20 December 2013
Sydney Morning Herald
Gina Rinehart’s Roy Hill joint venture is a step closer to reality this morning after a US government agency agreed to lend $US694.4 million ($784 million) to the giant iron ore mine, port and rail project in Western Australia.
In its final decision on the matter, the Export Import Bank of the United States found the loan could support up to 3400 US jobs by stoking demand for US products, such as Caterpillar trucks or trains built by GE.
Despite being opposed by some North American miners, the Exim Bank decided the loan represented “a significant opportunity for American exporters to create and sustain American jobs”.
The loan is a symbolic win for the $US10 billion Roy Hill project, which has taken longer than expected to secure the $US7 billion worth of finance it needs.
More than half that amount has been expected to come from export credit agencies, and Fairfax Media believes the Korean EximBank may have also approved about $US1 billion worth of loans on Monday.
The Japanese Bank for International Cooperation is also understood to have loaned just over $US1 billion to Roy Hill in March on the grounds that Japanese company Marubeni is one of the joint venture partners.
“Export credit agencies from several other countries have obtained preliminary or final approvals for the Roy Hill transaction as well,” said the US Exim Bank this morning, after a board meeting in Washington.
Commercial banks like ANZ and NAB are expected to help fund about $US3 billion from commercial banks. China Steel Corporation, POSCO and Ms Rinehart’s Hancock Prospecting are the other partners with Marubeni, and are funding the roughly $US3 billion that will not come from debt.
Roy Hill had hoped to finalise its debt this year, and while the puzzle may not be fully complete, it has taken a big step forward this week.
The project is forecast to be exporting iron ore from Port Hedland by the latter months of 2015, and hopes to eventually export about 55 million tonnes of iron ore each year.
The long-running effort to secure funding would not have been hurt by the strong iron ore prices witnessed during 2013, with the benchmark price averaging close to $US135 per tonne for the calendar year so far. Calendar 2012 saw the commodity average closer to $US128 per tonne.
Courtesy of the Sydney Morning Herald