Mineral Resources has struck a deal to purchase the Koolyanobbing iron ore mine from US-based Cleveland Cliffs, after getting support from the state government and railway owner Arc Infrastructure for a deal that will save up to 400 jobs around Southern Cross and Esperance.
Under the deal, MinRes will acquire all assets associated with the project, including fixed plant, equipment and non-process infrastructure within the tenements.
The company will also assume ownership of Cliffs’ fixed infrastructure assets at the Port of Esperance, which includes a rail car dumper and two storage sheds.
The financial terms of the deal were not revealed.
The state government has also helped facilitate the acquisition, providing royalty relief for Cliffs-related port throughput and reduced port charges to MinRes.
MinRes managing director Chris Ellison thanked the government
“I particularly wish to acknowledge the efforts of the state government, the Premier Mark McGowan and his ministers whose commitment to preserving jobs in Western Australia and getting better results for the Yilgarn has been plainly evident in our dealings with them,” Mr Ellison said.
“I also wish to thank the team at Arc Infrastructure for their pro-active approach in agreeing an acceptable below-rail access arrangement that recognises the challenging conditions in the lowergrade iron ore market.”
MinRes said Arc Infrastructure has also agreed to a track access framework that assists with the economics of a continued Yilgarn-to-Esperance iron ore operation.
MinRes said the transaction would allow the company to commence an iron ore export business from Esperance using larger and more cost-effective Capesize vessels.
Koolyanobbing is located adjacent to MinRes’ existing Carina iron ore project.
The Environmental Protection Authority rejected MinRes’s planned Jackson 5 and Bungalbin East iron ore project, which would have extended the life of Carina, last year.
Cliffs flagged in January that it was planning to wind-up work at Koolyanobbing, with softer prices for lower grade ores creating a net loss for the business.
As a result of the transaction, Cliffs’ costs of closing the operations are expected to be reduced by approximately $US65 million to $US75 million based on MinRes assuming certain obligations and Cliffs reaching negotiated settlements with other third parties.
“The sale of these assets to Mineral Resources marks Cliffs’ exit from the Australian iron ore business, and represents the final step in the implementation of our US iron ore-centric strategy,” Cliffs chairman Lourenco Gonclaves said.
Shares in MinRes finished off 5.15 per cent at $16.40 each.
