Ships waiting to be loaded with iron ore are seen at the Fortescue loading dock located at Port Hedland, in the Pilbara region of Western Australia in this file photo from December 3, 2013. REUTERS/David Gray
By James Regan
SYDNEY, April 11 (Reuters) – A small Australian exploration company said it has secured more than $6 billion in equity funding from unnamed investors to build a port and rail network to revive plans for a second iron ore export zone in the country.
Padbury Mining said it was obtaining the funds from private Australian equity investors, who required anonymity, with an initial $470 million due in 40-45 days.
Plans for a port to open up the Mid West region of Western Australia have been around for decades and there was uncertainty over how Padbury, capitalised at A$111 million ($104.52 million), could secure so much capital.
“You could build a moon base with that kind of money,” said James Wilson a mining analyst at Morgans.
Padbury shares soared on the news but were later placed in a trading halt pending the release of the names of investors to the Australian Securities Exchange .
Giant port’s 1,000 km (600 miles) to the north handling a half-billion tonnes of iron ore mined annually by Rio Tinto , BHP Billiton and Fortescue Metals Group have made Australia the world’s biggest exporter of the steelmaking mineral.
Most of the ore goes to China to help feed the country’s 2-million-tonnes-per-day steelmaking industry.
Construction of the port in the Indian Ocean coastal stretch of Oakajee in Western Australia state has long been seen as the trigger to unearthing billions of tonnes of iron ore stranded by a lack of transport and export routes.
But plans for a port have repeatedly been in the works, each time failing to get off the ground owing to the massive investment needs.
FUNDING MEGA PROJECTS
It took four years for a consortium led by Australian billionaire Gina Rinehart to secure $7.2 billion to construct its Roy Hill mine and port project in Western Australia, involving nearly two dozen banks globally, underscoring the difficulties facing mega projects.
More than a decade ago, Kingstream, a Taiwan-backed company collapsed after attempting to push through a $2 billion plan to use the Mid West’s iron ore reserves to feed a steelmaking plant at Oakajee.
Ten years later China’s Sinsoteel abruptly suspended work on a new Mid West iron ore mine, citing uncertainty over if and when a port would be built after projected costs blew out to by $3 billion. Mitsubishi Corp and Murchison Metals have also tried their hand.
“The idea of a port has been around for more than 30 years in various forms that were never going to happen for a number of reasons,” Padbury Chief Executive Gary Stokes said in a telephone interview. “What we’ve done is fulfilled all the necessary requirements to finally make this come about.”
Stokes said Padbury had been working with South Korean engineering firms on the construction phase of the project, which has a $6 billion budget in the lead up to the investment.
It will be developed by Midwest Infrastructure Pty Ltd (MWI), wholly owned by Padbury, according to Stokes.
The investors will hold 64 percent stake in MWI and Padbury 36 percent, he said.
Padbury’s stock was up 65 percent to 3 Australian cents before trading was halted. ($1 = 1.0620 Australian Dollars) (Additional reporting By Lincoln Feast; Editing by Ed Davies)
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