http://au.finance.yahoo.com/news/Oakajee-port-project-takes-aap-4...

http://au.finance.yahoo.com/news/Oakajee-port-project-takes-aap-4050980976.html?x=0

On Thursday 23 June 2011, 15:52

The proposed commodities port at Oakajee in Western Australia is in doubt after a major foundation customer ceased operations at its iron ore mine.

Sinosteel Midwest Corporation (SMC) is believed to have shut down the Weld Range mine after constant delays to the multi-billion-dollar Oakajee Port and Rail (OPR) project.

The OPR consortium, consisting of Murchison Metals Ltd and Japanese company Mitsubishi Corp, is mainly responsible for building a 570 kilometre railway from regional iron ore mines in WA's mid-west to the port.

Murchison Metals called for a trading halt on Thursday, after its stock had shed more than five per cent, down 4.5 cents at 76.5 cents, after the news.

"The trading halt is requested to enable the company to consider the announcement today by Sinosteel Midwest Corporation (SMC) that it has shut down all work at its Weld Range operations and the implications for the Oakajee Port and Rail (OPR) project," Murchison said in the trading halt request to the Australian Securities Exchange.

It expects to make an announcement before the start of trading on Monday, June 27.

The company in March admitted the project's capital cost estimates had ballooned from about $4.4 billion to $5.23 billion.

Gindalbie Metals Ltd, another foundation customer lined up for Oakajee, said the project was a major part of its iron ore production expansion plans.

"The Karara iron ore project is investing more than $200 million on infrastructure at Geraldton Port to enable capacity of approximately 16mtpa (million tonnes per annum)," Gindalbie Metals managing director Tim Netscher said in a statement on Thursday.

"This capacity is suitable for the Stage 1 production level of 10mtpa and the anticipated Stage 2 expansion to 16mtpa.

"For production beyond 16mtpa, Karara requires the development of Oakajee Port and has signed an MOU (memorandum of understanding) as a foundation customer of the project.

"We continue to support the development of Oakajee and continue to be engaged in constructive negotiations with all parties involved."

Gindalbie's stock had lost 5.5 cents, or 6.15 per cent, to 84 cents by 1517 AEST.

The WA government in April committed $339 million to build the bulk of the port component of the OPR project, a figure matched by the federal government.

WA Premier Colin Barnett has previously said if OPR did not proceed with the project, the government had an option to buy the intellectual property.

He has also been lobbying senior Chinese government officials to invest in Oakajee.

Sinosteel is one of China's biggest iron ore traders.