Mid West iron ore miner Murchison Metals has confirmed feasibility studies for the $4.3 billion Oakajee port and rail development will be delayed by up to six months to enable key agreements to be completed with the government and customers.
Mid West iron ore miner Murchison Metals has confirmed feasibility studies for the $4.3 billion Oakajee port and rail development will be delayed by up to six months to enable key agreements to be completed with the government and customers.
The feasibility studies are now slated for completion in the second quarter of next year, meaning a final investment decision may not occur until early 2012, and first ore exports may not occur until early 2015.
Project sanction had previously been expected late next year, followed by first exports in early 2014.
Murchison, which owns 50 per cent of infrastructure developer Oakajee Port & Rail, said budget and engineering work for the Oakajee project would be completed by the end of this year as planned, but that more time would be needed to complete implementation agreements with the WA government and to finalise agreements with OPR's customers.
That would in turn require the state government to extend its April deadline for OPR to attain key milestones and maintain its exclusive rights to develop the port and rail infrastructure.
"The changes of schedule will require an extension of certain project deadlines agreed with the WA Government under the State Development Agreement and this has now been formally requested," Murchison said.
Murchison, which had flagged such delays were likely late last month, said they were related to the need for extra time to complete bankable feasibility studies for the Jack Hills iron ore project, one of Oakajee's three foundation customers.
The Jack Hills study is now expected to be completed in the second quarter of next year, reflecting the need to revise the mine layout following the significant increase in the Jack Hills resource to over 3 billion tonnes in recent months.
Jack Hills is owned by unlisted Crosslands Resources, which like OPR, is a 50:50 venture between Murchison and Mitsubishi.
Murchison and Mitsubishi each reaffirmed their commitment to both ventures, with Mitsubishi stating its "involvement and commitment to these projects remains entirely unchanged".
"This is clearly reflected in our continuing substantial investment in feasibility studies for the (Jack Hills), Oakajee port development and associated heavy haul rail network," it said in a statement.
"Through our joint ventures (Crosslands and OPR), we continue to make every possible effort to drive forward the feasibility studies of these projects."
Murchison said the financing process was well under way with both parties engaged in detailed discussions with international and domestic financiers. Under the terms of its agreements with Murchison, Mitsubishi is required to manage the arranging of finance for both projects.
The delays come amid growing anxiety by China-backed foundation customers of the port, Sinosteel Midwest and AnSteel, over the construction schedule. Both are anxious for the port's completion to meet the export and expansion deadlines of their flagship Weld Range and Karara projects respectively.
