29/07/2008 - 15:33

Govt cautious after Oakajee decision

29/07/2008 - 15:33

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Planning and Infrastructure Minister Alannah MacTiernan has cautioned that the development of the $2 billion Oakajee port and associated rail infrastructure is some time away, after today selecting Oakajee Port and Rail Pty Ltd as the preferred bidder.

Planning and Infrastructure Minister Alannah MacTiernan has cautioned that the development of the $2 billion Oakajee port and associated rail infrastructure is some time away, after today selecting Oakajee Port and Rail Pty Ltd as the preferred bidder.

Premier Alan Carpenter announced today that OPR, an equal joint venture between Murchison Metals Ltd and Japan's Mitsubishi Corporation, had been selected as preferred proponent for the development of the deepwater port north of Geraldton.

Earlier this year the government officially opened up a tender process in what would be a two-horse race between OPR and the Midwest Corporation Ltd and China-backed Yilgarn Infrastructure Ltd.

A new port at Oakajee has been mooted for well over a decade and is needed to transport product from proposed iron ore mines in the Mid West to market.

It offers a solution for exporters frustrated by congestion at Geraldton Port.

"Financing of both proposals was conditional on confirmation of project feasibility - so there is some way to go before there is a clear green light for the project," Ms MacTiernan said.

"Further, the mining companies that would be the foundation customers for the project still needed to prove-up their resources and agree to 'take-or-pay', or similar arrangements sufficient to underpin the investment in port and transport infrastructure.

"Oakajee Port's prospects will strengthen if the mining companies can find a way to work together.

"But clearly, selection of a preferred respondent is another important step towards realisation of the dream for a deep water port in the Mid-West."

OPR chief executive Christopher Eves said the company will now negotiate with the government over the next six months over the details and terms of the development agreement.

"Shortly following government negotiations we'll be concluding relationships with contractors and the consultant team and the main group and we're looking to get to financial close on the project within about 12 months time and then commence construction as soon as possible," Mr Eves said.

"We still have to get in place all the necessary environmental approvals and construction will take a bit over two, two-and-a-half years.

"We're anticipating that [construction] will probably be in about 18 months time."

Yilgarn said it will be reviewing the government's decision and its implications.

The Geraldton Iron Ore Alliance said the development of the Oakajee port will not only help to cement the future of the iron ore industry, but also has the capacity to attract other industries to the region.

"The development of key infrastructure in the Mid West, such as Oakajee Port, is critical to the development of the region," GIOA chairman Clive Brown said.

"Timing is important. Delays in constructing the port could lead to delays in the development of some the Alliance members' projects."

A report commissioned by the alliance last year estimated that development of the Mid West iron ore industry has the potential to provide more than 1300 jobs during the construction stage and over 4000 jobs during the suggested operation stage of 25 years.

The report also estimated that construction expenditure of $5.5billion will generate a further $13billion of expenditure elsewhere in the State.

The Oakajee port could become operational as early as 2012.

The top four Australian banks and five international banks including HSBC will provide debt financing for the port project.

Engineering and construction company Thiess will build the port, P&O Automotive and General Stevedoring Pty Ltd will handle materials at the port and Australian Railroad Group will operate the rail line.


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