Sinosteel Midwest, formed in 2008 when Sinosteel took over iron ore miner Midwest, said on Thursday it had stopped all major work at its Weld Range project, laid off 43 workers and closed its office in the port town of Geraldton. The company cited setbacks in the progress of the Oakajee Port and Rail project as the reason for its decision to “park” the project and said probable further delays beyond a recently revised completion date of 2015 would cost Sinosteel’s Australian unit A$100m per year.

Oakajee, being developed by Japan’s Mitsubishi Corp and Perth-based Murchison Metals, is crucial for the Weld Range project as it was meant to enable the efficient transportation of the mined iron ore to markets. However, it has been plagued by spiralling costs and delays, leading Sino-steel Midwest to suspend operations at Weld Range until “uncertainty around the [port] development can be resolved”.

The move throws the future of the Oakajee project into doubt, and comes just before Murchison was expected to issue a feasibility study on the development. Sinosteel was among Chinese investors approached by Murchison and Mitsubishi to contribute equity to the project.