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Ground Breakers: Iron ore tops US$126/t as Gina Rinehart signs deal to develop stranded iron ore mines
Mining
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Gina Rinehart is back in action, this time to revive one of Australia’s longest delayed iron ore projects.
Rinehart and her company Hancock Prospecting signed a development agreement this week to lead a bankable feasibility study on the Hardey project in the West Pilbara owned by the API Joint Venture.
The deal comes off the back of market chatter about the revival of the project, which was shelved due to falling iron ore prices during the downturn.
With prices climbing back above US$126/t overnight and sitting above long term averages, it has brought the APIJV back into focus.
Under the terms of a development agreement signed this week, Hancock will lead the development and operation of the project subject to a final investment decision.
The APIJV is 50% owned by Aquila Resources, an entity 85% owned by China’s Baowu, the world’s largest steelmaker and 15% by Mineral Resources (ASX:MIN) which bought its stake off Aurizon this year.
The other 50% is held in a JV between America’s AMCI and Korea’s POSCO, which owns 12.5% of Gina’s flagship miner Roy Hill Holdings.
Rinehart said the window was opening to develop the long-dormant Hardey project.
“The Hardey project has waited years for the right window to proceed to development,” she said.
“We have an outstanding group of partners, and we believe that now is the right time for the Hardey project to be progressed.”
The deal raises the prospect that incremental tonnes to expand Australia’s iron ore industry and increase seaborne supply could come not from the majors but the emerging mid-tier.
Hancock is studying expansion plans in the form of new developments at its Atlas Iron business, while MinRes is plotting a rapid expansion over the next few years by developing two hubs at the Port of Ashburton and its Marillana and Othalmia JVs with Brockman Mining (ASX:BCK).
MinRes also paid $200 million cash up front and $200 million deferred for Red Hill Iron’s (ASX:RHI) 40% stake in the RHIOJV, 60% of which is owned by the APIJV.
Despite weakness in futures markets, benchmark 62% iron ore fines rose US$2.96/t to US$126.35/t overnight according to Fastmarkets MB.
58% discounted fines however were down US$2.02 to US$94.69/t, while 65% Brazil premium fines were up US$0.20 to US$143.20/t.
Iron ore miners enjoyed bullish trading conditions on the final day before the Christmas holidays, sending the materials index 0.73% higher along with heavy support for lithium stocks.
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