Diversified Japanese industrial conglomerate Mitsubishi Corp has officially suspended the $10-billion Oakajee Port and Railway (OPR) project and Jack Hill iron ore mine expansion in Western Australia (WA) after announcing a ''slow-down'' earlier in November.
In a recent visit to China and Japan, WA premier Colin Barnett has been trying to lure investors for the Oakajee project. No positive outcome has been reported yet.
"A search for an investor has not been fruitful and that has led to (the project) being put on hold," Wall Street Journal reported quoting a person familiar with the suspension.
Mitsubishi Development Pty Ltd, a wholly-owned subsidiary of Mitsubishi Corp and the holding company of Mitsubishi's mineral resources investments in Australia, acquired full control of the Oakajee Port and Railway in 2012.
OPR is developing the infrastructure and supply chain business to transport iron ore from Western Australia's mid-west to customers across the globe.
The infrastructure includes development of deepwater port facilities at Oakajee, 445 km north of Perth, and integrated 570-km rail network to service operating and emerging iron ore mines and other port users in the region at a cost of $6 billion.
Simultaneously, Mitsubishi said it was deferring the expansion work at its Jack Hills iron ore mine, and putting it under care and maintenance.
Last year, Mitsubishi took control of the mine through the acquisition of Crossland Resources Ltd, the developer of Jack Hills, aiming for a multi-billion dollar expansion by transferring interests of the mine to potent partners.
The mine expansion envisaged augmenting its capacity from 1.8 million tonnes per annum to over 20 million tonnes by investing around $3.7 billion.
In November, OPR said the slow-down of work was due to difficult economic environment and lack of progress in talks with joint venture partners.
OPR chief executive John Langoulant said the move was a difficult but necessary step.
"Progressing partnership discussions for the mine, port and rail project in the current economic environment for commodities is particularly challenging, and is probably now harder than it was in November 2012 when the decision was made to reduce expenditure on the project," Langoulant said.
"The Jack Hills mine and expansion project will be properly maintained so they can be ramped up rapidly when the conditions allow," he further stated.
It is believed that the move will result in further job cuts in the project.
Slump in commodity prices are forcing resource companies to cut costs by shelving projects and disposing of non-core assets.
In recent months, iron ore prices have slumped by around 30 per cent from their recent high of $154 a tonne in February and are currently languishing at their 8-month lows.
According to Australian Bureau of Energy and Economic Resources, iron ore prices will average at around $119 in 2013 although they are likely to drop further to $90 level in the next five years.