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Mid West miners wait on Barnett for Oakajee callKATE EMERY, The West Australian
January 24, 2011, 6:25 am
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The eyes of the Mid West iron ore industry will be trained on Premier Colin Barnett when he returns to his office today after a holiday.

The Premier may have bigger things on his mind than the immediate future of the $4.3 billion Oakajee development but his return sets the clock ticking on a two month countdown for Murchison Metals and Mitsubishi Corp to retain their exclusivity rights over the infrastructure project.

At stake is the future of the Mid West as WA's second iron ore province and billions of dollars tied up in projects that depend on Oakajee for their viability.

As things stand Murchison, one half of the Oakajee Port and Rail (OPR) consortium along with Mitsubishi, has asked the WA Government to extend an April deadline to complete a bankable feasibility study.

Since it requested the extension in November Murchison has maintained its confidence that it will be granted. But Mr Barnett has yet to either announce a decision or provide guidance on when he is likely to do so.

Mr Barnett has three options: to grant an unconditional extension, to grant an extension with conditions or not to grant an extension at all.

It is unclear what kind of conditions Mr Barnett could consider, although he has previously expressed support for a reorganisation of OPR's structure that would decouple Oakajee from the development of the consortium's Jack Hills iron ore project.

Even if Mr Barnett did not grant OPR an extension the consortium would not lose the right to develop the project, only its exclusivity, opening the door to other parties.

Some would-be rivals are already waiting in the wings. Yilgarn Infrastructure, the Chinese-backed player that lost out to OPR in the first place, is in talks to sell its intellectual property over Oakajee.

Chinese groups have held informal talks about possibility of a Plan B.

OPR's detractors, who say they are concerned about the slow pace of progress so far, argue that if anybody can build a multi-billion-dollar project quickly it is the Chinese.

The counter argument from the OPR camp is that nobody - with or without Yilgarn's $45 million worth of financial modelling and engineering and environmental studies - would be able to catch up on the extra two years of work OPR has completed. Hence, allowing another party to take over would only delay the project further beyond its 2015 start date.

The pressure on Mr Barnett will be considerable.

Given the significant of Oakajee to the development of the Mid West region, the industry needs an end to the uncertainty, described by Murchison chairman Paul Kopejtka as a "concerted campaign of destabilisation".

Whatever the State Government decides, it will not want to open itself to the risk of legal action.

Oakajee is also regarded as something of a legacy project for Mr Barnett, who has put his stamp on the development since taking office in late 2008.

Most notably it was Mr Barnett who made the decision to sink about $300 million of taxpayers' money into the development.


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