The Koolyanobbing iron ore operation in Western Australia’s Yilgarn region has found a saviour in Mineral Resources (MinRes).
US-based owner Cleveland-Cliffs, which was working towards closing Koolyanobbing this year, announced overnight that it had reached an agreement with MinRes to sell its Asia-Pacific iron ore assets.
The deal, expected to close this quarter, will save hundreds of jobs, both at the Koolyanobbing site and at the Port of Esperance where the operation’s product is exported.
MinRes today confirmed the acquisition, saying the deal would include Cliff’s tenements and all remaining iron ore, as well as the fixed plant, equipment and non-process infrastructure.
In addition, MinRes will own Cliffs’ infrastructure at the Port of Esperance, including the rail car dumper and two large storage sheds.
MinRes believes the acquisition will enable it to realise further value from the investments it has made in fixed plant, mobile equipment and rail rolling stock that has been used to operate the Carina operation, which will close this year.
The Western Australian Government helped facilitate the deal for both parties. Rail owner Arc Infrastructure, meanwhile, has agreed to a track access framework that assists with the economics of a continued Yilgarn-to-Esperance iron ore operation.
MinRes managing director Chris Ellison described the deal as a win-win outcome for all parties involved.
“I can confidently say that this transaction, and the many benefits it will create for Western Australia, would simply not have been possible without the cooperation and commitment from Cliffs, the state government and Arc Infrastructure,” Ellison said.
While Cliffs did not reveal the value of the deal, it did say that the cost of closing its Australian operation was now expected to be reduced by around $US65-75 million, based on MinRes assuming certain obligations.
Cliffs chairman, president and chief executive Lourenco Goncalves said the sale marked the company’s exit from the Australian iron ore business, and represented the final step in the implementation of its US iron ore-centric strategy.
“We are pleased to have reached agreement on a transaction that not only brings real value to Cliffs shareholders, but also represents the potential for continued job opportunities for employees in Western Australia who would be impacted by the pending closure of the Koolyanobbing complex,” Goncalves said.
Cliffs announced in January that it was planning to accelerate the closure of its Asia Pacific operations in 2018 after evaluating current and anticipated future market conditions in connection with its iron ore reserves.