15 January 2014
The West Australian
Gina Rinehart has pulled the trigger on the major construction phase at her 55-million-tonne-a-year Roy Hill project, even though the project is yet to finalise deals over the debt package that will fund its construction.
It is understood Mrs Rinehart and her equity partners in Roy Hill – POSCO, Marubeni and China Steel Corporation – gave contractor Samsung C&T the go-ahead to push on with the next stage of construction of the $10 billion port, rail and mine project at the end of December.
Sources say the approval has led to a massive influx of construction workers at the project, with an estimated 1700 now on site, more than double December’s workforce.
The decision came after a suite of global export credit agencies, including the Korea EximBank, the Korea Trade Insurance Corporation and the US Export- Import Bank agreed to extend credit lines worth up to $US2.9 billion for the Pilbara project.
The project is yet to secure final agreement from Japanese export credit agencies for extra loans. It is understood negotiations with commercial banks over a separate loan package are continuing.
Despite that, Roy Hill has given the go-ahead for the bulk of the construction work, telling Samsung and major subcontractors such as John Holland, Len Buckeridge’s BGC Contracting, Forge Group and NRW Holdings.
It is understood the latest development approval is a project “tipping point” containing the bulk of the major construction work, with the work likely to be worth billions of dollars.
Although the full debt package is yet to be finalised and the ECA loans already approved are unlikely to be available for drawdown, Mrs Rinehart still has plenty of equity capital. Despite calling down at least $865 million from the project’s minority shareholders before Christmas, Australian Securities and Investments Commission records show the 30 per cent minority holders were owed almost $1.2 billion in equity contributions to the project in December.
A spokesman for Roy Hill would not comment on the work approval yesterday but confirmed that contractor numbers at the project were rising.
Courtesy of the West Australian