Russians And Chinese In Cape Lambert Deal
The Age
Friday August 1, 2008
RUSSIAN steel group Evraz and China Metallurgical Group Corporation (MCC) have teamed to develop the Cape Lambert iron ore project in Western Australia's Pilbara.
The unlikely pairing follows Evraz's recent acquisition of a 19% stake in Cape Lambert Iron Ore, the group that earlier this week sold the iron ore project to MCC for $400 million.The entry of Evraz on to the Cape Lambert register had prompted speculation that it would block the MCC deal and bid for Cape Lambert to gain control of the 1.56 million tonne magnetite iron ore resource.The Evraz deal neatly sidesteps the need for a Cape Lambert bid and comes as the Russian group is seeking clearances to buy a 51% stake in another Chinese steel group, Delong. Delong is also a shareholder in Cape Lambert. Evraz and MCC said they would jointly invest in the development of the Cape Lambert magnetite project. Evraz will hold 75% and MCC a 25% economic interest."It is anticipated that all of the project's iron ore will be shipped to China to meet the requirements of Chinese mills, while MCC will be entitled to sign an off-take agreement for up to 60% of the iron ore volumes," the new partners said.Evraz's participation in the joint venture is subject to Foreign Investment Review Board clearance.Annual production from the Cape Lambert project has been forecast at 15 million tonnes of magnetite concentrate.MCC was due to settle on the $400 million acquisition of Cape Lambert's project yesterday afternoon. Settlement would have triggered a $240 million down payment.
© 2008 The Age