Gina Rinehart’s Roy Hill mine is a sure thing with the project securing its $7.2 billion debt package after 18 months of negotiations.
The deal, said to be the largest funding package for any mine worldwide, was signed off in Singapore on Thursday.
Five international export credit agencies and 19 commercial banks contributed to the $7.2 billion package, which will help build the 55 million tonne a year port, rail and mine project.
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.
Collectively the companies have poured more than $3 billion into construction of the project, which is about 30 per cent complete.
Expected to add 7 per cent to Australian iron ore supply, 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.
Rinehart said the project 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.”
Having already dished out more than $3 billion worth of contracts for the development of the mine, first ore is expected in September 2015.
There are currently 2500 working at the project, with this number expected to peak at 3600 later this year.
Steel production in China is set to peak at 1.1 billion tonnes in 2025 with the major miners expecting strong demand for the next 10 years.
"The longer term is still intact. I can’t see any change to forecasts. I expect volatility on a regular basis, but the longer term is still intact,” Rio Tinto iron ore chief executive Andrew Harding said this week.
Predictions of the next price rise or fall depend on who you listen to.
Some say the price could fall as low as $US80 a tonne by 2015, while others say that figure is far too short, and expect the price to settle at around $US112 a tonne.