Western Australia seeks Oakajee port investment

Western Australia Premier Colin Barnett said Tuesday during a visit to China that he is looking for Chinese investment in a port project at Oakajee after a Japanese company decided to scale back its investment.

Plans for a new deep-­water port at Oakajee in Western Australia were shelved after Japanese trading giant Mitsubishi scaled back its funding in November because of a big increase in costs, volatile iron ore prices and a weakening global economy.

"The door is open now for China to become more involved in the infrastructure," Barnett told reporters in Beijing.

According to Barnett, state and federal governments will concentrate on port development, while the Chinese side can focus on mine and rail development linked to the port.

Five State-owned enterprises (SOEs) in China had previously shown interest in investing in the Oakajee project, but they lost the bid to Japan's Mitsubishi in 2008.

Barnett said he is making efforts to push the project and trying to bring together the interests of China, Australia and Japan on the heels of growing tensions between the two Asian countries over sovereign territorial disputes.

Barnett met officials from the National Development and Reform Commission, China's top economic planner, on Tuesday in Beijing, discussing potential cooperation on the Oakajee project, but he did not disclose details about the meeting.

The premier of Western Australia is also calling for Australia's Foreign Investment Review Board to give fair treatment to China's SOEs, as currently the board reviews investment from SOEs more strictly than other foreign investment.

But Chinese investors have become increasingly cautious about investing in Australia after losses were reported by Chinese companies involved in several Australian projects.

For instance, Metallurgical Corp of China, the country's leading metallurgical conglomerate, said it lost 3.1 billion yuan ($505 million) in 2012 in building a magnetite iron ore mine project in Western Australia.

"Chinese investors should look carefully at the Oakajee project, as the port will be mainly used for exports of iron ore from the magnetite-rich midwestern region," Zhang Jiabin, an analyst with steel industry portal umetal.com, told the Global Times Tuesday.

"Mining costs for magnetite iron ore are high in Australia," he said.

"Furthermore, shipping rates for iron ore are at a low level currently but are very likely to rebound in the future, which will add costs for Chinese iron ore importers and make iron ore produced in the region less appealing."