A radical shift in government planning for the Mid-West iron ore industry has been welcomed by two of the major protagonists, Murchison Metals and WestNet Rail, but been criticised by a third player, mining company Midwest Corporation.
A radical shift in government planning for the Mid-West iron ore industry has been welcomed by two of the major protagonists, Murchison Metals and WestNet Rail, but been criticised by a third player, mining company Midwest Corporation.
The government has sought to break the impasse over infrastructure provision in the Mid-West by proposing that port and railway projects be broken into several components.
Previously, Murchison and Midwest had been competing for the right to develop the port and rail infrastructure as a single project, at a cost of up to $3 billion.
The new infrastructure, including a port at Oakajee north of Geraldton, will be needed to service a series of large iron ore mines planned for the region.
The latest government plan puts Babcock & Brown Infrastructure subsidiary, WestNet Rail, in the box seat to expand its rail freight services in the region.
WestNet chief executive John Cleland welcomed the government’s latest proposal.
“We’re supportive of the approach the minister has taken and believe it provides a sound basis for the parties to talk,” Mr Cleland said.
“We remain of the view that there needs to be an integrated network.”
A spokesman for Murchison also welcomed the new proposal.
Murchison’s board was in Japan this week signing a funding deal with its joint venture partner Mitsubishi Corporation, which it believes ensures its ability to implement the infrastructure projects.
In contrast, Midwest chief executive Bryan Oliver was highly critical, arguing that the latest proposal could create delays and result in miners in the Mid-West missing their window of opportunity.
“I think the current proposal is too complex,” Mr Oliver said.
“It involves a large number of parties and that will have an impact on their ability to finance it…and is less efficient from a logistic chain point of view.”
Midwest is aligned with infrastructure provider Yilgarn Infrastructure, which recently signed a $750 million equity funding deal with five Chinese companies.
Acting Planning and Infrastructure Minister, Jon Ford, said the proposal currently being considered by the state government was to put the development of the Oakajee port out to tender.
The tender would be restricted to Murchison and Midwest or their nominated infrastructure provider.
Mr Cleland said Babcock was interested in participating in the port development, particularly the land-based infrastructure.
The government has proposed that miners would use the existing railway running from Mullewa to Geraldton, which is run by WestNet Rail.
“The proposal currently being considered is for WestNet Rail to extend this existing railway line from [Geraldton] to the port at Oakajee,” Mr Ford said.
“The development of the railway corridor from Mullewa to the mines will not go out to tender.
“Instead, the state government will define a railway corridor from Mullewa to the mine sites that will be wide enough to accommodate two railway lines if the mining companies wish to each build their own, or work together to build one common line.”
Mr Ford said the details of the proposal were currently being finalised.
The government proposal does not address planned rail links to the south-east, where Gindalbie Metals is proceeding with its Karara iron ore mine.
WestNet Rail, possibly in tandem with Yilgarn, is expected to provide rail services to Karara.
Any expansion of WestNet’s services would add to the rapid inroads that the Babcock & Brown investment group has made in WA in the past two years.
As well as buying WestNet Rail, Babcock has bought energy utility Alinta (in a joint venture with Singapore Power), has an interest in power generation projects and has bought the Fini retirement homes business.
