❓ Mr. Johnston questions the Premier about delays in the Oakajee port and rail project, given budget allocations are not expected to be spent until 2016, contrasting this with the Premier's 2009 statement on its importance. The Premier explains the project's complexity, ownership structure, and ongoing negotiations, emphasizing its potential economic benefits and the government's commitment.
AnsweredQoN 342Legislative Assembly
QuestionView source ↗
STATE BUDGET 2012–13 —
OAKAJEE PROJECT
342. Mr W.J. JOHNSTON to the Premier:
I refer to the amount allocated for the Oakajee port and rail
project in the forward estimates.
(1) Given the
budget papers show the amount is not expected to be spent before 2016, what is
the likely time frame for the Oakajee construction?
(2) How does
the Premier contrast this current situation with his statement of March 2009 in
which he said that Oakajee is the single most important project for Western
Australia's economic development?
OAKAJEE PROJECT
342. Mr W.J. JOHNSTON to the Premier:
I refer to the amount allocated for the Oakajee port and rail
project in the forward estimates.
(1) Given the
budget papers show the amount is not expected to be spent before 2016, what is
the likely time frame for the Oakajee construction?
(2) How does
the Premier contrast this current situation with his statement of March 2009 in
which he said that Oakajee is the single most important project for Western
Australia's economic development?
AnswerView source ↗
(1)–(2)
Members might be surprised to learn that the government does not control
Oakajee. The commonwealth and the state government have committed about $670 million
for the development of the port for the simple reason that a major deep seaport
on the Western Australian coast in the southern part of the state is going to
be a government-owned and controlled port. It will not be a Japanese-owned port
and it is certainly not going to be a Chinese-owned port; it will be a Western
Australian government–owned port. The timing and the development of
Oakajee is in the hands of the proponents. The proponent at this stage is
Oakajee Port and Rail—although it no longer has an exclusive right—which
is owned by Mitsubishi, having bought out Murchison Metals for some $400 million;
money a company would not spend unless it was serious about the project. Mitsubishi,
with the support of the state government in a policy sense, is working closely
with the Chinese mining investors in the area. They are all Chinese government–owned
enterprises along with Chinese financial institutions and the National
Development and Reform Commission. As part of undertaking their due diligence,
they have a team of over 100 engineers working on every single aspect of the
project to reduce its capital cost, and they are doing so with some success.
That process is ongoing.
It is a complicated project in
terms of its ownership, its financing, and the fact that many different parties
are involved on different mines and in different aspects of the project. I have
been around for a while and this is the most complex project I have dealt with
in the past 20 years or so. Why is it the most important project? I probably
should not call it the most important, but it is important because it is a
major resource project that involves in the order of $6 billion in investment.
It will liberate into the market some 14 billion tonnes of magnetite iron ore
principally. Through the Sino Iron project in the Pilbara we are about to
become a producer of magnetite. Magnetite is a high value-adding component of
the iron ore industry. High value adding means high local content, and that is
why it is important. The project will also generate literally thousands of jobs
in the southern part of Western Australia; and in the midwest region jobs that
can be accessed directly from Perth, but more importantly regional centres like
Geraldton and country towns in the northern wheatbelt. This is an opportunity—people
talk about spreading the benefits of the mining industry and increasing local
participation and jobs, and Oakajee will do it because it is developing in that
part of the state where the most people live.
For all of those reasons it is an
important project. It is at a critical stage because the negotiations taking
place principally in China between Mitsubishi and China are being done in
goodwill, and with strong support from this government, particularly through
the Department of State Development. I cannot give the member a time. The money
for Oakajee in terms of the state is preserved in a special account and will be
accessed when it is required. I hope it is required, and I hope that we have a
conclusion to these negotiations before the end of this year. The state
government is ready to proceed on its part of the project; that is, the
development of the port itself.
Members might be surprised to learn that the government does not control
Oakajee. The commonwealth and the state government have committed about $670 million
for the development of the port for the simple reason that a major deep seaport
on the Western Australian coast in the southern part of the state is going to
be a government-owned and controlled port. It will not be a Japanese-owned port
and it is certainly not going to be a Chinese-owned port; it will be a Western
Australian government–owned port. The timing and the development of
Oakajee is in the hands of the proponents. The proponent at this stage is
Oakajee Port and Rail—although it no longer has an exclusive right—which
is owned by Mitsubishi, having bought out Murchison Metals for some $400 million;
money a company would not spend unless it was serious about the project. Mitsubishi,
with the support of the state government in a policy sense, is working closely
with the Chinese mining investors in the area. They are all Chinese government–owned
enterprises along with Chinese financial institutions and the National
Development and Reform Commission. As part of undertaking their due diligence,
they have a team of over 100 engineers working on every single aspect of the
project to reduce its capital cost, and they are doing so with some success.
That process is ongoing.
It is a complicated project in
terms of its ownership, its financing, and the fact that many different parties
are involved on different mines and in different aspects of the project. I have
been around for a while and this is the most complex project I have dealt with
in the past 20 years or so. Why is it the most important project? I probably
should not call it the most important, but it is important because it is a
major resource project that involves in the order of $6 billion in investment.
It will liberate into the market some 14 billion tonnes of magnetite iron ore
principally. Through the Sino Iron project in the Pilbara we are about to
become a producer of magnetite. Magnetite is a high value-adding component of
the iron ore industry. High value adding means high local content, and that is
why it is important. The project will also generate literally thousands of jobs
in the southern part of Western Australia; and in the midwest region jobs that
can be accessed directly from Perth, but more importantly regional centres like
Geraldton and country towns in the northern wheatbelt. This is an opportunity—people
talk about spreading the benefits of the mining industry and increasing local
participation and jobs, and Oakajee will do it because it is developing in that
part of the state where the most people live.
For all of those reasons it is an
important project. It is at a critical stage because the negotiations taking
place principally in China between Mitsubishi and China are being done in
goodwill, and with strong support from this government, particularly through
the Department of State Development. I cannot give the member a time. The money
for Oakajee in terms of the state is preserved in a special account and will be
accessed when it is required. I hope it is required, and I hope that we have a
conclusion to these negotiations before the end of this year. The state
government is ready to proceed on its part of the project; that is, the
development of the port itself.
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