Murchison wins port tender

OPR was competing against Yilgarn Infrastructure, a group backed by Chinese state-owned enterprises including Sinosteel - the majority shareholder of rival iron-ore miner Midwest.

The status of preferred tenderer does not extend to building the $2 billion railway needed to service four iron-ore projects in the region, but OPR's development of the port should give it a leg-up in commercial negotiations.

A technical assessment of the rival tenders had resulted in a "very definitive" recommendation in favour of OPR, said the Premier, Alan Carpenter. "Its proposal was judged to be more developed and robust than that of its competitor."

Murchison shares surged 24c to close at $3.

OPR, which is a 50/50 joint venture between Murchison and Mitsubishi, plans to fund 60 per cent of the project with debt and 40 per cent with equity.

The chief executive of OPR, Christopher Eves, said indicative term sheets had been "extensively negotiated" with NAB, ANZ, Westpac, Commonwealth Bank and five international banks to provide the debt funding.

To fund its share of the equity, Murchison will use the funds from selling half its iron-ore deposits to Mitsubishi once its feasibility study is done next year.

OPR will negotiate with the WA Government to reach a legal commitment to develop the port by the end of the year. But it will not start construction until Murchison and Midwest have proved their projects have progressed to the point of being able to feed the infrastructure.

"Because the project is financed by the private sector, it needs to respond to market demand, not lead market demand," Mr Eves said.

The level of confidence in developing the mining projects is expected to firm by the middle of next year, meaning the port - initially capable of exporting 35 million tonnes a year - could be operational as early as 2012.

A spokeswoman for Yilgarn said that the consortium would continue to examine the construction of a railway and a second berth at the Oakajee port.

Although the Oakajee port will be constructed by OPR, the WA Government will retain ownership with the Geraldton Port Authority as the operator.

Mr Eves said OPR planned to contact Midwest as soon as possible to discuss railway options now that it was released from confidentiality requirements, having nominated Yilgarn as its preferred infrastructure provider. Although Sinosteel had planned to help fund the Yilgarn proposal if successful, it is understood the Chinese company is indifferent as to who owns the infrastructure.