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FYI

Font Size: Decrease Increase Print Page: Print Nigel Wilson, Energy writer | October 08, 2007
THE West Australian cabinet is today expected to consider a controversial proposal for developing infrastructure in the burgeoning Mid West region, east of Geraldton.

Planning Minister Alannah MacTiernan is proposing to split port and rail infrastructure into three bites to be funded by the private sector - a plan that some mining companies in the area say is commercially unviable.

As part of the plan, the state Government has announced it will not implement a long-running state agreement Act held by Midwest Corporation that includes the provision of infrastructure because it has been "stranded by history".

The Government's failure to honour the agreement Act - one of 72 pieces of specific legislation that underpin projects in Western Australia - has led to allegations that the state is being exposed to sovereign risk.

Deputy Premier Eric Ripper, who is on a tour of Asian capitals, met with representatives of Mitsubishi Corporation last Friday.

While details of the conversation were not released, it is understood Mr Ripper wanted to explain the rationale behind the Government's action.

Mitsubishi last month signed a $150 million deal to become a 50:50 partner with Midwest Corporation rival Murchison Metals to develop the Jack Hills deposit.

Mr Ripper told parliament last month the state Government would shortly announce the process to facilitate the development of Mid West region infrastructure to ensure that all the emerging Mid West iron ore companies had timely access to efficient rail and port facilities.

"It would not be appropriate or responsible for the state to enter into detailed negotiations with just one player at this stage," he said.

It is this proposal that cabinet is expected to discuss today.

Murchison has backed the Government's position.

This week, Mr Ripper will be in China and is expected to meet representatives of five Chinese government-backed organisations that have signed financial agreements with Yilgarn Infrastructure which has a contract with Midwest Corporation and other Mid West region players to supply infrastructure.

The contract is backed by the Iron Ore (Murchison) Authorisation Agreement Act which is now owned by Midwest Corporation which has told the Government that as far as it is concerned, the Act is valid.

Midwest Corporation maintains that it has been unable to raise its concerns directly with ministers.

Chinese President Hu Jintao raised Yilgarn's proposals with West Australian Premier Alan Carpenter early last month.

The key to the argument is that the mining proposals relate to relatively small iron ore deposits that individually cannot fund the necessary infrastructure.

The Port of Geraldton, where Mid West region iron ore is currently shipped, is regarded as too small to handle the load and too expensive to expand.

The current railway between Mullewa and Geraldton would have to be substantially upgraded before it could handle iron ore loads safely.

For around two decades a port north of Geraldton - Oakajee - has been proposed but the state Government is opposed to funding it or improving the railway.