Deadline rolls round for Oakajee iron ore port

July 27, 2008

July 27th (The West Australian) – The WA Government is poised to make one the most contentious decision of its seven-year reign next week when Planning and Infrastructure Minister Alannah MacTiernan announces the preferred developer of a $1.5 billion port at Oakajee, north of Geraldton.
The announcement is expected on Tuesday, the final day of a two-day State Cabinet meeting in Geraldton.
After more than two decades of dithering about the viability of a port, next week’s announcement should signal the long-awaited go-ahead for a multi-user facility capable of underpinning the development of the Mid-West’s iron ore province.
But Ms MacTiernan’s announcement is also expected to stir fresh controversy only months out from a likely State election.
One of the two proponents, Yilgarn Infrastructure, is heavily backed by the Chinese Government, raising concerns in some quarters about China’s increasingly far-reaching grab for WA’s resources sector.
The other proponent, Oakajee Port & Rail, is owned by Japanese trading giant Mitsubishi and iron ore aspirant Murchison Metals, sparking separate concerns its ownership of both the port developer and a mine would raise conflicts of interest and disadvantage other miners wanting to use the port.
Ms MacTiernan has said the way she structured the Oakajee tender would ensure that nationality of the winning bid is immaterial — ownership of the port’s key multi-user components such as breakwater and channels would revert to the WA Government after project completion — and that the Geraldton Port Authority, which would operate Oakajee, would ensure fair access for all users.
Even with confirmation of a preferred Oakajee tender, significant hurdles remain.
Ms MacTiernan expects to spend until the end of the year negotiating a final development deal with the chosen party and financing of the $1.5 billion project, notwithstanding both proponents’ claims that funds are locked in, is likely to be a focus given the global credit crunch. It is hoped port construction can begin next year, with completion targeted by 2012.
A finished Oakajee should be capable of initially handling 30 million to 35 million tonnes of exports at year, with much of that to come from Murchison, the Sinosteel Corp-controlled Midwest and Gindalbie Metals.
Sinosteel yesterday extended the takeover deadline for its $1.4 billion cash bid for Midwest by a month to August 25 in the hope of snaring the few remaining minority shareholders.
Having bought an additional three million shares on market yesterday, Sinosteel’s stake has been boosted from 54 per cent to about 55.9 per cent and it continues to hold out for Midwest deputy chairman David Law’s 13.2 per cent stake.


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