Gas Week

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Rivals China and Japan in fight to build key infrastructure for WA minerals; open tender between proponents cancels govt-Midwest deal

Posted by gasweek on 26 September, 2007

Midwest was promoting a $3 billion Chinese-financed plan led by Aus­tralian company Yilgarn Infrastruc­ture to build open-access port and rail infrastructure in the mid-west region, touted as the next Pilbara region for Australian iron ore exports, wrote Andrew Burrell in The Australian Financial Review (27/9/2007, p.11).
Sensitive rivalry: But the WA Government was facing a sensitive political exercise given a rival proposal by fellow mid-west miner Murchison Metals was backed by Japanese giant Mitsubishi. The contest in effect pitted the state’s two biggest export partners, fierce rivals China and Japan, in a fight to build key infrastructure. Deputy Premier, Eric Ripper, wrote to Midwest in July outlining the government’s plan to abandon a decades-old state agreement that gave the company the exclusive right to develop the infrastructure. The government now intended to set up an open tender between the two proponents and it was hoping to avoid a situation like that experi­enced in the Pilbara where third parties have been been unable to access infrastructure built by BHP Billiton and Rio Tinto.

Outdated deal: Speaking in State Parliament, Ripper accused Midwest of not honouring all its obligations under the state agreement, including failing to submit annual reports to the government. He said Midwest and its prede­cessors had “sat on this agreement doing virtually nothing” for more than 30 years. While the company had ignored its obligations under the agreement, it had also been “parading” the agreement as a way of attracting financial support for its Weld Range project. He said he did not consider the agreement to be a suitable vehicle because much of it was outdated. For example, he said the agreement created obligations for the State Electricity Commission and the WA Government Railways Commission – two entities that no longer existed.

Midwest begs to differ: Midwest Corp said in a statement last night it had received legal advice that the state agreement was valid. The company said it was still seeking a meeting with Ripper to explain its position.

The Australian Financial Review, 27/9/2007, p. 11

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