On July 4, Australia-based iron ore miner Murchison Metals (Murchison) announced some changes in its top management due to Oakajee port and rail (OPR) project cost blowouts. The cost estimate of the infrastructure project in the emerging Midwest iron ore production region of Western Australia has risen to A$5.94 billion (US$6.38 billion) from the March estimate of A$5.24 billion (US$5.63 billion), representing a 35 percent surge in capital costs.
The latest cost estimate for the project followed the uncertainties caused by Chinese iron ore trader Sinosteel's decision to suspend the building of the A$2 billion Weld Range iron ore project because of delays to the OPR project development. Sinosteel was a foundation customer in the project.
In March, Murchison first denied a report by local newspaper The Australian about the project cost jumping to A$6.7 billion (US$7.1 billion), but then admitted it was likely to be higher than the original estimate. Murchison and its partner, Japan's Mitsubishi, are responsible for building a 570 km railway with a designed capacity of 45 million mt per year to link iron ore mines in Western Australia's Midwest to Oakajee port.