19 December 2013
Stephen Bell
Dow Jones News
PERTH, Australia–Roy Hill Holdings, majority owned by Gina Rinehart’s Hancock Prospecting unit, has won the backing of a U.S. credit agency for its proposed US$10 billion iron ore mine in Western Australia state’s Pilbara region.
The Export-Import Bank of the United States approved a US$694.4 million loan to Roy Hill, which has started early construction work for its proposed mine producing 55 million metric tons of iron ore a year.
The credit deal is contingent upon the purchase of U.S. mining and rail equipment from companies like Caterpillar Inc. and General Electric Co., the U.S. bank said in a statement.
It is the first confirmed loan in Roy Hill’s year-long efforts to secure approximately US$4 billion from export credit agencies and a further US$3 billion from commercial banks to develop the mine.
Roy Hill is pushing ahead with what would be Australia’s biggest iron ore mine in decades as other major producers like BHP Billiton and Rio Tinto choose to expand or squeeze more from existing mines.
“Roy Hill continues to make good progress with both its financing and on-ground works,” a Roy Hill spokesman said in relation to the U.S. deal, which was provisionally approved last month.
Separately, a report this week in the Korea Economic Daily said that Korea EximBank would provide a US$1 billion project finance loan to Roy Hill. The state-run bank will provide US$550 million in loans and US$450 million in loan guarantees to the project, the newspaper said.
Although Roy Hill declined to comment, the report has been posted on Hancock Prospecting’s website.
Roy Hill is 70% owned by Hancock Prospecting alongside Asian investors including South Korea’s Posco and Japan’s Marubeni Corp.
Courtesy of Dow Jones News