Jobs on line at Oakajee

Up to 1000 construction jobs in regional WA are in doubt following the turmoil surrounding the nation’s largest infrastructure project.

Oakajee Port and Rail (OPR), an iron ore port and rail network based 22km north of Geraldton, suffered a major blow last week when one of its foundation customers pulled out.

Chinese-owned Sinosteel Midwest immediately ceased operations at $2 billion Weld Range and shut its Geraldton office.

The move immediately made 43 workers redundant and put 1000 construction jobs in doubt.

Sinosteel chief operating officer Julian Mizera said the company “had to draw a line in the sand” after losing $100 million per year from setbacks to Oakajee.

OPR’s other foundation customers, Karara Mining and Crosslands Resources, are still forging ahead with their operations.

Gindalbie Metals, 50 per cent owner of the Karara iron ore project, planned to cart ore through Geraldton Port as well as Oakajee.

Gindalbie Metals managing director Tim Netscher said delays to Oakajee would not affect the Karara project in its initial stages.

“The Karara iron ore project is investing more than $200 million on infrastructure at Geraldton Port to enable capacity of approximately 16 million tonnes per annum,” he said.

Mr Netscher said Karara relied on Oakajee for production beyond 16 million tonnes.

The miner is assessing when it will get to that point, but it is likely it will not need Oakajee for the next five or six years.

Crosslands Resources, a joint venture between Murchison Metals and Japanese Mitsubishi Development, is developing the Jack Hills Expansion Project (JHEP).

JHEP, potentially the biggest iron ore mine in the Mid West, is on track to deliver its feasibility study at the end of June.

Japanese company Mitsubishi and Murchison also own Oakajee Port and Rail. This ownership structure caused some conflict as the bidding war for the project took place.

Murchison said this week that its failure to negotiate supply agreements with potential customers “remains a significant hurdle” to the future of the development.

Murchison also said that funding its 50 per cent share of the project “remains challenging” and that the company had entered discussions with interested Chinese parties.

Chinese iron-ore trader Sinosteel was seeking a revised tariff structure and further certainty on scheduling, including the date by which the port and rail infrastructure would be delivered, Murchison said.

The Oakajee project and JHEP are equally dependent on one another.

Sinosteel’s Weld Range iron ore project, 380km north-east of Geraldton, was set to start production in 2015.

The mine would provide 15 million tonnes of ore per year to Oakajee for at least 15 years.

Sinosteel is to continue operations at its Koolanooka and Blue Hills deposits, which jointly provide about two million tonnes of ore through Geraldton Port per annum.

The State and Federal governments jointly committed $678 million to Oakajee, based on initial estimates of $4.4 billion.

Costs at Oakajee have since blown out to $5.2 billion and reports have pegged the project at more than $6 billion.