Oakajee chaos cuts WA's power needs

29 Jul, 2011 08:33 AM

THE turmoil affecting Western Australia's Oakajee port and rail development has had a silver lining: the state's electricity planners have been able to strip a medium-sized power station from their long-range needs because of the delay in the port development and associated mines.

In an update to potential investors in WA's electricity sector, the state's Independent Market Operator (IMO) has released its annual "statement of opportunities".

It shows WA's mid-west region will need 200 megawatts less power by 2013-14 than forecast last year, reports The Australian Financial Review .

IMO chief executive Allan Dawson said the scaling back in the energy forecast was the result of continuing delays in mining projects in the mid-west, which could be further delayed by recent troubles at the Oakajee port and rail project.

The Oakajee project was thrown into disarray last month following a decision by one of the miners lined up as a foundation customer to suspend its flagship project.

Sinosteel Midwest, a subsidiary of giant Chinese iron ore trader Sino-steel, announced it would "park" its $2 billion Weld Range iron ore project in the region until the uncertainty surrounding the cost and timing of Oakajee was resolved.

Oakajee, which is being developed by Murchison Metals and its Japanese partner, Mitsubishi, with federal and state backing, was originally supposed to have been shipping iron ore by next year, but this will now be 2015 at the earliest.

Murchison launched a management shake-up and review of its operations earlier this month amid a blow-out in the cost of the Oakajee project to $5.94 billion from original estimates of about $4.3 billion.

Sinosteel and the other company lined up as a foundation Oakajee customer, Gindalbie Metals, are concerned over access fees for using the port and rail, given the project's rising costs.

The Australian Financial ReviewSource: http://www.afr.com


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