Padbury Mining announced this morning that they have secured 100% of the funding needed to build the Oakajee deepwater port and rail. The Oakajee Port and Rail project is expected to cost approximately $6 billion to build.
The money is coming from Australian private equity investors, a big surprise as many expected the Chinese to foot the bill.
With the limited space around the Geraldton port, and the fact that it cannot accommodate larger ships, Iron Ore miners in the Mid West have been wanting a longer term solution for some time.
A dedicated rail network will be built to connect mines in the Mid West to the new port.
Perhaps most exciting beyond the building of the port and rail, is the potential development of the land surrounding the Port as an industrial estate.
Around 15 years ago the state government purchased large amounts of farming land in Oakajee with the intention of developing it into a value adding industrial estate, conveniently located next to the deepwater Oakajee port and away from the more densely populated Geraldton. The land has been sitting dormant since that time, with tenants who rent the homes scattered about the area forbidden from using the land to grow crops.
The story of the non-event that the Oakajee Port has been to date is a long and frustrating tale for those who have wanted to see it built. But today's announcement puts it firmly back on the top of the top of discussions for the business community of Geraldton and WA.
While anyone who bought an investment property in Geraldton in the last 10 years probably wanted to see this happen a lot sooner, the timing for building the project at a reasonable price might actually be great. Anecdotal reports indicate mines around WA are starting to slow or finish their building and expansion projects, meaning less staff are required for day to day operations.
This has caused an influx of unskilled labor to arrive back in Perth and other regional areas around WA, as people's positions on the mines are no longer required.
This means the cost of labour may not be as high as it otherwise would have been to build the Oakajee deepwater port and rail infrastructure, making the project somewhat more feasible.
As we mentioned in our earlier article, Padbury acquired some intellectual property from Yilgarn back in 2011, which now looks like a very good move.
What still has to happen?
- The next step toward the project becoming a reality is the definitive feasibility studies. Pre-feasibility studies are underway, but there's a few more calculations that need doing apparently.
- Finding the right engineering, procurement and construction companies. It's a complicated project and will require world class expertise to make it happen. The CEO of Padbury is in Korea at the moment shopping around for the right contractors.
- Getting the miners and investors in the project to agree on pricing. Basically each mine in the Midwest that wants to use the rail and port infrastructure is going to have to pay, but if it's cheaper just to go to Esperance, then that could hinder Oakajee. The team Padbury put together need to get all the local mines to come to an agreement on price.
What will this mean for Geraldton?
While the amount of iron ore in the Midwest is not at the scale as our neighbours to the north, there's no doubt the extra funds flowing into the region will stimulate economic activity in Geraldton and the Midwest.
What do you think this will mean for Geraldton? What will the social impact be?