Midwest Corporation Ltd is facing a crisis on two fronts, with the state government turning up the attack on its disputed state agreement and refusing to provide a long-term extension to its iron ore trucking arrangements, which could force it to halt exp
Midwest Corporation Ltd is facing a crisis on two fronts, with the state government turning up the attack on its disputed state agreement and refusing to provide a long-term extension to its iron ore trucking arrangements, which could force it to halt exports.
The company currently operates a small iron ore mine in the Mid West and trucks the ore by road to Geraldton, but is seeking to transfer this haulage to an existing railway line.
In addition, the company plans to develop a much larger iron ore mine, which would require a completely new railway and a port at Oakajee north of Geraldton.
The company achieved some progress on the former matter today after what a spokesman called a "most constructive" meeting with planning and infrastructure minister Alannah MacTiernan.
The company announced this morning that the minister had written to it, indicating that she would not grant its request for an extension to its trucking permit beyond this weekend. Its current permit expires on Saturday 29th September.
It has been working for more than a year to shift the ore haulage to rail, at the insistence of Ms MacTiernan, but says it has been delayed by issues related to environmental approvals and landholder agreements.
At today's meeting, the minister granted the company an extension to 20 October.
Ms MacTiernan told WA Business News that the company "needs to come back with evidence I require as to their ability to meet a new deadline".
She noted that ther original approval for the project was on the basis that ore would be transported by rail, and the company under its former management unilaterally chose to switch to road transport.
Ms McTiernan said the company had already been granted three etxensions to her original deadline for switching to rail.
"We have bent over backwards to accomodate them."
In response to the company's claim that the latest delays were due to factors outside its control, she said: "Its all a question of how hard you try. There are ways you could achieve the environmental approvals".
Separately, state development minister Eric Ripper has continued his attack on the company's state agreement, which Midwest has claimed provides a valid and appropriate mechanism to develop new port and rail infrastructure in the Mid West.
Midwest is aligned with the China-backed Yilgarn Infrastructure, which is competing against a Murchison Metals - Mitsubishi Corporation joint venture to developer the new infrastructure, at a cost of up to $3 billion.
Mr Ripper said the government "has always honoured and will continue to honour State Agreements".
"The State Government considers it is bound by the terms of State Agreement Acts however where an agreement has been stranded by history the Government is not bound to renegotiate it," Mr Ripper said.
"The State's position hasn't changed since the 30th January 1998, when the State (through Colin Barnett as minister responsible for State Agreements) entered into an agreement with Midwest's predecessor (Kingstream) for termination of the State Agreement."
Mr Barnett did not implement that decision.
Midwest has repeatedly stated that the agreement was renewed in 2003, but Mr Ripper said this was "a complete furphy".
"In 2003 the Government extended the rights of occupancy to the Temporary Reserve for 5 years to November 2008. This administrative procedure was to enable Midwest Corporation to retain the right of occupancy of the land within TR 3902H. This was not a renewal, extension or variation of the State Agreement."
Pasted below are two statements from Midwest Corp and Mr Ripper's ministerial statement:
RESPONSE TO MINISTERIAL STATEMENT - MIDWEST'S STATE AGREEMENT ACT
Midwest Corporation Limited (ASX:MIS) notes the Statement to Parliament today by the Minister for State Development Eric Ripper about Midwest's State Agreement Act.
Midwest re-asserts that it has a valid State Agreement Act in place that provides simplicity, clarity, workability and certainty for the timely development of the Mid West iron ore province.
Midwest has received advice from Queen's Counsel that the State Agreement Act is on-foot and valid. The Company is of the opinion that the State Agreement Act provides a sound basis to develop an independent, multi-user and open access port and rail infrastructure network in the Mid West.
The company continues to seek a meeting with the Minister for State Development to clarify its position and provide the Government with the benefit of the advice it has received.
Road to Rail
Midwest Corporation Limited ("Midwest") is seeking an urgent meeting with the Western Australian Minister for Planning and Infrastructure, Alannah MacTiernan, following receipt of a letter today from the Minister indicating that she will not grant the Company's request for an extension to the company's permit to haul its ore by road from the Koolanooka stockpile to Geraldton until a number of issues are resolved.
The present authority to haul by road expires at midnight on Saturday 29th September 2007.
In May 2007 Midwest requested from the Minister an extension of time in which to move the transport of its ore from road to rail due to circumstances beyond the Company's control.
Since May, Midwest has continued to diligently progress the move to rail with more than $7M spent on the process, including the purchase and delivery of rail wagons and railway materials and efforts to arrange suitable rail siding approvals. The remaining issues relate to Government approvals and landholder agreements.
Midwest is assessing its options in addressing the Minister's requests and will advise the market of the outcome of its discussions with the Minister's office and the implications for Midwest's shareholders, employees, customers and suppliers.
STATEMENT TO PARLIAMENT: IRON ORE (MURCHISON) AGREEMENT AUTHORISATION ACT 1973
The purpose of my statement today is to explain to the Parliament why the Government does not support the use of the Iron Ore (Murchison) Agreement Authorisation Act 1973 (the "Murchison Agreement"), to develop rail and port infrastructure to service the emerging Mid West iron ore industry.
The State Government considers it is bound by the terms of State Agreement Acts however where an agreement has been stranded by history the Government is not bound to renegotiate it.
The Government would also expect other parties to agreements to abide strictly by their obligations.
In 1973 the State negotiated the Murchison Agreement for the exploration and development and treatment of iron ore from Weld Range.
Midwest Corporation has advised the State that it wishes to use this Agreement to develop rail and port infrastructure in the Mid West but the company has also acknowledged that the Murchison Agreement cannot be used without being amended.
The Premier and I have informed Midwest Corporation, that the State does not consider the Murchison Agreement, in its current form, to be a suitable vehicle for this development. There are a number of reasons for this some of which include the following;
First, the Agreement is a package of rights and obligations for the development of a specific, integrated project comprising an iron ore mine, railway and port and, ultimately, secondary processing facilities, including potentially, a steel mill.
Secondly, over 90 per cent of the area of the tenements held under the Agreement have been relinquished leaving only about 30 km2. It is not clear that this amount of land is sufficient to support the integrated project.
Thirdly, the Agreement obliges the State to grant title in the form of a mining lease under the 1904 Mining Act. The 1904 Mining Act has been repealed.
Fourthly, the Agreement creates obligations for the State Electricity Commission of WA and for the WA Government Railways Commission. These entities no longer exist and no transitional arrangements were put in place.And fifthly, the third party access provisions under the Agreement are out of date and inadequate.
In January 1998, the Agreement parties executed a Deed to cancel the Agreement once arrangements to transfer the land had been made. There was no discussion or intention to transfer the infrastructure rights and obligations.
In the event, the Agreement was not cancelled because Midwest Corporation's predecessor went into administration before the land could be transferred. Since then, there has been no change in the State's policy position that the Murchison Agreement ought be cancelled. Midwest Corporation is aware of this and is aware of the history of discussions on the Agreement.
The Government will shortly announce the process going forward to facilitate the development of Mid West region infrastructure to ensure that all of the emerging Mid West iron ore companies have timely access to efficient rail and port facilities. It would not be appropriate or responsible for the State to enter into detailed negotiations with just one player at this stage.