Source:http://www.theaustralian.com.au/business/mergers-acquisiti...

Source:http://www.theaustralian.com.au/business/mergers-acquisitions/deal-close-on-oakajee-port-and-rail-project-rescue/story-fn91vdzj-1226202970334




Deal close on Oakajee port and rail project rescue
BY: RICK WALLACE, ANDREW BURRELL From: The Australian November 23, 2011 12:00AM


A DEAL that could allow Japan's Mitsubishi to rescue the struggling $5.9 billion Oakajee port and rail project in Western Australia may be announced as early as this morning.

Murchison Metals is expected to reveal it will offload its 50 per cent share in the project and the associated Jack Hills iron ore mine to Mitsubishi, its joint-venture partner.

Trade in Murchison's shares has been suspended since Monday pending an announcement.

Sources in Perth indicated last night an announcement could be made this morning but negotiations had still not been finalised.

Speculation in Tokyo centred on Mitsubishi teaming up with Korean steelmaker Posco to rescue the project, which has been in jeopardy amid cost overruns and Murchison's inability to fund its share of the development.

The Japanese giant, which refused to comment yesterday, has previously said it could not shoulder the development costs alone and has been in talks with third parties.


The state government has been anxiously courting Chinese investment to save the project, which it sees as vital for unlocking the emerging Mid-West region.

But China's $US400bn sovereign wealth fund, China Investment Corporation, announced last week it was reviewing whether Beijing should step in to rescue the planned project or walk away from it altogether.

Sources close to the project said the investment needed to get it across the line was more likely to come from Posco than a Chinese company, but there was no confirmation from any of the parties.

"I don't think it's Chinese," one source said. "My best guess is that it's actually Posco. They already have an offtake agreement from the project and they already have a shareholding in Murchison (Metals). They have been looking to upgrade their iron ore holdings in WA and they recently took a stake in Gina Rinehart's Roy Hill mine (in WA's Pilbara)."

Posco is the biggest shareholder in Murchison with about 14 per cent.

WA Premier Colin Barnett yesterday declined to comment on speculation that Mitsubishi was negotiating with Murchison to buy the assets.

But Mr Barnett, who has championed development of the Mid-West iron ore industry, said he hoped a deal would allow the Oakajee project to go ahead.

"What we are seeing now" was what he had been awaiting for some time, Mr Barnett said, "and that is a rearranging of the ownership structure of Oakajee Port and Rail".

"That is important for the project to go ahead," he added.

Mr Barnett said he wanted to see a clear separation of the infrastructure from the individual mining assets.