Gindalbie Metals yesterday secured a US$1.2 billion loan from a syndicate of Chinese banks to develop its $2.28 billion Karara iron ore project in Western Australia.
The agreement was signed by the China Development Bank’s chairman Chen Yuan and Gindalbie’s managing director Garret Dixon in the presence of China’s Vice-President Xi Jinping and Prime Minister Kevin Rudd.
The project is a joint venture between Gindalbie and Chinese company Ansteel.
“This is a major milestone for the Karara project and both joint venture partners,” Dixon said.
“Securing such a large project debt facility, which was arranged under the previous taxation regime, against the current backdrop of massive uncertainty arising from the proposed Resources Super Profits Tax is a considerable achievement.
“If this project was only at the concept stage I am not sure that it would be proceeding.
“It would more likely have been put on hold until the issues raised by the proposed new tax on the resources industry were sorted out.”
The loan has been provided for 12 years by a syndicate lead by the China Development Bank and Bank of China and has been guaranteed by Ansteel.
“Signing the loan facility is a reflection of both the unwavering support and commitment from our Chinese partners and the syndicate, together with the fundamental quality and strength of the project,” Dixon said.
“What is important to remember is we are currently building only the first stage of a world-class, long-life project.
“Under the right investment regime, both partners are keen to see Karara expanded to reach its full potential and take advantage of the considerable up-front investment they have made to build the necessary infrastructure that is required for these types of projects.
With iron ore production commencing next year, shareholders will start to be rewarded for their support.”
According to Dixon, the Karara project will convert low grade iron ore into a premium product for export to China.