Partner Tiff May Jeopardise $7bn Australian Iron Ore Project
By m rochan | September 14, 2013 1:09 AM EST
A multi-billion dollar plan to develop an iron-ore mine in Western Australia's Pilbara region has become mired in bickering between partners.
The West Pilbara Iron Ore project is being jointly developed by Aquila and AMCI Investments Australia - a 51%-49% joint venture between US-based resources investor AMCI and South Korean steel major Posco.
Aquila is unsure whether AMCI remains committed to its 25.5% stake in the project, and has held talks with potential investors, in the event that AMCI decides to pull out.
However, AMCI said it was prepared to invest in the project.
Meanwhile, Posco claimed it had not been informed of any plan by AMCI to exit their joint venture.
Pursued by Reuters, Aquila Chief Executive and top shareholder Tony Poli and general manager Martin Alciaturi refused to name potential investors.
"Should AMCI Investments Pty Ltd seek to divest its interest, the joint venture agreement contains pre-emptive and change-of-control rights that give (Aquila) some influence over such a divestment and (Aquila) has held discussions with parties exploring potential equity investment in WPIOP," Aquila told the news agency.
"AMCI retains plenty of liquidity to finance its share of the API development in addition to making other investments in the resources sector," said AMCI co-founder Hans Mende. API is the name of the joint venture between Aquila and its partners.
Aquila, which holds a 50% stake valued at A$224m, does not plan to own the entire project. "It needs partners, whether they're off-takers, or whether they're people who are going to help you build the infrastructure," Alciaturi said.
The mine was to begin operations by 2014. However, development plans were put on hold as the stakeholders struggled to source billions of dollars in funds, required to develop rail and port access. In addition, rising competition from larger miners such as Rio Tinto and BHP Billiton and lower Chinese demand for the mineral have also impacted the project.
"Nothing will be vanilla in this development. And if we're talking about an extended time period to develop this, they will enter the marketplace in an environment where the growth rate in China's consumption of iron ore is tailing off," said Lawrence Grech, senior resources analyst at PhillipCapital.
Global Mining Crisis
The global mining industry has been facing challenges due to rising operating costs and falling commodity prices.
According to a PricewaterhouseCoopers' (PwC) report, the mining industry is going through a confidence crisis over whether increasing operating costs can be controlled; uncertainty over the outlook for an improved return of capital which is at its lowest rate for a decade; and better commodity prices.
PwC's analysis is based on the top 40 mining companies, which reported a combined $110bn in capital spending for first four months of this year, a 21% fall year-on-year.
To contact the editor, e-mail:
Most Popular Slideshows
- NFL MNF: Pittsburgh Steelers 30, Houston Texans 23 [PHOTOS]
- 2014 MLB World Series Game 1: San Francisco Giants 7, Kansas City Royals 1 [PHOTOS]
- 2014 MLB World Series - Game 2: Kansas City Royals 7, San Francisco Giants 2 [PHOTOS]
- NFL Thursday Recap - Denver Broncos 35, San Diego Chargers 21: Peyton Manning Has 3 TDs In Easy Win [PHOTOS]
Join the Conversation
- Economic Growth In US And Sub-Saharan Africa Allay 2015 Recession Fears
- Travel Alert: Over 200 Canadians Infected with Mosquito-Borne Chikungunya Virus
- Canadian Ebola Drug: Tekmira Firm Starts Limited Manufacturing of Vaccine, Available By December; Shares Up
- US Dedicates 5 Airports for Travellers From Ebola-Stricken Nations, Lawmakers Want Travel Ban
- Australia's Low Birth Rate May Be Due to Low Confidence in Economy
- Xiaomi Redmi 1S vs. Sharp Aquos Crystal – Specifications, Features And Price Showdown
- ASUS Releases A Teaser Indicating The Arrival of New Zenfone and ZenWatch On October 28
- Boy Stoned To Death For Alleged Rape, Victim Receives Dowry From Militants
- Verizon Motorola Droid Turbo Leaked Live Images Surfaces, Scheduled To Get Unveiled On Oct 28
- Update HTC One M7 with LG G2 with Android 4.4.2 as Sprint OTA: Fixes and Installation
- Three Dual SIM Samsung Galaxy Note 4 Duos Variants Comes To China
- Russia is Creating Underwater Combat Robots to Protect its Arctic Territories