THE Japanese-backed Oakajee Port and Rail (OPR) consortium expects to rely on Chinese-supplied construction materials to develop Mid West's $4 billion rail and port infrastructure network.
OPR chief executive Chris Eves said he had already spoken to AnSteel, one of China's biggest stell mills and the controlling partner of the Karara magnetite project in the Mid-West, about providing stell for the rail network while he was also considering Chinese rail wagon suppliers.
Mr Eves said he expected the signing of the Oakajee port and rail development agreement with the WA Government yesterday to trigger a flood of interest from parties interested in participating in the project.
"I'm proposing to visit China very shortly to convey the fact of our appointment and indicate opportunities, as I will be going to Japan and Korea," he said.
South Korean steel mill Posco, already a big shareholder in OPR part owner Murchison Metals and an iron ore offtake partner, has been in touch. Japanese conglomerate Mitsubishi is OPR's other owner.
But it is Chinese suppliers that loom as key for OPR.
Chinese interests own a big portion of the Mid-West region's proposed iron ore production - in addition to AnSteel's Karara stake, Sinosteel owns Midwest Corp and Human Valin is a shareholder in Golden West Resources - and are also set to become the main buyers of ore transported through the Oakajee port and rail network.
The infrastructure was the missing link in China Inc's vertical integration in the Mid-West, which is why it backed unsuccessful Oakajee bidder Yigarn Infrastructure.
It is understood OPR, only too aware that China holds the key to the economic success of the Oakajee port and rail network, will try to sign up China Inc as suppliers to the project and structure payments around future iron ore port and rail haulage fees.
The signing of the development agreement yesterday will trigger a 12-month period for OPR to complete a bankable feasibility study before it signs an implementation agreement with the Government and raises the necessary finance.
Premier Colin Barnett said he expected WA and the Commonwealth to fund $678 million worth of plublic infrastructure such as the breakwater and shipping channel, leaving OPR to come up with about $3.3 billion.
Mr Eves said he expected debt to make up about 60 per cent of project funds, with financial close due by October next year.
OPR has a debt mandate with Australia's big banks, backed by Mitsubishi and Japanese institutions, and Mr Eves said he was confident of being able to raise the money despite the global financial crisis.
He was supported by Mitsubishi executive Saburo Takeuchi, who said: "We're in here for certainly a 50 year project. The speed (of the downturn) is obviously faster than we expected but again, we're looking at a project construction finishing off in 2013."
OPR plans to build two berths capable of handling 35 million tonnes of ore a year, predominantly from Murchison-Mitsubishi's Crooslands Resources, Karara and Midwest.