Published October 15, 2012
SYDNEY – Australian billionaire Gina Rinehart's $10-billion Roy Hill iron ore project aims to start construction on its Australian mine in mid-2013, later than hoped, as assessments by potential lenders stretch into next year, the project's spokesman said on Tuesday.
The Roy Hill partners, targeting 55 million metric tons a year of iron ore, had aimed to start producing in late 2014, but funding has taken longer to line up than expected, chiefly because of the size of the project, which involves building a mine, railway and port rather than just expanding an existing mine.
"It may be well into 2013 before this evaluation process is complete," Darryl Hockey, the Roy Hill general manager of external affairs, said at a mining conference.
Hockey spoke at the conference as the project's chief, Barry Fitzgerald, cancelled a long-scheduled appearance. The company declined to say why Fitzgerald did not attend, except for saying it had nothing to do with meeting bankers, as the conference host had said.
The project is 70 percent owned by billionaire Gina Rinehart's Hancock Prospecting, and 30 percent owned by a consortium led by South Korean steel giant POSCO <005490.KS>, with Japanese trading company Marubeni, South Korea's STX Corp <011810.KS>, and Taiwan's China Steel Corp <2002.TW>.
IMPOSSIBLE TO PREDICT
The Roy Hill project owners hope to start construction proper by mid-2013, Hockey said, with $2 billion already spent or committed on preliminary work, including dredging at the Port Hedland export point and building camps for workers.
He said even the mid-2013 target for construction was hard to pin down, as financiers were being extra cautious following the global financial crisis.
"It's impossible to predict target dates with absolute certainty," Hockey said.
The project had received a good response from local and international banks as well as export credit agencies, he said.
"So far the level of interest and the responses have been extremely positive."
"We're not uncomfortable with where we are," he later told Reuters.
While competing iron ore projects were running into delays and doubts, especially following the slide in iron ore prices to $87 from a high of $149 this year, he said the Roy Hill project was more robust.
"Compared to other companies we have a low cost structure and an above-average product quality, so that stands us in fairly good stead," Hockey said.
"The delay is not related to the recent volatility in iron ore prices," he told Reuters.
Roy Hill and POSCO have declined to comment on reports that POSCO has been appointed as construction contractor for the project.
The Roy Hill project had already run into delays in lining up equity partners as a bitter dispute between Rinehart, Asia's richest woman, and three of her children over control of a multibillion-dollar family trust spilled into the courts. The case is continuing.
Rinehart inherited valuable mining tenements from her father and is a partner with Rio Tinto on the massive Hope Downs iron ore project. Forbes this year estimated her fortune at $18 billion.
(Editing by Clarence Fernandez)