State prepared to tip $678m into Oakajee

Premier Colin Barnett says he is prepared to commit up to $678 million towards the $4 billion Oakajee port and rail development if the federal government does not provide funding from its Infrastructure Australia fund.

Today, the state government signed a formal development agreement with exclusive infrastructure provider Oakajee Port and Rail (OPR), which is backed by Murchison Metals and Japan's Mitsubishi Development.

Mr Barnett has previously said he will commit $339 million from state coffers towards the project, and seek matching funding from the federal government.

The state government included the Oakajee port and rail development as part of five priority projects from WA for the Rudd government's Infrastructure Australia, with the final list of projects to receive funding due out at the end of this month.

At a signing ceremony today, Mr Barnett said he is confident the project will receive federal government support however added that the state can afford to invest $678 million.

Government funding will be used for common-use infrastructure including channel, breakwater, turning basin, port administration offices and roads and utilities.

Under the state development agreement, OPR has the exclusive right to design and construct the port and a rail line to mine projects at Weld Range and Jack Hills.

OPR will also have a 50 year lease over the rail network corridor and an area of the port where it will operate an iron ore berth and associated equipment and stockpiles.

The agreement also provides an opportunity for private and state-owned Chinese companies to be involved in the project through the provision of rail cars, fabricated structural steel, engineering and construction services and financing.

Up to 2,000 jobs are expected to be created during the construction phase with 400 personnel operating the infrastructure when completed.

Mr Barnett added that the project is dependent on a positive bankable feasibility study which is due for completion by the end of March next year.

Mitsubishi executive vice president Jun Kinukawa, who is in Perth for 15 hours for the signing of the agreement, said the deal will accelerate further investigative studies valued at $160 million.

OPR chief executive Chris Evs said $2.4 billion will be spent on developing the rail component with the balance for the port component.

He added that the agreement allowed OPR to start talks with financiers for project funding.

The state government plans to develope a fully serviced 6,500 hectares heavy industrial estate to accommodate minerals processing facilities.

"If the project's feasibility is established and funding secured, construction could begin in 2010-11 with export shipments starting in 2013-14," Mr Barnett said.

"Once exporting from Oakajee begins, iron ore exports through Geraldton Port will be capped at 12 million tonnes a year, almost treble the 4.4mt handled in 2007-08."

Both Mr Barnett and Mr Eves said any role for Yilgarn Infrastructure is now a matter for commercial negotiation and would not commit to talking to the predominately Chinese-backed company.

Yilgarn was the other company vying for the development of the Oakajee project before OPR was named preferred proponent in July last year by the then Labor government.

Yilgarn declined to comment, only saying that it was still reviewing today's announcement.

Shadow Strategic Infrastructure Minister Alannah MacTiernan today said she remains concerned that $698 million of taxpayers' funds are being diverted to a project which the private sector has agreed to fund.

"Under the bid process, OPR agreed to build the port infrastructure and hand over the ownership and management of the common use infrastructure to the Geraldton Port Authority at its completion," she said.

"Extraordinarily, Premier Barnett continues to mislead the public by claiming taxpayers' funds were necessary because otherwise the port would be foreign-owned and foreign-controlled.

"There are many other infrastructure projects that do require Government funds which will now need to be put on the backburner."

She added that the new state agreement could again delay growth in the Mid West region with the agreement capping any expansion of Geraldton Port.

"When Mr Barnett was Resources Minister, he blocked any growth in Geraldton Port in the 1990s as he pursued the King Stream Oakajee Project," she said.

"This delayed the development of mining industry in the Mid West for eight years.

"A completion date before 2014 is optimistic and it could mean any project that needs further capacity at Geraldton Port before then will be stalled."