Western Australian Premier Colin Barnett is still hopeful the stalled $6 billion Oakajee Port & Rail project in the state’s Midwest can be restarted after owner Mitsubishi put the brakes on it last year to cut costs.
The renewed talks come even as Barnett affirmed the golden days of the iron ore boom in the state are over. He is hoping China and Japan will back the Oakajee project.
Barnett returned from an official visit to Beijing and said Chinese steel production was flat-lining, adding huge investment in iron ore would end once BHP Billiton, Rio Tinto and Fortescue Metals Group in the Pilbara finished their mine expansions.
“I think that will be the last of the strong growth in iron ore production,” he said.
“What I’m saying is the golden days of iron ore have passed, or are passing, and the industry will reach a mature level of production, which is nevertheless a massive industry.”
He said yesterday he had talked to China’s National Development and Reform Commission, the body in Beijing that makes investment decisions for China’s state-owned enterprises.
According to The Australian, he said the two parties agreed that the WA government would focus on the port element of the project, and Chinese state-owned enterprises would construct the railways.
The long-proposed Oakajee port was deferred last year as Mitsubishi looked to cut costs. Unstable commodity prices and uncertainty in the global metals market, along with cost blowouts meant the company could not sustain the port.
The premier’s renewed hope comes as iron ore miners in WA are cutting costs and refraining from further mine expansions as iron ore prices decrease and China’s economic growth decelerates.
But he conceded weaker iron ore prices had lessened interest in the Oakajee project.
It is not yet clear whether the new agreement means taxpayers would need to pay more for the Oakajee project. The state and federal governments have already pledged almost $700 million to the project, which is intended to make the Midwest a major iron ore export region.
Calls made to Oakajee Port & Rail were not returned.
Barnett also visited Tokyo and said Mitsubishi had consented to the agreement for China to construct the railway from the region’s mine to the Oakajee port.
Mitsubishi will focus on its Jack Hills mine and its own rail line.
This is in contrast to Barnett’s move in 2009, when he granted the Mistubishi-backed OPR full rights to construct the rail line, which had vexed Chinese interests.
But Mitsubishi, along with its then partner Murchison Metals, could not raise enough money for the infrastructure. Barnett had to look to China to fund the project.
At that time Barnett said construction would begin in 2010-11 and iron ore shipments would begin in 2013-14.
But when Chinese steel company Sinosteel abandoned its $2 billion Weld Range project in the Midwest in 2011 after delays and cost issues, the project was severely affected.