Mitsubishi cutbacks to halt Oakajee, coal projects

Western Australia's long proposed Oakajee port has been put on the backburner as Mitsubishi moves to cut costs.

The announcement is yet another blow for the port, designed to service the burgeoning Mid West and Yilgarn iron ore region, which has struggled to get off the ground.

Volatile commodity prices and uncertainty in the global metals market, as well as cost blowouts that saw the price of the port rise from $4.4 billion to as much as $6.7 billion, crippled the port and its main stakeholder Mitsubishi.

Mitsubishi has announced that it will look to cut costs globally, and is rethinking its resources investment plants.

The port, which has failed to gain Chinese investors, has been put on hold until more capital can be found.

The growing tensions between China and Japan became a wedge between the two nations and Mitsubishi's attempts to attract capital.

"Recent tension between Japan and China have slowed talks with potential Chinese partners," Mitsubishi said.

However WA premier Colin Barnett stressed that the port will be built, although he was unable to put a potential deadline on the table, The West reported.

"There is 13 billion tonnes of magnetite iron ore in the Midwest. Chinese, Japanese, Australian interests have already invested $3 billion in that province. It’s going to happen, although it’s obviously not going to happen in the near future.

“I’m not embarrassed, I’m disappointed,” Barnett said.

“This is a setback. It’s not the first setback Oakajee has had. And any major project in this State takes many years to develop.”

“Big projects, visionary, nation-building projects are difficult and complex. And we’re talking about over $7 billion investment in this project by various interests – that’s a lot of money in a difficult international environment.”

The Japanese stake in coal mining operations in Australia have also come under a cloud following the announcement, with Mitsubishi chief Ken Kobayashi explaining that it will find it difficult to break even at its BMA joint venture mines, according to the SMH.

"Global mining businesses have entered a new phase, where cost matters. Closing part of coal mines is an option to boost cost edge," Kobayashi said.

BMA closed two coal mines this year, shutting the Norwich Park mine in May and the Gregory open cut mine in October.

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