21/10/2019 - 15:53

Hype dampened over $9bn Oakajee project

21/10/2019 - 15:53

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Minister for Ports and Regional Development Alannah MacTiernan says a multi-billion dollar Oakajee port and rail project is unnecessary and Sinosteel’s Midwest general manger said there were no guarantees the company would push ahead with the project.

Hype dampened over $9bn Oakajee project
Alannah Mactiernan says the government does not think the Oakajee is necessary.

Ports and Regional Development Minister Alannah MacTiernan says a multi-billion dollar Oakajee port and rail project is unnecessary, while and Sinosteel’s Midwest general manger says there is no guarantee the company will push ahead with the project.

The Australian Financial Review reported this morning that Sinosteel acquired Mitsubishi Corporation's interests in the long-stalled port and rail project for a peppercorn price.

It said the company would seek to revive the $9.7 billion mining rail and port development.

However, while Ms MacTiernan said China-based Sinosteel’s acquisition was positive and the state government welcomed any expansion in the iron ore industry in the Mid West, she did not throw her support behind the project.

“The cost of the full Oakajee rail and port plan would seem prohibitive for a commercial enterprise – it is estimated at around $9 billion,” Ms MacTiernan told Business News.

“We do not see the Oakajee port and rail development as necessary for an expansion of iron ore exports in the region.

“There is plenty of room to grow at Geraldton port - the recently released draft port master plan indicates the port can grow to 50 million tonnes per annum from its current 16mtpa.”

In light of Ms MacTiernan’s comments, Sinosteel general manger Stuart Griffiths told Business News the company could not rule out alternative options to Oakajee.

“Every option will be looked at to develop the resources in the Midwest, we will work with the government to come up with a plan,” Mr Griffiths said.

He said the company would undertake a detailed review to assess the viability Oakajee, but could not put a timeline on when that review would be released or its contents.

“We still don’t even have all the data yet from the two companies we took over,” he said.

Sinosteel acquired the Midwest Corporation in $1 billion for 2008, a deal that did not prove fruitful for the China-based company.

In 2011, it suspended works on its $2 billion Weld Range iron ore mining project due to setbacks in development of the Oakajee port and rail line.

Sinosteel said further delays beyond a revised completion date of 2015 would cost the company’s Australian unit $100 million per year.

In 2018, ASX-listed AustSino Resources Group flagged the possibility of a $100 million investment at Oakajee, but this did not materialise.

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