Gina Rinehart's $10 billion Roy Hill iron ore project faces a new challenge to its attempt to secure debt funding from US export credit agencies after politicians wrote to the US Export-Import Bank to oppose a $US650 million ($719 million) loan to buy American-made machinery.
In a move backed by US-based Cliffs Natural Resources, which has extensive iron ore assets in WA's Yilgarn, four US senators from Minnesota and Michigan wrote to the chairman of the Ex-Im Bank to oppose the proposed loan, which would be used to buy Caterpillar equipment.
The senators - Amy Klobuchar, Al Franken, Carl Levin and Debbie Stabenow - said the 55 million tonne-a-year Roy Hill mine would produce more than the entire annual US output, arguing Mrs Rinehart's project "could cause a price shock on the international markets that would harm US ore producers".
A Cliffs spokesman told _Duluth News Tribune _in Minnesota that Roy Hill would "displace nearly $US600 million of US iron ore exports and cause a reduction of about $US1.2 billion in US domestic sales".
Cliffs ships more than 11mtpa from the Yilgarn, competing with other WA miners for sales into China and the rest of Asia.
A Roy Hill spokesman dismissed the political intervention in the loan talks, saying the company was confident common sense would prevail.
"The US economic advantages from the supply of its machinery to Roy Hill are high, so there are clear bilateral benefits from US Ex-Im involvement," he said.
"The notion that small US producers might be harmed by trade displacement is just plain silly, the numbers don't add up. If they were successful, the Minnesota politicians would apply a self-inflicted trade injury on US manufacturers by diverting valuable equipment sales to Asia."
It is understood US manufacturers have written to the Ex-Im Bank to lend their support for the Roy Hill loan deal. A decision is expected in the next few weeks.