the Geraldton Port.
However, it conceded that iron ore exports could exceed its proposed 12 million tonnes a year limit on a short-term basis while the $4 billion Oakajee deepwater port is built.
The concession comes after China-backed Asia Iron Holdings last week said it would start exports from its $2 billion Extension Hill magnetite development from 2012, following a $280 million cornerstone investment deal with a major Chinese investment group.
Under the Oakajee state development agreement signed in March, Premier Colin Barnett said iron ore exports from Geraldton would be capped at 12mt/year once the Oakajee port was operational in 2014.
The cap was established in order to promote maximum use of the Oakajee development, and to avoid the sort of problems afflicting the state's biggest iron ore gateway, Port Hedland.
But with existing producers Mt Gibson Iron and Crosslands Resources already shipping almost 5mt/year, and Gindalbie Metals also targeting a 2012 start-up for its $1.8 billion Karara magnetite venture, the cap left no room for Asia Iron's initial shipments.
Gindalbie and Asia Iron each plan to export around 10mt annually from their stage one projects, but have also pledged to study the use of Oakajee to expand their production.
In parliament last week, Mr Barnett conceded that the government had "relaxed the constraint to allow Asia Iron to use Geraldton port".
However, a government spokeswoman rejected opposition accusations of a backflip, and said the premier merely approved "transitional arrangements" to enable both Karara and Extension Hill to proceed while Oakajee was still under development.
“This may mean volumes through Geraldton Port exceed 12mtpa on a short-term basis,'' she said. ''Iron ore produced in stage 2 of the Extension Hill project will be railed directly to Oakajee."
In parliament, Mr Barnett said Geraldton port would never be able to handle the bigger capesize vessels needed to achieve large-scale exports from the Mid West.
Mr Barnett also suggested Asia Iron's plan to send ore to Geraldton via a slurry pipeline was "probably not the most economic way" of developing its project.
Gindalbie abandoned a similar plan two years ago in favour of rail, which allows a more flexible approach to expansion.
Geraldton Port Authority chief Peter Klein declined to comment on the matter as the authority had not yet received any formal advice from the government.
Mr Klein also confirmed that Asia Iron still had no formal agreements in place to stockpile ore at the port, but said he believed an agreement could be reached in time to meet the company's shipping target.
