Analysis missing from WA govt's port spend

The West Australian government leapt into committing millions of dollars to the
Oakajee Port development in the state's midwest without properly assessing whether
it was a worthy investment, a parliamentary committee says.
The state government in May last year pledged to contribute $339 million to the $4.4
billion Oakajee project, which was swiftly matched by the federal government
following lobbying by WA Premier Colin Barnett.
"The decision to fund the common-use infrastructure at the Oakajee Port project was
made without a cost-benefit analysis," a report tabled by a parliamentary committee
on Thursday said.
"Therefore, at the time the decision was made, it was not clear whether this
arrangement represented the best value for money for the state.
"The Commonwealth funding for the Oakajee Port common-use infrastructure is
contingent on the bankable feasibility study (BFS) demonstrating a positive
cost-benefit outcome and commercial rate of return.
"If the positive cost-benefit outcome is not demonstrated in the BFS, and the
Commonwealth does not proceed with its equity injection, it is not clear what impact
this would have on the state government's contribution to the project."
Murchison Metals Ltd, which is developing the project under its Oakajee Port and
Rail joint venture between Japan's Mitsubishi, this month pushed back the target
date for completion of the BFS from the December quarter of this year to the second
quarter of 2011.
Murchison has also moved to quell speculation that Mitsubishi wants to pull out,
with chairman Paul Kopejtka labelling the talk "a concerted campaign of
destabilisation based on rumour and misinformation".
"I would like to assure shareholders that we are committed to completing the
feasibility studies for the projects and thereafter financing and project go ahead,"
Mr Kopejtka said at the company's annual general meeting in Perth on Wednesday.
"We plan to complete the financing process, incorporating both debt and equity, in
the period following completion of the feasibility studies and prior to project
go-ahead.
"We are working with the state government on the issues that arise from the revised
schedule, and I am confident of an outcome that will realise our common goal of the
development of a deepwater port at Oakajee and the opening up of the midwest
region."
Oakajee Port will export iron ore from a swathe of new mines starting up in the
midwest region amid congestion issues at the nearby Geraldton Port.



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