Momentum building for Oakajee development

Oakajee Port & Rail received a strong level of interest from Mid-West miners wanting to participate in the first round of exports from the proposed port.
Expressions of interest from the miners, which forms part of OPR's feasibility studies, exceeded the port's Stage 1 capacity of 35 million tonnes a year.
OPR chief executive John Langoulant said he was pleased with the level of demand.
"This takes the project to a new level of confidence in terms of economic viability," Langoulant said.
"It also demonstrates that there is potential to expand the project beyond its initial Stage 1 capacity."
Several miners have already expressed an interest in the port's Stage 2 export capacity, he said.
OPR is currently conducting detailed analysis of the tonnage nominations to determine the composition of the allocation of Stage 1 export tonnages.

Background
Oakajee Port and Rail (OPR) is the developer of project which will create a deepwater port, 25 kilometres north of Geraldton, linked to regional mines by approximately 570 kilometres of rail.
Oakajee Port and Rail’s chief development officer, Alwyn Vorster, said the project was working toward project go-ahead.
“With iron ore demand strong, and promising announcements from mid-west miners, OPR remains on track to begin ore shipments from the new Oakajee Port in late 2013, early 2014,” said Vorster.
Vorster believed the business case for the project is compelling.
“This project will underpin the development of a new resource region for Western Australia. It will overcome constraints at Geraldton port on export capacity and the ability to accommodate the larger Cape Class vessels needed by major exporters,” he said.
“Long term demand for iron ore remains strong. The project will allow the expansion of the mid-west mining industry by reducing the delivered cost to market of iron ore.
“Mines, Government and OPR all have a common goal of transporting mid west ore to international markets efficiently, competitively and safely.”

Open access supply chain
The Oakajee project will deliver an integrated open access, bulk commodity supply chain to transport iron ore from the mid-west region to international customers. The bulk commodity supply chain is based on contemporary principles of open access, coordination and integration to deliver maximum efficiency to miners.
The port will have an initial, start-up capacity of around 35 million tonnes per annum (mtpa), with plans for future expansion as the demand grows. This will make it one of the largest bulk commodity ports in Western Australia.
The associated open access rail network, to be funded, constructed and operated by OPR, will be scalable to allow operations up to 80-100mtpa with single track and passing loops. System and train control will be situated at Oakajee. The rail infrastructure includes spur lines to Jack Hills and the Weld Range and a short spur to allow connection to the southern mines.
Vorster said the project needed the collaboration of mid-west miners to ensure its success.
“The OPR business model needs to be aligned with the business models of the mine customers,” Vorster said.
“This project will only be bankable and proceed if we align the commercial interests of the mines with that of the infrastructure service provider.”

Unique partnership
The Oakajee project represents a unique investment partnership between an independent infrastructure provider, Government, the private sector, and Australian and international partners.
OPR was established in September 2007 to pursue a joint venture between Murchison Metals Ltd and Mitsubishi Development Pty Ltd, each of which has a 50 per cent economic interest in OPR.
The Western Australian and Federal Governments have committed $678 million for the construction of the common use port infrastructure, including channel, turning basins and breakwaters. OPR will construct and operate the infrastructure and the Western Australian Government will own the facilities.
The Oakajee Port and Rail State Development Agreement signed in March 2009 provides the springboard for the development of major iron ore mines and other resource projects in the region.

Under the Agreement:
• OPR secured exclusive rights for the development of the port infrastructure and northern rail infrastructure to ensure an integrated and seamless supply chain;
• The State and Federal Governments committed to contribute funds for the construction of the outer harbour common use infrastructure, such as channel, turning basins and breakwaters; OPR would construct and operate the common use port infrastructure on behalf of the State Government, which would own the facilities;
• OPR would fund, operate and own the private use port infrastructure and its integrated open access rail; and
• Opportunities would be identified for local, Australian, and international entities (including private and State owned Chinese) to potentially participate in the project.

Targets achieved
The project is working toward financial close and project go-ahead – a decision due late 2010, early 2011. OPR has achieved all its target development milestones in 2009 and its achievements to date include:
• Signed confidentiality agreements with key mine customers to form a basis for negotiations.
• Signed agreements with landholders in the rail feasibility corridor to access land for study purposes.
• Contract awarded for the design of rail bridges.
• Completed drilling investigations over the port dredge area.
• Completed basis of design document.
• Assessment levels for both the terrestrial port and the rail parts of the project determined by EPA as Public Environmental Review (4 week public review period).
• Commenced environment and Aboriginal heritage surveys in the rail feasibility corridor and port site.
• Completed a review of the cyclonic and non-cyclonic wave conditions on the marine structures at Oakajee.
• Commenced detailed modelling and analysis of Long Wave Period impacts at Oakajee.
“This is a complex, infrastructure project with a huge range of challenges. We are diligently working through them and assembling a team of experts to ensure our project is an efficient solution for mid-west miners,” said Vorster.
In late January the OPR team was bolstered by the appointment of new chief executive officer, John Langoulant.
In previous roles Langoulant was Under Treasurer in the Western Australian Government, CEO of the WA Chamber of Commerce and Industry and, most recently, CEO of Kerry Stokes’ private investment group Australian Capital Equity.