Gina Rinehart’s Roy Hill iron ore project has received backing to the tune of $784 million from a US government agency on the condition it purchases U.S. mining and rail equipment from Caterpillar, GE, and Atlas Copco.
The Export Import Bank of the United States said the loan could support up to 3400 US jobs as well as hundreds of small businesses across the country.
The bank said the loan “represents a significant opportunity for American exporters to create and sustain American jobs”.
The export equipment is set to help develop the Pilbara-based mine, with Caterpillar to provide the mine’s surface equipment.
“Caterpillar applauds Ex-Im Bank for approving the long-term financing request for the Roy Hill’s Australian iron-ore project,” said Steve Wunning, group president of Caterpillar’s Resource Industries Group.
“By backing this project, Ex-Im Bank is bolstering U.S. manufacturing competitiveness, supporting American jobs and promoting exports.
“Ex-Im Bank is also providing Caterpillar and other U.S. suppliers with the opportunity to support Roy Hill with mining equipment that may have otherwise been supplied by non-U.S. competitors using their countries’ export credit agencies.”
Lobbyists from Minnesota and Michigan had called on the US government institution to block the loan saying the Roy Hill operation will flood global markets with iron ore, increasing competition for US mines.
The US loan also means leading mining equipment manufacturer GE will furnish locomotives to transport the iron ore to the port.
“Ex-Im Bank’s support of the Roy Hill’s Australian iron-ore project represents a major milestone for the mining industry and U.S. job growth,” said Russell Stokes, president and chief executive officer, GE Transportation.
While several other financiers have also agreed to help finance the project including the Japan Bank for International Co-operation with $US900m and Nippon Export and Investment Insurance Corporation for $US750m.
Gina Rinehart’s $10 billion Roy Hill iron ore development is undertaking one of the largest debt-raisings ever attempted in the mining sector, seeking $4 billion in funding from export credit agencies and an additional $3 billion from commercial bank.
However finance deals have taken longer than expected, with many predicting full production will be pushed back from its forecast date of 2015 to 2017.
But the miner has continued to reaffirm that the project remains on track and has already awarded $3 billion worth of contracts for the development of the mine.
Roy Hill Holdings is 70 per cent-owned by Rinehart's Hancock Prospecting with the remainder owned by South Korea's Posco, Japan's Marubeni and Taiwan's China Steel Corporation.
The Roy Hill project includes a new 55 million tonne per annum iron ore mine, 344 kilometres of railway and a new port at Port Hedland.