Major projects mark milestones

FOUR major resource and infrastructure projects have reached notable milestones this week, signalling the positive outlook for the Western Australian economy.

The $29 billion Wheatstone gas development and the $3 billion Extension Hill iron ore project in the Mid West were both due to have official ground breaking ceremonies on Friday.

This followed a recommendation by the Environmental Protection Authority earlier this week that work should proceed on the South West Creek port facility at Port Hedland.

And it followed Mitsubishi’s offer to pay a surprisingly large $325 million for Murchison Metals’ 50 per cent stake in infrastructure company Oakajee Port & Rail and the associated Jack Hills mine in the Mid West.

Premier Colin Barnett was due to fly to Onslow to mark the official start of work at Wheatstone, which is jointly owned by Chevron (74 per cent) along with Apache, Kufpec and Shell.

The Wheatstone development progressed quickly and smoothly through the approvals process, culminating in a final investment decision in September.

The development is set to transform the Onslow region, including the establishment of an accommodation camp for 4,300 construction workers.

Wheatstone is Chevron’s second gas development in WA, in addition to its majority owned Gorgon development.

Extension Hill is another major development that has progressed through the approvals process without much fanfare.

It is majority owned by Chinese joint venture Chongqing Chonggang Minerals Development, which paid $260 million last year to acquire a 60 per cent interest in Asia Iron Australia from Hong Kong trading house SINOM Investments.

A delegation from the city of Chongqing was in Perth this week before heading to the project site east of Perenjori for the ground breaking.

Asia Iron Australia director Bill Mackenzie expressed confidence the project would proceed, with nearly all approvals in place and engineers WorleyParsons close to completing an implementation study.

He acknowledged the project still faced some hurdles, most notably a requirement for Western Power to upgrade the transmission line from Perth to Eneabba.

“The power line will be built, it’s just the regulatory process is very difficult,” Mr Mackenzie told WA Business News in reference to a recent adverse ruling from the Economic Regulation Authority.

Mr Mackenzie said the first stage of the project would produce 10 million tonnes of magnetite concentrate, for export through the port of Geraldton.

That would put it on a par with the neighbouring Karara project, currently under construction.

Jointly owned by Gindalbie Metals and Chinese steel producer Ansteel, Karara is at the peak of construction, with a workforce of 2,000 on site.

Karara is also investing in upgraded railways and new port facilities at Geraldton, which the company says can support 16mt of exports per year.

Further growth in Mid West iron ore exports will be dependent on Mitsubishi, assuming it completes the purchase of Murchison’s half share in the Oakajee port project.

Mitsubishi has not signalled its intentions but the consensus is that it will seek to sell equity in the project to Chinese partners.

The port constraints in the Mid West are mirrored in the Pilbara, where several miners are planning port developments.

Atlas Iron and Brockman Resources have port allocations at South West Creek, which has a planned capacity of 50mtpa, supported by rail loops and conveyors.

Separately, Hancock Prospecting is planning its own wharf development at SW Creek to support its Roy Hill mine. Hancock has started dredging at its site.