21/04/2009 - 15:32

Approval delays affect Gindalbie project

21/04/2009 - 15:32

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The development timeline for Gindalbie Metals' $1.8 billion Karara iron ore joint venture has been pushed back after delays in gaining foreign investment and environmental approvals.

The development timeline for Gindalbie Metals' $1.8 billion Karara iron ore joint venture has been pushed back after delays in gaining foreign investment and environmental approvals.

In its quarterly report released today, Gindalbie said it expects to start hematite production by the second half of 2010 and the magnetite operations in the first half of 2011.

The company had previously targeted hematite production to start in the second half of 2009 and magnetite production to start one year later.

Gindalbie managing director Garrett Dixon said the new timetable was a result of significant delays to applications to both the Foreign Investment Review Board and Environmental Protection Authority.

He told WA Business News that project partner AnSteel, which is taking up to a 50 per cent interest in Karara, had first submitted its FIRB application in December following shareholder approval to an equity deal.

Ansteel has subsequently had to re-submit its FIRB application four times.

Mr Dixon suspects a "China storm" is taking place at FIRB, which received the $US19.5 billion Rio Tinto-Chinalco application around one month later, and essentially kick-started a slew of substantial China investment deals.

He said FIRB had not indicated to AnSteel its reasons for not yet accepting the deal.

FIRB applications initially have a 30-day assessment period, however the board can ask companies to re-submit applications or otherwise be locked into a 90 day system, Mr Dixon said.

AnSteel decided to withdraw and re-submit its latest FIRB application on April 17.

Mr Dixon said that despite the delays, he remained confident that Gindalbie will receive approval but was unsure of the timing.

AnSteel is waiting on the approval of a $162 million share placement, which will cover Gindalbie's final financial contribution to the Karara project.

If the placement is approved, AnSteel's interest in Gindalbie will rise from 12.6 per cent to 36.28 per cent.

AnSteel has also been making staggered payments towards the project, and has one final payment of $143.7 million.

Meantime, Mr Dixon expects the company to receive the EPA recommendations in around two weeks.

Altogether, Gindalbie's approvals process has taken a "long" three years, Mr Dixon said.

 

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