21 March 2014
Gina's Giant Gamble
Gina Rinehart has secured backing from a group of global banks and export credit agencies for a new $US10 billion ($A11.0bn) iron-ore mine that can feed Asian steel demand, just as miners like BHP Billiton scale back investments amid a broad decline in commodity prices.
Australia's richest person said lenders, including US, Japanese and Australian banks, had agreed to put up $US7.2bn in debt to build the Roy Hill mine deep in the Australian outback. The deal was signed in Singapore on Thursday.
Ms Rinehart has already sold 30 per cent of the unit developing the Roy Hill mine to Asian steelmakers and trading houses, including Japan's Marubeni Corporation and South Korea's Posco, in separate deals agreed in 2012, not long after iron-ore prices peaked near $US200 a tonne. That has eased concerns that there wouldn't be a market for the 55 million tonnes of iron ore that Roy Hill will produce annually.
Some analysts question whether the world needs more iron ore when new mines are starting up in countries from Brazil to the Republic of Congo. BHP Billiton, the world's biggest mining company by revenue, predicts global iron-ore demand won't keep up with additional production for the next five years. Also, China's push to tighten credit and rein in pollution could put a squeeze on steelmaking.