24 Sep 2009 08:43

Australian defense department against WISCO's JV proposal

Shanghai. September 24. INTERFAX-CHINA - Australia's Department of Defense (DoD) will not support Wuhan Iron and Steel (Group) Corp.'s (WISCO) proposed joint venture project with Western Plains Resources Ltd. if an application is formally submitted to the Foreign Investment Review Board (FIRB), due to national security concerns, the South Australia-based company announced on Sept. 23.

WISCO inked an agreement in May 2009 to establish a 50:50 joint venture with Western Plains to develop magnetite deposits at the Hawks Nest project in South Australia.

In its notification to Western Plains, the DoD said it could not approve the proposed joint venture operations at Hawks Nest, because the project is incompatible with the DoD's activities at the Woomera Prohibited Area on safety, operational and national security grounds. As such, the DoD cannot grant the level of access to Hawks Nest required by WISCO.

The Hawks Nest project lies within the Woomera Prohibited Area, a parcel of land covering some 127,000 square kilometers in South Australia that is used for the testing of war materials by the Australian and allied defense forces.

In response, Western Plains said that the DoD's decision is a gross overreaction and that the DoD's concerns can be resolved by renewed constructive dialogue between the parties.

Western Plains is in talks with WISCO regarding a time extension for the transaction in order to further pursue this matter with the government.

The estimated resources at the Hawks Nest project total 569 million tons of iron ore grading 35 percent. Western Plains said it is possible that the project could produce more than 10 million tons of iron ore per annum for a period of more than 30 years. The company expects the feasibility study at the deposits to be completed in 2012.