MELBOURNE (REUTERS) - Japan's Mitsubishi Corp has put its US$10 billion (S$12 billion) Oakajee port and rail project and Jack Hills mine expansion in Australia officially on ice, letting go of most of the people on the projects on Friday with the local chief executive stepping down.
Oakajee had long been envisioned as the key to opening up a new iron ore province in Western Australia outside the Pilbara region, which is the world's biggest iron ore exporter. But with the cooling of iron ore demand growth in China and a slump in iron ore prices, the prospects for the Midwest region dimmed.
Mitsubishi had been in talks with Chinese parties to line up a partner for the expansion of the Jack Hills mine and Oakajee, but as talks faltered last year, it put the port and rail project on hold with a first round of lay-offs last November.
"The difficulty we have is we just don't have an equity partner sitting next to us to develop this project," said Crosslands Resources and Oakajee Port and Rail chief executive John Langoulant, who is quitting at the end of June.
He declined to predict how long the project, with 3 billion tonnes of iron ore reserves, would remain suspended.
"Mitsubishi is a long-term investor. The project will be on care and maintenance until an investment decision is made to develop the mine. I wouldn't put a time frame on it," Mr Langoulant told Reuters.
The company let 15 people go on Friday, leaving just seven on staff to keep the Jack Hills mine on care and maintenance with a feasibility study for expanding the mine to be completed later this year.
The Oakajee port and rail plan's biggest advocate, state Premier Colin Barnett, predicted last November that the project would be frozen for at least two to three years. Following a trip to China, he said this week that the boom years for iron ore were clearly over.