Oakajee Port struggles at costs rise

As continually rising capital costs hit Oakajee Port & rail (OPR), it looks more unlikely that Murchison Metals can get the project together.

According to The West, the infrastructure project is already finding it difficult to meet a West Australian Government timetable to complete a State Development Agreement, and now scope changes have created an increase in the capex for OPR, a subsidiary of Murchison Metals.

The infrastructure project’s last publicised budget sat at $4.3 billion, with both the State and Federal Government promising to provide up to $800 million towards its completion.

Murchison will address the OPR blowout issue today when it responds to a Government offer of an extension of time to complete the development agreement.

Previously, Murchison and Oakajee had until the start of April to conclude the agreement, however late last year the miner stated that it was nearly six months behind schedule and would rely on the West Australian Government to retain its Oakajee development mandate.

WA premier Colin Barnett has previously voiced his anger at the delays in development, stating that he would require changes in the corporate structure of the company before granting the extension.

"I will give it an extension when I am satisfied that there has been sufficient movement in the corporate structure of Oakajee Port and Rail,” he said.

However, Opposition state development spokesperson Mark McGowan hit back at Barnett, urging him to grant the extension, calling his actions “interventionism at its worse.”

According to The West’s Peter Klinger, Barnett is willing to give Murchison until the end of the year to conclude the State Development Agreement if his stringent conditions are met.

Murchison entered a trading halt yesterday “pending an announcement concerning the Government’s response to the Company’s request for an extension of the State Development Agreement for Oakajee.”

It expects to make an announcement before the close of normal trading today.

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