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Bipartisan approach needed to get vital Sino Iron project moving - Gary Grey

Mining News - Published on Tue, 21 May 2019

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The West Australian reported that in the late 1940s, WA parliamentarians thought of State agreements to underpin the development of Western Australia - the first being the Oil Refinery (Kwinana) Agreement Act 1952 that sparked the development of the State’s only major oil refinery. Since then, successive Liberal-National and Labor State governments have used this legislative tool to expand WA’s economy and create jobs. These State Agreements support big and long-term investments. They carry mutual obligations and apply in general to projects of scale. State Agreements have delivered tremendous outcomes for WA - jobs, wealth creation, regional development and royalties income - by providing the private sector investor the tenure, fiscal certainty and clarity to de-risk and to justify their significant investments.

The safeguard for the investor is that State Agreements cannot be changed without the consent of both parties - the State and the project propronent-cum-developer. It is a safeguard enshrined in State legislation and would require a bipartisan approach to change or be overruled by new legislation. But the benefits only flow mutually when the State Agreement is adhered to in terms of the rules of law — and rules of engagement.

Premier Mark McGowan’s frustration with the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002, referred to as the Mineralogy State Agreement, is therefore understandable.

The Mineralogy State Agreement, struck in 2002 between a Labor State government and the Clive Palmer-controlled Mineralogy Pty Ltd, underpins CITIC Pacific’s Sino Iron magnetite project south-west of Karratha. Sino Iron cost more than USD 10 billion to construct, is China’s largest single investment in Australian mining and has created thousands of permanent jobs in regional WA and Perth. The project takes low-grade magnetite and transforms it into a valuable high-grade commodity.

Notably, at the time the Mineralogy State Agreement was put in place it was contemplated that Mineralogy by itself or with other parties would develop the project. In fact, CITIC Pacific ended up being the party that ultimately developed and funded the project.

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Posted By : Rabi Wangkhem on Tue, 21 May 2019
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