WA: Oakajee agreement questioned

According to the Oakajee agreement, Chinese companies are to be involved in the provision of fabricated steel rail cars, engineering and construction services and debt financing.

The unique wording of the clause in the development agreement between OPR and the West Australian government is contained in an internal email from the Department of State Development that was tabled in parliament last year. Premier Colin Barnett has refused to release the entire agreement.

Mr Barnett has been pushing for Chinese companies to become equity investors in the Oakajee project, which has been hit by major delays and cost blowouts.

OPR is owned by Japanese corporate giant Mitsubishi and troubled Perth miner Murchison Metals, which is planning to sell its half-share to Mitsubishi. The port and rail infrastructure is being planned to service several iron ore mines in WA's emerging mid-west region to open it up for exports, mainly to China.

Chinese interests own major stakes in the region's mines, but missed out on building the infrastructure when OPR won the government tender in 2009.

The Australian Manufacturing Workers Union state president, Steve McCartney, said yesterday Mr Barnett should disclose the extent of China's involvement in providing goods and services to Oakajee.

"Colin Barnett became the first premier in WA's history to sign a state development agreement which gave preference to Chinese fabricators over local fabricators to supply to the Oakajee project," Mr McCartney said.

"What we want to know is that when the Premier went to China recently to seek financing for the Oakajee project, what else has he offered them in exchange? This has a real impact on the local community."

Figures released by the ABS last month revealed the number of manufacturing jobs in and around Kwinana fell from 14,000 to 12,000 over the past year and youth unemployment in the area has gone past 25 per cent. The peak body representing steelmakers, the Australian Steel Institute, has complained that the clause in the Oakajee agreement stipulating Chinese involvement was unfair because the local steel industry was not consulted.

Mr Barnett, who was unavailable for comment yesterday, has maintained that the vast majority of the Oakajee project will be Australian-built.

An OPR spokesman said the company aimed to provide opportunities for Australian and international suppliers and businesses to be involved in the project.

“OPR will balance its obligations under the State Development Agreement and ensuring that our procurement and contracting approach encourages local industry involvement in the project,” the spokesman said.

The controversy over Oakajee comes as unions also complain that a Chinese-owned mine project in WA has imported huge amounts of Chinese steel and equipment, including concrete footpaths at accommodation.

The Australian Workers Union says the $US6 billion Citic Pacific-owned Sino Iron project in the Pilbara has used 100,000 tonnes of imported steel, as well as Chinese pipes, plumbing, power generation and refrigeration infrastructure. A spokesman for Citic Pacific Mining said yesterday the level of local content investment to date was more than 70 per cent.

ASI has also expressed concerns to the government about the amount of Chinese steel to be sourced at the Daunia Coal mine project in Queensland.