A private company formed by Padbury Mining and backed by a major investor will fund the $6 billion Oakajee port and rail project in Western Australia, breathing new life into the mothballed project that was once in the sights of the Chinese and Japanese.
The funding agreement, expected to be announced tomorrow, comes as the project proponents are in South Korea to finalise a contract to develop the scheme, which is said to have been helped by Tony Abbott’s visit this week to finalise the free trade agreement.
Japan’s Mitsubishi, which beat the Chinese to win exclusive rights to develop the project, shelved its plans last year after failing to secure financing.
Junior company Padbury Mining took up the challenge of getting it developed, even before the Japanese plans collapsed, and has spent the past 18 months in financing discussions.
Australian-listed Padbury entered into a trading halt yesterday pending a “material announcement” on the execution of a project financing agreement for the development of the port and rail.
The trading halt would be in place until the announcement is made or tomorrow morning.
The funding injection is set to be the single largest investment in infrastructure in the Mid-West region.
The private backer, who The Australian has learned is a wealthy Australian, wants to remain a silent partner.
The funding is expected to be in three tranches, with the first tranche — to be the smallest — to enable early works to ready the project for construction.
The private investor is expected to earn a majority stake in a newly created private infrastructure company that will develop the port and rail.
The Australian understands the new private company will be named Mid West Infrastructure, which will become a subsidiary of Padbury Mining.
With the private investor expected to take just over a 60 per cent stake in the new venture, Padbury will hold a 30 per cent interest.
While the private investor is reluctant to be revealed, having the funding in place means the engineering, procurement and construction contract can be finalised.
It is understood top executives from Padbury and the silent investor are in South Korea talking to large engineering firms to finalise the agreement to construct the ambitious project.
The engineering, procurement and construction contract for the development could go to the likes of Samsung Engineering or Hyundai Engineering and Construction.
If the project, which has embarrassed the Japanese and the WA government over their failure to develop it, does finally get going it will prove a trigger for undeveloped resources in the Mid-West region. There are billions of tonnes of iron ore resources that no one can get out of the ground because there has been no infrastructure in place to get the steelmaking commodity to port and exported.
Padbury never believed the Japanese-backed project would be successful and the company spent $2.25m in 2011 to acquire the intellectual property from Chinese-backed Yilgarn Infrastructure, which lost a government tender to build the project in 2008.
Managing director Gary Stokes told The Australian last year the company always believed the project would get up, but it was a matter of having the right management team to execute the plan.