Ann: Yilgarn Acquisition , page-29

Bungy to accompany your post and give some further information 4 months ago the Australian reported this article .

could PDY be the driver behind Plan B ?

Oakajee brave face fails to dispel doubts about project

The Australian September 21, 2010 12:00AM

Colin Barnett, with Chinese consul-general Li Shugang and Sinosteel vice president Jiang Hong in July.

DOUBTS have emerged over the willingness of foreign investors to back ambitious plans for the Oakajee port project to achieve its potential.
While Japanese interests are behind the $4 billion Oakajee port and rail infrastructure project, which will connect the mines to export markets, industry figures are beginning to question the likelihood of the plans meeting looming deadlines.

Several mine hopefuls in the midwest are banking on the Oakajee project going ahead to unlock the potential in the region. The original plans are for a 45 million tonne a year port capacity, which is set to expand to 100 million tonnes; and most of the mines will not succeed without the rail and port going ahead.

The project proponent, Oakajee Port & Rail, is a joint venture between Japan's Mitsubishi and Murchison Metals, which are also joint venture partners in Crosslands Resources, which is developing iron ore projects in the midwest.


The project backers are putting on a brave face with a spokesman for Murchison Metals telling The Australian that the targets were being hit.

"Work on the development of the mining and infrastructure projects continues apace, backed by both Murchison and Mitsubishi Development," he said.

Market speculation has also recently resurfaced that Mitsubishi was looking to sell its interest in Crosslands but the company spokesman rejected the rumours, which he said had been circulating for years.

Mitsubishi still has to spend about $4bn on the Crosslands agreement, after putting in $150 million in 2007 as part of the joint venture deal. However, certain targets have to be met before any final payment is agreed on.

The reassurances are set against a backdrop of growing industry speculation that all is not well among the OPR joint venture and that alternative sources of finance have already been explored, if only furtively and behind closed doors.

The Colin Barnett-led West Australian Liberal government has been vocal about its wish to have the Chinese involved in the massive infrastructure project and has made it a mandate of OPR to work with the economic powerhouse.

But when the Japanese group was selected for the project in March last year over a China-backed proponent, the Chinese were said to see it as a "political decision". An industry source said the OPR proponents were now trying hard to get the money out of China.

"The Chinese are key players in the midwest region and are still finding it hard to get over the fact that the (China-backed) Yilgarn Infrastructure deal did not succeed," he said.

Industry observers said it was highly unlikely that China would be interested in funding a Japanese-controlled vehicle.

"It is more likely that the Chinese parties will be a part of a Plan B, rather than fund a Japanese-led consortium," one insider said.

Linda Liu Bearne, an investment consultant whose clients include China International Capital Corporation, the country's largest investment bank, said interest in the project was being sought from China.

"The Chinese are interested, but OPR need to be talking to the right party, otherwise it won't happen," she said.

OPR is still confident of succeeding and only last month signed framework agreements with three foundation customers, China-backed Gindalbie Metals, Chinese-owned Sinosteel Midwest and Crosslands.

OPR said at the time that the agreements enabled the company to move towards developing the project.

Interested parties in the project are concerned about delays and OPR meeting a March deadline for an implementation/finance agreement. If the deadline is not met, the government and OPR need to agree to extend it or it could fall through.

Gindalbie Metals chief executive Garret Dixon, who has outlined the miner's plans to use the infrastructure and has signed up as a foundation customer, said the company remained supportive of OPR.