Grange Resources Ltd, Australia's largest iron ore pellet producer, is seeking debt funding from China to help finance a A$1.8 billion ($1.6 billion) iron ore mine in western Australia.
"We will be talking to financiers in China in the not too distant future to shore up the debt finance that we need for that," Russell Clark, chief executive officer of Perth-based Grange, said today in a phone interview. "I'm hoping to get it largely in place in the next six months."
Grange's largest shareholder Jiangsu Shagang Group Co, China's biggest closely held steelmaker, will arrange debt for as much as 70 percent of the cost of the proposed Southdown mine, he said. Iron ore prices may be 5 percent higher next year than this year because of supply constraints, Goldman Sachs JBWere Pty said in a report last week.
"The fundamentals of growth in China and India remain, the fundamentals of supply constraints remain," Clark said. Grange is studying an increase in the proposed annual capacity of Southdown to 10 million metric tons of iron ore concentrate a year, from the initial target of 6.6 million tons, he said. The mine, a joint venture with Japan's Sojitz Corp, may start output toward the end of 2013, he said.
Grange gained 3 percent to 51 cents at 1:24 pm Sydney time on the Australian stock exchange, giving it a market valuation of A$587 million. Grange also produces iron ore pellets from the Savage River mine in Australia's Tasmania state.
