Gindalbie Metals has announced a $71 billion dollar offtake agreement with Chinese steel mill Ansteel.
The deal, which is the largest in Australian history, will the see the miner provide magnetite iron ore offtake from its Karara mine for the life of the project.
Speaking to Australian Mining, Gindalbie investor relations manager Michael Weir said “this deal means everything to the company.”
Weir went on to say that the miner will continue construction at the mine for the next 12 to 18 months.
It expects to begin shipment of the ore during the second half of 2011.
Gindalbie “will start at around 10 million tonnes per annum, but the project has the resource for 30 million tonnes annually over 30 years, so the focus is now on how quickly we can expand the project to this size,” Weir told Australian Mining.
Ansteel was reported to be paying full price for the iron ore.
“The pricing structure embedded in these contracts reflects the high quality and niche market position of magnetite concentrate in the global iron ore market,” Gindalbie managing director Garret Dixon explained.
Gindalbie “would not be surprised to see a further increase next year when Karara begins production,” Garret added.