Chonggang Group to gain access to Aussie iron ore projects
Shanghai. November 9. INTERFAX-CHINA - A Chongqing Iron and Steel Group (Chonggang Group) joint venture has entered into a framework agreement to acquire a 60 percent stake in Asia Iron Holdings Ltd. (Asia Iron) through a new share issue, in order to gain access to Australian iron ore mining projects, state media reported on Nov. 7.
According to a Xinhua news agency report, Chonggang Group's joint venture vehicle will invest up to $258 million for the stake in Asia Iron, as well as the development of iron ore projects, including the Extension Hill Magnetite project. The acquisition will give Chonggang Group the rights to the Australian company's iron ore output in proportion to its stake holding.
The joint venture, named Chonggang Mining Investment, is owned by Chonggang Group and Chongqing Foreign Economic and Trade Group.
At present, Asia Iron is wholly-owned by Sinom Investments Ltd. (Sinom), which is working to develop the Extension Hill Magnetite project and other iron ore projects in Western Australia.
Asia Iron's management predicts that iron ore resources at the Extension Hill project amount to 1.78 billion tons. The first-phase development of the project will require an investment of $2 billion, and the deposit is due to start production in 2012 at the earliest, with a designed production of 10 million tons of iron ore concentrate grading at 68 percent per annum, the report said.
Chongqing Municipality-based Chonggang Group has an annual production capacity of 3 million tons of crude steel, and up to 80 percent of the iron ore needed for production is imported from Australia and Brazil.