Buoying Sino-Australian relations

One of the ten agreements signed in June was a memorandum of understanding between CBD and Aquila to explore development opportunities related to Aquila’s Queensland coal projects at Isaac Plains, Washpool and Eagle Down and Aquila’s West Pilbara iron ore project.

Another Chinese-backed port development is CITIC Pacific’s Cape Preston, which is being developed in conjunction with its magnetite project. The cost of CITIC’s Sino Iron project has recently ballooned from an original estimate of $US3.5bn to about $US5.2bn. It is the largest magnetite project in Australia, and CITIC is aiming to export 28bn tonnes of magnetite and pellets a year for 25 years.

The project includes a 450-megawatt power station, a 51-gigalitre desalination plant and a port at Cape Preston. MCC owns a 20% stake in the project and CBD has backed the US$1.3bn financing of this development.

Another of the ten deals signed in June was a Facility Agreement for US$1.2bn between Karara Mining Ltd and CDB for the construction of the new deepwater port and rail infrastructure at Oakajee, located in mid-west Western Australia about 450km north of Perth. Karara is a joint venture between Australia’s Gindalbie Metals and China’s Anshan Iron & Steel Group (Ansteel). The other user of the Oakajee port would be Sinosteel Midwest Corp which is developing mines in the area.

The Oakajee deepwater port is planned to have a capacity of 45m tonnes, including two Cape Class berths. Cost is expected to be US$4.4bn with completion in 2014. In the meantime, exports will be handled by the nearby Geraldton port.

The third agreement signed in June relating to Chinese investment in port infrastructure is between Resourcehouse Ltd, Export-Import Bank of China, MCC and China Power Holdings to establish a US$8bn coal project in Queensland. The China First Coal Project involves the construction of a mine, a 476km railway to the port of Abbott Point and the construction of a coal loading terminal.

The project is expected to result in approximately US$4bn in exports every year for 25 years. MCC is providing some of the estimated capital cost of the project and will be responsible for construction.