Despite recent iron price jitters which have seen investors flee small mining firms, Gina Rinehart’s $10 billion Roy Hill mine is making steady construction progress and is almost half way done.
Targeting first ore in September 2015, the mine is 43 per cent complete, with major works to build the mine and its associated rail and port infrastructure tracking nicely.
The Roy Hill project, located 115km north of Newman, will eventually export 55 million tonnes of iron ore a year, adding 7 per cent to the amount of ore Australia supplies the world.
Currently employing more than 3500 people, the project has already handed out more than $3 billion in contracts for various aspects of its development.
CEO of Roy Hill Holdings, Barry Fitzgerald, said the stable delivery of the project was a positive sign for the company.
“This is another positive step forward and effectively represents an independent health check of our construction progress as well as the comprehensive financial management and reporting systems we have developed,” Fitzgerald said.
In what is thought to be the biggest ever project financing deal worldwide, the project was able to secure a $7.2 billion debt package that helped to fund its development.
Five international export credit agencies and 19 commercial banks contributed to the sum with the project’s owners pouring in the remaining $3 billion.
Roy Hill Holdings is 70 per cent-owned by Rinehart's Hancock Prospecting. Selling off 30 per cent of the project last year, the remainder is now owned by South Korea's Posco, Japan's Marubeni and Taiwan's China Steel Corporation.
The mine deal comes at a time of increasing volatility in iron ore prices amid concerns China’s demand for the steelmaking commodity will fall on the back of record stockpiles and the lack of credit availability.
However, Rinehart has previously said Roy Hill mine is a “crucible of opportunity” during a period of global uncertainty.
“It has already shown it will create new jobs, and benefit the greater mining and construction related industries, it will add to Australia’s exports, and significantly benefit our West Australian and national economy,” Rinehart said in a statement.
“I am immensely proud that Hancock, a wholly-owned West Australian company, is taking the lead on such a significant project. It is a strong vote of confidence in Hancock and Roy Hill that this financing has attracted such substantial investment and support.”
Fitzgerald said Roy Hill was spending $10 million-a-day to build the mine and its rail and port infrastructure.
Image: West Australian