Boost for iron's new frontier in WA's Mid-West Andrew Burrell From: The Australian March 19, 2010 12:00AM Increase Text Size Decrease Text Size Print Email Share THE emergence of Western Australia's Mid-West region as the nation's next iron ore province has taken a major leap forward, with the company building the $4 billion Oakajee project revealing that the size of the deepwater port will probably double from initial estimates.
Oakajee Port and Rail chief executive John Langoulant said rising Chinese demand for iron ore had already led the company to increase the planned start-up capacity of the port, near Geraldton, from 35 million to 45 million tonnes a year.
And the company announced yesterday that it had preselected three of the region's biggest miners, two backed by China and one by Japan, as foundation customers for Oakajee.
But Mr Langoulant said there were 11 other miners with deposits in the region and he expected the project's capacity would move "substantially" beyond 45 million tonnes by the time it began operating in 2014.
He hesitated to name a figure, but it is understood the start-up capacity of the port could be 80 or 90 million tonnes a year if demand continues to exceed expectations.
"With the current iron ore price and the demand for steel, there's every reason to be optimistic that other mines will come on," he said.
"This project has got very strong prospects; it will occur.
"The rail will be put into place and the port will be developed. How quickly we can grow demand through the rail and the port, we'll see. But I'll be surprised if it's not quickly above 45 million tonnes."
Oakajee is seen as a crucial infrastructure project that will unlock the potential of the Mid-West to become a global iron ore export province. It will be built through a mix of private and public funds, with the federal and state governments agreeing to contribute a total of $680 million.
OPR is a joint venture between Perth miner Murchison Metals and Japan's Mitsubishi.
The three preselected foundation customers for Oakajee are Chinese-owned Sinosteel Midwest's Weld Range project, Gindalbie Metals' China-backed Karara Mining, and Crosslands Resources' Jack Hills project, which is a joint venture between Murchison and Mitsubishi.
OPR will enter into a due-diligence process with the three miners to define project timing, volumes and financial capacity.
Offers of initial port capacity are expected to be made this year.
Four others companies -- listed miners Golden West Resources and Emergent Resources, and private companies Cashmere Iron and Extension Hill -- could be next in line to be allocated capacity at the port, Mr Langoulant said.
The Mid-West's potential was underlined last week when Cashmere revealed it had a Joint Ore Reserves Committee-compliant hematite and magnetite deposit at its project of more than one billion tonnes.
Mr Langoulant said the decision to raise the port's capacity would lead to a relatively minor increase in the capital cost of the project.
"Rather than operating off one berth for a cape-sized vessel, we'll operate off two berths," he said. "It's not a huge increase in the capital cost. It's a small fraction of the total."
Mr Langoulant said OPR was preparing a feasibility study to submit to the West Australian government at the end of the month, with the final feasibility study due later in the year.
Shares in Murchison rose 4.6 per cent to $2.71.
Murchison executive chairman Paul Kopejtka said the demand for Oakajee capacity had exceeded his expectations and had reinforced his view that OPR would be a viable business.
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