murchison confident of extension for oakajee

Murchison confident of extension for Oakajee

Updated 35 minutes ago

Murchison Metals remains confident it will obtain an extension for the $4 billion Oakajee Port and Rail Project in the Mid West.

Earlier this week the Premier Colin Barnett wrote to the Oakajee Port and Rail company outlining conditions to be met before he will approve any further extensions to the deadline.

Murchison holds a 50 per cent stake in the Oakajee project and last November sought a six month extension from the government for the project.

The miner's December quarter report also revealed floods last month led to delays in hauling its iron ore, with shipments falling by more than a third, compared to the September quarter.

THE Japanese-backed consortium behind the $4.4 billion Oakajee port and rail network says it is confident of retaining its exclusive right to build the project after West Australian Premier Colin Barnett revealed he was demanding "exacting" conditions to extend a critical deadline.

Oakajee Port & Rail, a joint venture between Murchison Metals and Japan's Mitsubishi, said in November that a bankable feasibility study for the project would be delayed until the second quarter of 2011, and the first shipment until 2015.

But an extension to the project's timeframe needs approval from the state government and Mr Barnett has threatened to allow Chinese entities to take equity stakes in the project, in WA's Mid West region.

OPR said yesterday the "minor" six-month extension in the project's timeframe had been discussed with Mr Barnett and a formal proposal to extend the time by which agreements are to be executed had been made.

"The Premier has sent a letter outlining some conditions in relation to an extension which forms the basis of ongoing discussions with the government," an OPR spokesman said.

"Discussions are progressing well and we are confident of obtaining the extension in the near future. A six-month extension in a project of this scale and with its projected 50-year life is minor."

Mr Barnett said yesterday he was frustrated because "there is no scope for further delay".

Projects such as Gindalbie Metals' Karara mine were well advanced and would need rail and port infrastructure to start exporting iron ore, he said....

The Premier signalled he still wanted to see greater Chinese involvement in the project given Chinese companies had invested in several of the region's mines, including Karara, and China would buy most of the product.

"This project will go ahead as an Australian-Japanese-Chinese project," he said.

A decision from Mr Barnett is expected within the next few weeks. Golden West Resources executive director John Lester said yesterday the Mid West hopeful supported construction of the Oakajee infrastructure but the delays were hurting the miners that planned to use the new port and rail.

"We are extremely concerned about the delays," Mr Lester said. "We cannot do our bankable feasibility study unless we are definite on the infrastructure because we need to know the costs."

Meanwhile, junior explorer Padbury Mining is looking to muscle in on OPR's attempt to build the infrastructure after buying the "intellectual property" on a multi-user rail network from OPR's former rival, Yilgarn Infrastructure, for $2.25 million.

Yilgarn, which lost its bid for the exclusive rights to build Oakajee in 2008, has entered an agreement with Padbury to sell the company all the information on a new rail network, which it obtained during its work to win the contract.

Padbury, whose chairman John Saunders is the former chairman of Yilgarn, said the acquisition of the intellectual property was subject to conditions. - Andrew Burrell, Sarah-Jane Tasker