China pulls out of $6bn WA projectJune 23, 2011 01:45PMPage 1 of...

China pulls out of $6bn WA project
June 23, 2011 01:45PM
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THE $6 billion Oakajee port and rail project in Western Australia was today dealt a major blow after Chinese metals giant Sinosteel moved to wind up its $2 billion Weld Range iron ore project in a dramatic response to cost blowouts and lengthy delays in building the critical infrastructure.

Sinosteel Midwest Corp confirmed to The Australian today that it had stopped all major work at its Weld Range project, laid off 43 workers and closed its office in the mid-west town of Geraldton.

The move could jeopardise the troubled Oakajee project from going ahead in its present form.

Oakajee is being built by Perth-based Murchison Metals and Japan?s Mitsubishi Corp, but Chinese investors - including Sinosteel - are known to have been sounded out about contributing equity to ensure the project?s viability.

Sinosteel?s move comes just days before Murchison is due to release a bankable feasibility study on the project.

WA Premier Colin Barnett, who has championed the development of Oakajee as a way of opening up the state?s next major iron ore province, was briefed on the decision today.

Murchison said in March that the estimated cost of Oakajee had grown from $4.4bn to $5.2bn, in response to a series of reports in The Australian that suggested the development cost could be higher than $6bn.

However, market speculation in Perth has suggested the forecast cost may since have gone higher than $7bn and Murchison was considering a sell-down of its stake in development vehicle Oakajee Port & Rail....