The long-term strategic view of Oakajee Port and Rail


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Jim Netterfield, Project Director, Oakajee Port and Rail delivered this presentation at the 2012 WA Transport Infrastructure Summit in Perth. For more information on the upcoming event, please visit

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The long-term strategic view of Oakajee Port and Rail

  1. 1. Oakajee Port and Rail Pty Ltd | ABN 25 117 240 007OPR is wholly owned by Mitsubishi Development Pty Ltd.Project UpdateWestern Australia Transport 201221-22 August, Novotel Langley PerthJim Netterfield – Project and Operations Director21/8/2012
  2. 2. The early days – OPR the preferred port proponent2“Technical assessment of the two proposals resulted in avery definitive recommendation in favour of Oakajee Portand Rail.“Its proposal was judged to be more developed and robustthan that of its competitor, and to present the State withthe best opportunity to develop a world-class port.“The evaluation panel and supporting technical teamsexamined in detail the commercial, legal, engineering,social and environmental aspects of the two proposalssubmitted.”- WA Government Media Statement – 29 July, 2008
  3. 3. The early days – Rail component added, CUI committed3
  4. 4. Oakajee Port and Rail – The vision4
  5. 5. The ultimate configurationStrategicindustry zoneand generalindustry zonePort landzoneIron oreindustryzoneCoastalzone*Estate and associated zones not to scaleRailwayBuffer zone5
  6. 6. The Infrastructure Task – Agreed design principles6The State’s performance requirements An integrated logistics chain Port/rail infrastructure initially capableof accommodating at least 35mtpa Berthing capacity for Cape-size vessels Breakwater to withstand major storms Open access arrangements Berthing capacity for cape-size vessels Expansion allowing for future growth
  7. 7.  On the existing base case (45mtpa), the OPRmodel delivers the lowest unit cost of capacityand lowest absolute capital cost Extensive independent peer review and valueengineering assessments endorse OPR’sapproach Standard- Gauge (37TAL) is based on the globaliron ore experience – moving large tonnages along way for the least cost Delivers optimal efficiency, and maximises theopportunity for future expansion Meets the needs of multiple customersOPR’s basis of design - Fit-for-purpose, lowest-cost solution7
  8. 8. Port design - key metrics8Initial ~ 45mtpa (wet)• 2.5km breakwater• 2 Cape-size vessel berths• 18.3m laden draft• 1 shiploader• 1 reclaimer• 1 rail car dumper (dual car, single cell)• 2 stackers
  9. 9. Port design – Critical factors9
  10. 10. Port design – Trestle (jetty), unsuitable for local conditions10Dalrymple Bay Coal Terminal - Queensland
  11. 11. Rail design – key metrics11Initial ~ 70mtpa• 570km single track• Standard-Gauge, Heavy haul, 37tonne axle load (TAL)• Six 2.5km passing tracks, withexpansion capability• 11 bridges, 19 public road railcrossings• 3190 culverts, 466 locations• Earthworks –total fill volume 8.16m3, total cut 5.28 m3
  12. 12. Rail design – Route12• Main line to Jack Hills• Spur to Weld Range• Spur to southern mines• Rail route approved byWA Government, nowawaits passage throughParliament
  13. 13. Alternatives? – “Another route, upgraded legacy rail”13Use legacy grain networks, upgraded to 26 tonne axle load (TAL)- for the base case, 26TAL total capital cost (inc. rolling stock) vs 37TAL Standard-Gauge$500m at 45mtpa $1.8b at 100mtpaOperating Cost - 37TAL Standard-Gauge provides: Half the number of ore cars A fifth of the locomotives Up to a third of the train sets Less train movements mean less congestion,which means faster loading times
  14. 14. Alternatives? – “Supersize the Narrow-Gauge”14Narrow-Gauge 32TAL?• Unprecedented and untested – world’sheaviest axle-load for Narrow-Gauge• The closest – South Africa’s Transnet(30TAL), trains are up to 4km long• Only 5% saving on initial below-rail capex –more than offset by higher cost of rollingstock• Completely incompatible with longer termplans for an intermodal port, withcontainer capability
  15. 15. Rail design – Heavy haul rail, an industry standard15• The Pilbara experience – Standard-Gauge,heavy haul from the very beginning• Vale’s EFC (Broad-Gauge) 32.5TAL, aimingfor 37TAL by 2016• Sweden’s Malmbanan Railway (Standard-Gauge) – currently 30TAL, with plans toincrease to 32.5TAL
  16. 16. Opening up the region’s magnetite/hematite deposits16WA’s Mid-West can become aglobally-significant iron ore provinceIt has: Superior product quality Steel mills’ desire fordiversification away from “Big 3” Proximity to Asia State and Federal GovernmentsupportBut: There’s a dilemma…
  17. 17. Facts and fiction - The mid-west dilemma172011 Mid-West Iron OreExports Total – 5.8mtpa
  18. 18. Jack Hills will be critical18• One of the most significant ore reserves in the mid-west (more than 3.2b tonnes)• Delivers the tonnages, underpins viability of port and rail infrastructure• Crosslands has undertaken a Strategic Asset Review of JHEP, optimises theextraction of the resource, now finalising a Definitive Feasibility Study“Higher tariffs to subsidise Jack Hills”• Agreed Project Principle – open access to infrastructure, on fair and equitable terms• Oversight from independent Economic Regulation Authority
  19. 19. Approvals – EnvironmentalWell advanced19OPR requires environmental approval for the project under:• State - Part IV of the Environmental Protection Act 1986 (WA)• Commonwealth - Environment Protection and Biodiversity Conservation Act 1999(EPBC Act) due to potential impacts to matters of National EnvironmentalSignificance (NES)APPROVAL PROGRESSApproval Components State CommonwealthPort Marine Development Approved ApprovedPort Terrestrial Development Approval recommended by EPAMarch 2011Awaiting Ministerial approvalApprovedRail Development Approval recommended by EPAMarch 2011Awaiting Ministerial approvalApproved
  20. 20. OPR ownership restructure – $A325m vote of confidence20100%50%50%Post 20 February 2012Before 20 February 201225% 25%50% 50%50%
  21. 21. Next tasks21• New equity partner(s)• Negotiate EPCM contract / mobilisation• Complete environmental approvals• Complete Implementation Agreements• Finalise CSIRO Co-existence Agreementand necessary Commonwealthcommitments regarding SKA• Complete Native Title and heritageagreements• Finalise Bankable Feasibility Study• Complete Supply Chain Agreements• Project Go Ahead/Constructioncommencement• First ore on ship
  22. 22. Disclaimer22• The information provided in this presentation ( “information”) is commercially sensitive and confidential to MitsubishiDevelopment Pty Ltd (“MDP”), its related bodies corporate, Oakajee Port and Rail Pty Ltd (“OPR”), Crosslands Resources Limited(“CRL”) (together “OPR Parties”).The information must be treated as strictly confidential and must not be disclosed to any thirdparty without MDP’s prior written consent.• Each of the OPR Parties, and their respective shareholders, officers, employees, partners, joint venturers, directors,representatives, agents and advisers (each a “Relevant Person”) makes no representation as to the accuracy, currency,completeness or sufficiency of the information , nor as to the reasonableness of any assumption contained herein or used inpreparing the information. No person may rely on any of the information and each Relevant Person expressly disclaims, to thefullest extent permitted by law, any and all liability for any loss, damage or cost (whether direct, indirect or consequential)suffered or incurred by any person relying on or in connection with any information, including as a result of any omission,inadequacy, insufficiency or inaccuracy in the information (including, without limitation and to the fullest extent permitted bylaw, any liability arising from any misrepresentation, fault or negligence on the part of any Relevant Person).• In particular, the Relevant Persons make no representation as to any future matters or assumptions or as to the accuracy,reasonableness , likelihood of achievement, or completeness of any estimates, projections, targets, opinions, prospects, returnsor forecasts concerning the anticipated future performance of OPR, CRL, the Jack Hills Project, the Oakajee Rail Project, theOakajee Port Project, or the industry in which any of them operate (“Forward Looking Statements”) or that any such ForwardLooking Statements will be achieved. You should make your own independent investigation and assessment of the ForwardLooking Statements.• Nothing contained in this presentation constitutes investment, legal, tax or other advice.• The information is current as at the date of this presentation or such other date as stated. Circumstances may change and thecontents of this presentation may become outdated as a result. The Relevant Persons will be under no obligation to provide youwith access to any additional information, to update the information or to correct any inaccuracies that may become apparent inthe information after its date.
  23. 23. Oakajee Port and Rail Pty Ltd | ABN 25 117 240 007OPR is wholly owned by Mitsubishi Development Pty Ltd.End of PresentationPERTHOFFICE MID-WESTOFFICEt +61 89486 0777 t +61 8 9938 4900f +61 89486 0799 260 Foreshore DriveL3,33Richardson Street Geraldton, Western Australia6530West Perth, Western Australia6005Want to know more?