The chief executive charged with developing Gina Rinehart's Roy Hill project says the mining magnate is considering a further selldown of her stake in the iron ore asset as part of the funding mix.
Mrs Rinehart is still chasing debt funding for the estimated $10 billion project, and is expected to lock in Korean engineering giant Samsung as the preferred engineering contractor on a fixed-price bid worth $6 billion to $7 billion over the next week. Samsung is understood to have undercut a subsidiary of Roy Hill equity partner POSCO to win the contract.
The price certainty offered by that appointment is likely to smooth the way for debt offers by commercial banks and export credit agencies.
Roy Hill chief executive Barry Fitzgerald told a Perth iron ore conference yesterday a further selldown of Mrs Rinehart's 70 per cent Roy Hill stake, held through Hancock Prospecting, was on the table.
Mrs Rinehart is unlikely to consider allowing her stake to fall below 60 per cent. The sale of a 10 per cent stake could bring in more than $1.2 billion, based on last April's deal that saw Taiwan's China Steel Corp buy a 2.5 per cent holding from POSCO for $305.2 million.
Mr Fitzgerald said the debt funding was likely to be completed by the end of the year and, despite challenges, there had been no change to expectations of first ore shipments by September 2015.
"We have no reason to change that plan," he said.
Mr Fitzgerald said the forecast weakness in the iron ore price later this year would have no impact on the debt talks."This project is being assessed against the long-run price of iron ore, not the short term," he said. "The funding period is quite long and the mine life is quite long as well. We're talking to all these institutions, basing the project on a long-run model."
The new magazine for a new generation of West Australians.Click here to download »
All the latest market figures from Australia and the world.Click here »
'The West Australian' is a trademark of West Australian Newspapers Limited 2013.
All rights reserved.
Select your state to see news for your area.