Feb 26 (Reuters) – Australian billionaire Gina Rinehart’s Roy Hill iron ore project is close to finalising a $7.8 billion financing deal, sources said, a vital step towards an end-2015 start for the giant mine in Western Australia’s iron-rich Pilbara district.
The 55-million tonnes-a-year project, which would make Roy Hill Australia’s fourth-largest iron ore producer, will add to hefty new supplies coming on line from Rio Tinto, BHP Billiton and Fortescue Metals Group.
It could also add to the wealth of mining magnate Rinehart, already Australia’s richest person with a $17.7 billion fortune, according to Forbes. Roy Hill is likely, however, to be the last new project of this scale to get off the ground, given worries over shaky underlying demand for iron ore in China, the world’s biggest consumer of the steel-making raw material.
Other miners are rethinking expansion and cutting costs as iron ore prices drop. At just below $120 a tonne .IO62-CNI=SI on Wednesday, prices have fallen more than 11 percent so far this year and are down almost 40 percent from a record high of $200 reached in February 2011.
“The agreement is not completely settled yet. All the views have to be gathered as there are a lot of stakeholders. But as of now I don’t see any problems, and a March signing looks likely,” said one source with direct knowledge of the negotiations.
The start for the project, which includes a 344 km (210 mile) rail line and port facilities, has been pushed back amid delays in finalising equity partners and debt funding. Roy Hill had initially been targeting an end-2014 start to production.
“According to current plans, first shipment is expected in the latter half of 2015. It can be understood as a trial run just before construction is expected to be completed by end-2015,” said the source.
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