Oakajee drama between acts

07/05/2008 - 22:00


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The drama surrounding the $2 billion Oakajee deepwater port in the state’s Mid West is set to enter a new stage.

Oakajee drama between acts

The drama surrounding the development of the $2 billion Oakajee deepwater port in the state’s Mid West is set to enter a new stage, with the state government expected to be in receipt of two bids by the end of this week.

After months of frenetic corporate activity, a calm appears to have overtaken this important infrastructure development as the public positioning of the players fades and the process of bureaucratic deliberation takes over.

The state has until June 30 to deliver a decision as to which of the two proposals is found to be economically, socially and environmentally viable.

Oakajee port is a necessity if the region’s mining hopefuls are to deliver on the promise of large-scale projects, with exports projected to rise to more than 45 million tonnes per annum from around 2010.

Tensions developed when Midwest Corporation Ltd signed an agreement in June last year to back unlisted public company Yilgarn Infrastructure for port and rail development, ending a previously amiable joint venture plan with other winners.

Yilgarn said it had the backing of a consortium of Chinese companies that had agreed to fund the project to the tune of $750 million. 

Soon after, Murchison Metals Ltd responded by signing an agreement with Japan’s Mitsubishi Corporation, jointly forming Oakajee Port and Rail.

It was only earlier this year that the state government officially opened up a tender process between both Murchison and Midwest for the development of Oakajee, after backing down from a similar decision last year.

While Murchison’s path for nominating OPR as its preferred infrastructure provider has been clear cut, Midwest’s path has been less so.

Midwest had previously claimed the right to develop the port under a state agreement before it agreed to be part of the tender process.

Perceived by many to be a strong candidate, big hurdles emerged when its major shareholder and one of Yilgarn’s participants, Chinese steel maker Sinosteel, sought to take over the company, inflaming animosities between the parties and giving rise to concerns about foreign ownership of resources and infrastructure. There is also speculation that Sinosteel wants to bid for Murchison.

This came to a head last month when Yilgarn flagged a potential $1 billion law suit against Midwest for failing to nominate it as the preferred infrastructure provider.

Midwest argued that a shareholder vote was necessary for official nomination due to its major shareholder also backing Yilgarn in its proposal, triggering a potential related parties transaction on the ASX ruling list.

However, last week the ASX ruled that a vote was not necessary, clearing the way for Midwest to nominate Yilgarn. A spokesperson for Yilgarn said discussions with Midwest were ongoing.

The successful proponent will construct and control their own berth at Oakajee and provide necessary common-use infrastructure for other users, which will be managed by the Geraldton Port Authority.


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