❓ McGowan questions the Premier on the status and cost of the Oakajee Port and Rail project after previous strong support. The Premier acknowledges delays due to global economics, China-Japan relations, and iron ore prices, but insists the project is not abandoned.
AnsweredQoN 684Legislative Assembly
QuestionView source ↗
OAKAJEE PORT AND RAIL PROJECT — DEFERRAL
684. Mr M. McGOWAN to the Premier:
I refer to the Premier's many comments on the Oakajee
project, including in this place in March 2009, when he said —
I regard this as the most
important development project for Western Australia, and arguably the most
important development project in the nation right now.
(1) Has the
Premier now lost this project?
(2) What has
been the full cost to Western Australian taxpayers of this project, including
consultants, infrastructure, travel and other expenditure?
684. Mr M. McGOWAN to the Premier:
I refer to the Premier's many comments on the Oakajee
project, including in this place in March 2009, when he said —
I regard this as the most
important development project for Western Australia, and arguably the most
important development project in the nation right now.
(1) Has the
Premier now lost this project?
(2) What has
been the full cost to Western Australian taxpayers of this project, including
consultants, infrastructure, travel and other expenditure?
AnswerView source ↗
Before I answer the question I
acknowledge the students from the Coolgardie Christian Aboriginal
Parent-Directed School. I visited that school with the member for Eyre a couple
of months ago. I have a wonderful photograph; they are great kids. It is good
to see them here
(1)–(2) I
am not surprised by the question because Mr Jun Kinukawa, the senior vice
president of Mitsubishi, came to see me yesterday to update me on the Oakajee
project. Members will recall that during the time of the previous government,
Mitsubishi and Murchison were awarded preferred-bidder status. That was
confirmed by this government. Murchison subsequently dissolved as a company
because it was not able to keep up with it and Mitsubishi bought out Murchison's
interests. Mitsubishi has two components to this project, the Jack Hills mine,
which is the largest of the iron ore resources in the midwest, and the Oakajee
port and rail project. It is clear that this project will fly, if you like,
only if China becomes formally involved in it. The previous government set up
China and Japan in competition—not a very smart move in my view, and I
said so at the time.
Mr
M. McGowan : Four years later and you're still blaming others.
Mr
C.J. BARNETT : Listen to the answer. One of the things I have worked on
throughout this period is to bring China formally into the project. It is
absolutely essential because this is magnetite iron ore —
Mr
E.S. Ripper : Your claims to expertise are looking a bit thin.
Mr
C.J. BARNETT : It is low-grade iron ore compared to the iron ore in the
Pilbara. The market is almost exclusively China. There are 13 billion tonnes of
magnetite iron ore and some hematite. It was always going to be a difficult
project to develop, as I have said repeatedly. I have a long association with
trying to get Oakajee up. It matters because it is a major infrastructure
project, a deep-sea port on the Western Australian coast involving maybe
thousands of kilometres of rail line and it will open up a whole mineral
province, not just iron ore. It will always be difficult because of the
infrastructure costs involved.
The points raised with me by Mitsubishi—I appreciate
the professional way they did this—were that, first, Mitsubishi's
profitability for the last year was substantially reduced by a range of
factors, particularly, obviously, the global economic environment. As a group,
its profits have virtually halved. Mitsubishi also said that there are
difficulties in the relationship between Japan and China. As members know,
Japan and China are currently in dispute over the ownership of islands at the
end of the peninsula close to the Chinese coastline. That has materially
affected their relationship. It is not only a political dispute; it is one that
has economic ramifications. For example, Mitsubishi explained to me that
Chinese customers in China were avoiding buying Japanese-labelled goods. This
territorial dispute has economic implications that are wider than I and I think
most people in the west understand.
Mr E.S. Ripper interjected.
Mr C.J. BARNETT :
This is a serious issue, members should be serious about it and I am treating
the question as serious. That has been a fact. There is also the change in
China's leadership, which is happening right now.
The third and probably most important factor was the fall in
iron ore prices. While prices have recovered, the iron ore market is weaker
than it was a few months ago. Mitsubishi also made the point that it has
virtually completed its feasibility and design work, yet the communication
between China and Japan has broken down, so there is virtually nowhere to go at
the moment. It has reduced its workforce. I think it had employed something
like 150 people—a big workforce. It has probably cut that to about half
and it will concentrate on proving up and on the engineering and design work
around the Jack Hills mine. Mitsubishi is not walking; it has not abandoned the
project. It has paid hundreds of millions of dollars for its share of this
project. It is concentrating its effort now, not on the infrastructure, because
that is China dependent, but on the Jack Hills mine.
I was surprised at the extent to which there has been a total
breakdown in China–Japan communication. However, throughout that time,
the Western Australian government, through the Department of State Development,
has had continuing negotiations and discussions with Mitsubishi and, in
parallel to that, continuing negotiations and discussions with each of the
Chinese interests in the midwest.
Mr M. McGowan : You
failed.
Mr C.J. BARNETT :
That includes, on a weekly basis, the National Development and Reform
Commission.
Mr M. McGowan : You
signed an agreement; where's your outcome?
Mr C.J. BARNETT :
The Leader of the Opposition said, ''You've failed''.
Mr M. McGowan : You
have.
Mr C.J. BARNETT :
What does that tell us about him? That tells us that he does not stick to it;
he walks and he would walk from this project.
Several members interjected.
The SPEAKER : Thank
you, members!
Mr C.J. BARNETT :
He does not stick to projects. I have repeatedly —
Mr M. McGowan : It's
the second time you have failed—deja vu.
Mr C.J. BARNETT : I
have repeatedly —
The SPEAKER : Take
a seat.
Mr C.J. Barnett : You don't understand, do you;
you don't get it.
The SPEAKER :
Leader of the Opposition, you have asked a question in all seriousness in this
place and from what I am hearing the Premier is responding in kind. I would
like to hear the Premier's response.
Mr C.J. BARNETT : I
have said over the past 10 years or longer that this is an extremely difficult
project.
Mr E.S. Ripper : It's
your second failure.
The SPEAKER :
Member for Belmont, you have been in here long enough to know that if you would
like to make comment in a more appropriate way, you can seek the call. I
formally call you to order for the first time today.
Mr C.J. BARNETT : I
find it interesting that the Leader of the Opposition and the former Leader of
the Opposition gloat and say that it is a second failure. It tells us something
about their attitude towards a major process. It tells us that they do not have
the perseverance to see it through. Falling global prices, a dispute between
China and Japan, change of Chinese leadership and costs and risks of the
project are all factors. I make the point again that $167 billion worth of
projects are either under construction or committed. The point I make is that
Oakajee was never included in that list of committed projects because it has
never got to that stage. Members opposite need to understand that the project
is not shelved; it is on hold.
Mr E.S. Ripper interjected.
Mr C.J. BARNETT :
Here is the man giggling who lost Inpex.
Several members interjected.
Mr C.J. BARNETT :
He is the man who would not pick up the phone. He lost a $30 billion project.
Ms R. Saffioti interjected.
Mr C.J. BARNETT :
What a hypocrite. Is that what you think?
The SPEAKER : Take
a seat, Premier!
Mr C.J. BARNETT :
There are a whole lot of circumstances. I again reiterate the obvious point
that this is not a government project. It is a project of funding from probably
state-owned enterprises and private companies into mine and rail development.
The joint commitment of the commonwealth and state government is to fund and
own the common port infrastructure.
Mr B.S. Wyatt : A
year ago it was all yours.
Mr C.J. BARNETT :
It never has been.
Mr P. Papalia interjected.
The SPEAKER :
Member for Warnbro!
Mr T.G. Stephens :
Was Inpex a government project?
Mr C.J. BARNETT :
That is your argument, is it not? That is your argument.
Mr B.S. Wyatt : No;
that is your argument.
Mr C.J. BARNETT :
Here we have a Labor opposition —
The SPEAKER : I
presume there are other members in this place who would like to ask a question.
I even sense that perhaps the Leader of the Opposition would like to ask a
supplementary. There are people in this place who are preventing that from
happening. I am going to provide some advice: if you want to ask questions and
you want some answers, perhaps some of you should remain silent for a while.
Mr C.J. BARNETT :
Here we have a Labor Opposition, celebrating today because it thinks the
Oakajee project is over. That is what we can see—celebrating today,
gloating about what they think is a failure.
Several members interjected.
The SPEAKER :
Members!
Mr C.J. BARNETT : I
acknowledge, for all those reasons —
Mrs M.H. Roberts :
Failure!
Mr C.J. BARNETT :
Here we go—gloat, gloat, gloat! I acknowledge that today is a setback
for Oakajee. But I will tell members what: I will not give up on trying to
achieve this project. I will not give up, as members opposite gave up—as
they demonstrate today, they give up. I will not give up, and this government
will not give up. I can tell members that Oakajee will happen. There is 13 billion
tonnes of iron ore that will find its way to market.
Mrs M.H. Roberts :
With no thanks to you!
Mr C.J. BARNETT :
Look at them gloating—look at them gloating—because they think
Western Australia has lost a chance. Get in there and support the government in
the development of this state.
acknowledge the students from the Coolgardie Christian Aboriginal
Parent-Directed School. I visited that school with the member for Eyre a couple
of months ago. I have a wonderful photograph; they are great kids. It is good
to see them here
(1)–(2) I
am not surprised by the question because Mr Jun Kinukawa, the senior vice
president of Mitsubishi, came to see me yesterday to update me on the Oakajee
project. Members will recall that during the time of the previous government,
Mitsubishi and Murchison were awarded preferred-bidder status. That was
confirmed by this government. Murchison subsequently dissolved as a company
because it was not able to keep up with it and Mitsubishi bought out Murchison's
interests. Mitsubishi has two components to this project, the Jack Hills mine,
which is the largest of the iron ore resources in the midwest, and the Oakajee
port and rail project. It is clear that this project will fly, if you like,
only if China becomes formally involved in it. The previous government set up
China and Japan in competition—not a very smart move in my view, and I
said so at the time.
Mr
M. McGowan : Four years later and you're still blaming others.
Mr
C.J. BARNETT : Listen to the answer. One of the things I have worked on
throughout this period is to bring China formally into the project. It is
absolutely essential because this is magnetite iron ore —
Mr
E.S. Ripper : Your claims to expertise are looking a bit thin.
Mr
C.J. BARNETT : It is low-grade iron ore compared to the iron ore in the
Pilbara. The market is almost exclusively China. There are 13 billion tonnes of
magnetite iron ore and some hematite. It was always going to be a difficult
project to develop, as I have said repeatedly. I have a long association with
trying to get Oakajee up. It matters because it is a major infrastructure
project, a deep-sea port on the Western Australian coast involving maybe
thousands of kilometres of rail line and it will open up a whole mineral
province, not just iron ore. It will always be difficult because of the
infrastructure costs involved.
The points raised with me by Mitsubishi—I appreciate
the professional way they did this—were that, first, Mitsubishi's
profitability for the last year was substantially reduced by a range of
factors, particularly, obviously, the global economic environment. As a group,
its profits have virtually halved. Mitsubishi also said that there are
difficulties in the relationship between Japan and China. As members know,
Japan and China are currently in dispute over the ownership of islands at the
end of the peninsula close to the Chinese coastline. That has materially
affected their relationship. It is not only a political dispute; it is one that
has economic ramifications. For example, Mitsubishi explained to me that
Chinese customers in China were avoiding buying Japanese-labelled goods. This
territorial dispute has economic implications that are wider than I and I think
most people in the west understand.
Mr E.S. Ripper interjected.
Mr C.J. BARNETT :
This is a serious issue, members should be serious about it and I am treating
the question as serious. That has been a fact. There is also the change in
China's leadership, which is happening right now.
The third and probably most important factor was the fall in
iron ore prices. While prices have recovered, the iron ore market is weaker
than it was a few months ago. Mitsubishi also made the point that it has
virtually completed its feasibility and design work, yet the communication
between China and Japan has broken down, so there is virtually nowhere to go at
the moment. It has reduced its workforce. I think it had employed something
like 150 people—a big workforce. It has probably cut that to about half
and it will concentrate on proving up and on the engineering and design work
around the Jack Hills mine. Mitsubishi is not walking; it has not abandoned the
project. It has paid hundreds of millions of dollars for its share of this
project. It is concentrating its effort now, not on the infrastructure, because
that is China dependent, but on the Jack Hills mine.
I was surprised at the extent to which there has been a total
breakdown in China–Japan communication. However, throughout that time,
the Western Australian government, through the Department of State Development,
has had continuing negotiations and discussions with Mitsubishi and, in
parallel to that, continuing negotiations and discussions with each of the
Chinese interests in the midwest.
Mr M. McGowan : You
failed.
Mr C.J. BARNETT :
That includes, on a weekly basis, the National Development and Reform
Commission.
Mr M. McGowan : You
signed an agreement; where's your outcome?
Mr C.J. BARNETT :
The Leader of the Opposition said, ''You've failed''.
Mr M. McGowan : You
have.
Mr C.J. BARNETT :
What does that tell us about him? That tells us that he does not stick to it;
he walks and he would walk from this project.
Several members interjected.
The SPEAKER : Thank
you, members!
Mr C.J. BARNETT :
He does not stick to projects. I have repeatedly —
Mr M. McGowan : It's
the second time you have failed—deja vu.
Mr C.J. BARNETT : I
have repeatedly —
The SPEAKER : Take
a seat.
Mr C.J. Barnett : You don't understand, do you;
you don't get it.
The SPEAKER :
Leader of the Opposition, you have asked a question in all seriousness in this
place and from what I am hearing the Premier is responding in kind. I would
like to hear the Premier's response.
Mr C.J. BARNETT : I
have said over the past 10 years or longer that this is an extremely difficult
project.
Mr E.S. Ripper : It's
your second failure.
The SPEAKER :
Member for Belmont, you have been in here long enough to know that if you would
like to make comment in a more appropriate way, you can seek the call. I
formally call you to order for the first time today.
Mr C.J. BARNETT : I
find it interesting that the Leader of the Opposition and the former Leader of
the Opposition gloat and say that it is a second failure. It tells us something
about their attitude towards a major process. It tells us that they do not have
the perseverance to see it through. Falling global prices, a dispute between
China and Japan, change of Chinese leadership and costs and risks of the
project are all factors. I make the point again that $167 billion worth of
projects are either under construction or committed. The point I make is that
Oakajee was never included in that list of committed projects because it has
never got to that stage. Members opposite need to understand that the project
is not shelved; it is on hold.
Mr E.S. Ripper interjected.
Mr C.J. BARNETT :
Here is the man giggling who lost Inpex.
Several members interjected.
Mr C.J. BARNETT :
He is the man who would not pick up the phone. He lost a $30 billion project.
Ms R. Saffioti interjected.
Mr C.J. BARNETT :
What a hypocrite. Is that what you think?
The SPEAKER : Take
a seat, Premier!
Mr C.J. BARNETT :
There are a whole lot of circumstances. I again reiterate the obvious point
that this is not a government project. It is a project of funding from probably
state-owned enterprises and private companies into mine and rail development.
The joint commitment of the commonwealth and state government is to fund and
own the common port infrastructure.
Mr B.S. Wyatt : A
year ago it was all yours.
Mr C.J. BARNETT :
It never has been.
Mr P. Papalia interjected.
The SPEAKER :
Member for Warnbro!
Mr T.G. Stephens :
Was Inpex a government project?
Mr C.J. BARNETT :
That is your argument, is it not? That is your argument.
Mr B.S. Wyatt : No;
that is your argument.
Mr C.J. BARNETT :
Here we have a Labor opposition —
The SPEAKER : I
presume there are other members in this place who would like to ask a question.
I even sense that perhaps the Leader of the Opposition would like to ask a
supplementary. There are people in this place who are preventing that from
happening. I am going to provide some advice: if you want to ask questions and
you want some answers, perhaps some of you should remain silent for a while.
Mr C.J. BARNETT :
Here we have a Labor Opposition, celebrating today because it thinks the
Oakajee project is over. That is what we can see—celebrating today,
gloating about what they think is a failure.
Several members interjected.
The SPEAKER :
Members!
Mr C.J. BARNETT : I
acknowledge, for all those reasons —
Mrs M.H. Roberts :
Failure!
Mr C.J. BARNETT :
Here we go—gloat, gloat, gloat! I acknowledge that today is a setback
for Oakajee. But I will tell members what: I will not give up on trying to
achieve this project. I will not give up, as members opposite gave up—as
they demonstrate today, they give up. I will not give up, and this government
will not give up. I can tell members that Oakajee will happen. There is 13 billion
tonnes of iron ore that will find its way to market.
Mrs M.H. Roberts :
With no thanks to you!
Mr C.J. BARNETT :
Look at them gloating—look at them gloating—because they think
Western Australia has lost a chance. Get in there and support the government in
the development of this state.
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