One issue was that the Chinese groups were wary of dealing with an infrastructure provider that was aligned with both Japan and a competing miner.
Another issue was cost, which blew out from an estimated $2 billion initially to more than $4 billion. Layered on top of that was the softening of the global iron ore market.
The doubts over the project escalated in June 2011 when Sinosteel halted development of its $2 billion Weld Range iron ore project.
Sinosteel said its mine, anticipated to produce 15mt annually, was too costly to maintain while awaiting- ing the Oakajee port green light.
In late 2011, Mitsubishi bought Murchison Metals out of the port-and-rail project.
This was more of a last-ditch effort to keep the project alive than a sign of confidence it would proceed.
As the iron ore market continued to weaken, Mitsubishi wound back its funding for OPR during 2012 and halted work on the project entirely in June 2013.
Oakajee was back in the news less than a year later, but this time for all the wrong reasons.
Little-known Perth company Padbury Mining had been quietly working on Oakajee after acquiring intellectual property and engineering studies from Yilgarn Infrastructure in 2011.
It stunned the market in 2014 when it claimed to have lined up more than $6 billion of funding to revive the port-and-rail project.
Padbury, led by former state government executive Gary Stokes, suffered a fatal credibility blow when it emerged its mystery funder was an Australian business figure with a chequered history – hair regrowth entrepreneur Roland Bleyer.
Less than three weeks after announcing the deal, Padbury terminated its so-called funding agreement.
Padbury subsequently went through a major restructure and emerged with new directors and a new name – AustSino Resources Group.
AustSino was at the centre of last month’s surprise announcement that a little-known Chinese group was planning to invest $100 million in Oakajee and other iron ore projects.
The Chinese investor was a private sector company named Western Australian Port Rail Construction (WAPRC).
Its major shareholders are Shanghai-based investors Li Ping and Qiu Yu Hu, who according to AustSino are involved in businesses within the industrial, property and technology sectors.
WAPRC plans to acquire a 61 per cent stake and effective control of AustSino via the purchase of 7.6 bilion at 1.3 cents each.
Using the proceeds WAPRC placement, Austino plans to acquire a majority stake in Perth-based Resources, which has been seeking to develop the Mbalam Nabeba project in Cameroon.
AustSino also plans to invest in its iron ore tenements in the Mid West, including the Peak Hill deposit, about 650km north-east of Geraldton, and undertake engineering studies at Oakajee.
This followed the announcement in May that AustSino had hired Churchill Consulting to prepare a concept study looking at infrastructure solutions for the Mid West.
Boutique advisory firm Contour Capital, led by former KPMG partner Duncan Calder, is also working for AustSino.
“The company believes the time is right to re-evaluate previous options and scenarios and to explore fresh ideas which may assist in finally developing a viable economic infrastructure solution for the region,” AustSino stated.
The West Perth-based company said its preferred model would be for its proposed project partners to directly fund the development of port and rail infrastructure under a ‘build own operate transfer’ model and to recover the cost via tariffs paid by mining companies. It concluded by saying there was no certainty this would happen.
COMPANIES MENTIONED:
AustSino Resources Group, Mitsubishi Corporation, Sinosteel, Padbury Mining, Churchill Consulting, Sundance Resources
Oakajee pg. 15