Murchison clings to hope for OPR

Murchison Metals says Sinosteel hasn’t given up on the Oakajee Port and Rail project despite withdrawing last week

Murchison clings to hope for OPR
Murchison clings to hope for OPR

By Anna Game-Lopata | June 27, 2011

Murchison Metals
says its key Chinese customer
Sinosteel Midwest Corporation hasn’t given up on the Oakajee Port and Rail (OPR) infrastructure project despite withdrawing last week.

The iron ore miner, which holds a 50 percent interest in OPR, today told investors Sinosteel remains willing to engage in ongoing discussions about the deep water port and rail infrastructure
project planned for Oakajee north of Geraldton in Western Australia.

Murchison last week halted trading when Sinosteel announced it would suspend the development of its $2 billion Weld Range iron ore mine, which represents one third of the proposed port's capacity.

According to Murchison, unresolved supply chain agreements are preventing the OPR project from moving forward.

"The fact that to date it has not been possible to reach common ground with the proposed foundation customers on tariffs andother commercial terms of the supply chain agreements remains a significant hurdle to the development of the project, and a point for further negotiation," Murchison says.

"To this end, Sinosteel is seeking a revised tariff structure or model and further certainty on scheduling, including the date by which the port and rail infrastructure will be delivered."

According to Murchison, feasibility studies for its OPR and Jack Hills projects are due to be received this week, with the expectation they will establish the viability of each.

"Murchison considers agreement on the supply chain agreements vital to the development of its projects and, as such, is committed to finding a solution which is acceptable to all parties," the company says.

"We acknowledge funding its proportionate share of the equity in the projects remains challenging. Accordingly, Murchison has already begun to advance discussions with parties interested in investing in OPR, including Chinese-related interests."

Murchison Metals jointly holds a 50 percent interest in OPR with Mitsubishi Development.

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