It's a big ask but I'll save troubled Oakajee, says WA Premier...

It's a big ask but I'll save troubled Oakajee, says WA Premier Andrew Burrell From: The Australian September 10, 2011 12:00AM

WEST Australian Premier Colin Barnett has revealed that an overhaul of the troubled $5.9 billion Oakajee port and rail development is just weeks away, as he works around the clock to save a project that would open the way for billions of dollars worth of iron ore exports.
In an interview with The Weekend Australian, Mr Barnett described Oakajee as the most difficult project he had worked on during his three years as Premier. But Mr Barnett said he still believed it would go ahead.

The Oakajee project would underpin the development of several iron ore mines in WA's Mid-West region, allowing a rapid increase in exports through a new deepwater port north of Geraldton. But a series of delays and cost blowouts in building the infrastructure have threatened to scuttle the project.

Mr Barnett has personally championed Oakajee and promised to tip more than $300 million in WA taxpayer funds into building common-user facilities at the port.

"I am spending a lot of time on Oakajee, trying to unscramble it and put it back together again," Mr Barnett said.

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"A lot will be happening in the next few weeks -- the next few weeks are quite vital. I don't know if I can pull this off. This is the trickiest project, the most complex project, I've ever dealt with."

Mr Barnett said negotiations that would allow for major changes to the Oakajee ownership structure -- which could involve bringing in Chinese parties as investors in the infrastructure -- had been going on for some time.

Talks were also occurring around a staged development of Oakajee rather than the "big bang" project proposed by Perth-based miner Murchison Metals and Japan's Mitsubishi Corporation. Industry sources say a staged development of the Oakajee rail network would allow for a southern rail line to be built to Gindalbie Metals' Karara mine before a northern line to projects planned by Murchison and China's Sinosteel.

Sinosteel, a foundation customer of Oakajee Port and Rail, threw the project into disarray in June when it shelved its planned $2bn Weld Range mine, citing exorbitant tariffs.

Murchison has since admitted it cannot fund its share of the costly project and has effectively put itself up for sale. Mr Barnett has given Murchison and Mitsubishi until December 31 to prove the viability of the project, but major changes are expected to be revealed well before that.

The Premier told The Weekend Australian that he had known for some time that Murchison, as a small-cap miner, would struggle to deliver the project. "Murchison is not up to major billion-dollar investments in infrastructure and that's been proven to be the case," he said.

He criticised the former WA Labor government for the way the project was established, including the tender process that effectively pitted Chinese against Japanese interests.

Mr Barnett backed a staged development of Oakajee. "There is merit in bringing on the southern rail line and the port -- even the port can be a staged development," he said.

"(The problem was) it became a big-bang project. You can have a big-bang project if you've got a Mt Tom Price or a Mt Whaleback or a North West Shelf gas reserve -- but none of the (Mid-West) resources are like that."