Yilgarn secures $750m funding deal with 5 Chinese steel firms

Yilgarn Infrastructure has secured a $750 million funding deal with five Chinese steel companies for the development of railway and port infrastructure in the Midwest, should the proposal win WA Government approval.

The group of five companies includes some of China's biggest enterprises in the fields of port and railway construction; railway operations, iron ore trading and steel production.

The loan is a crucial item in Yilgarn's $3 billion planned infrastructure rollout, and comes after the company recently aligned itself with Midwest Corporation Ltd, announcing plans to work together earlier this year.

The full text of a Midwest Announcement is pasted below

Midwest Corporation Limited (Midwest) welcomes today's announcement by Yilgarn Infrastructure (attached) that it has negotiated the A$750 million equity required for the development of rail and port infrastructure in the mid west region of Western Australia.

Midwest and Yilgarn are parties to an Implementation Agreement to work together to progress the development of the port and rail infrastructure.

The raising of the equity through five of China's biggest and most successful companies, including our joint venture partner Sinosteel Corporation, is most encouraging for the emerging iron ore industry in the area.

"It signals the strategic interest of major Chinese companies in iron ore in W.A. and the growing co-operation between Chinese and Australian companies. Today's announcement also confirms China's appetite for investment opportunities in W.A.", commented Mr Bryan Oliver, chief executive of Midwest.

The company is delighted to be associated with a group of this calibre which has the capacity to expedite the infrastructure required to capitalise on the massive opportunities in the iron ore industry in the region.

The full text of a Yilgarn announcement is pasted below

Yilgarn Infrastructure Limited has signed an investment agreement with five major Chinese enterprises to underpin the A$750 million equity needed for the development of the Oakajee Port and Rail Project in Western Australia's Mid West region.

The agreement, signed in Beijing on Friday, August 17, was witnessed by the Australian Embassy's Minister Commercial, the Director of the Commonwealth Government's Beijing office of Invest Australia and senior members of China's EXIM Bank and the China Development Bank.

Speaking at the ceremony, Yilgarn Chairman Dr John Saunders said a crucial component of the agreement was a 'local content' commitment by all parties to partner with Australian expertise and suppliers for the development, construction and operation of the estimated AU$3 billion infrastructure project.

The equity deal follows a commitment by China's EXIM Bank to underwrite the debt required for the project.

"Yilgarn is forging a highly skilled and competent project team by combining Australian expertise and local inputs with Chinese project execution capabilities," Dr Saunders said.

"Ensuring these commercial partnerships continue to be created and fostered into the construction and delivery phases of the port and rail will ensure the Mid West - and Western Australia - receives the best possible infrastructure development.

"This agreement provides significant opportunities for Western Australian companies to form partnerships in key roles for this project and to take advantage of China's demand for our products and the need for local expertise. It also sets up a pathway for companies in WA to go offshore to join their Chinese counterparts in the Chinese project and infrastructure marketplace."

The group of five companies - with combined assets of more than US$50 billion and revenues of more than US$60 billion - includes some of China's biggest enterprises in the fields of port and railway construction; railway operations, iron ore trading and steel production. * See attached list for detail.

Dr Saunders said the strong balance sheets and delivery capabilities of the group would provide Yilgarn with significant strategic, technical and financial support and would complement its world-renowned Australian-based engineering and project management team, which includes WorleyParson's Services Pty Ltd and Parsons Brinckerhoff.

"This equity agreement, together with the debt finance commitment secured from China's EXIM Bank, puts Yilgarn on the best possible financial footing as we progress the Oakajee Port and Rail Project," Dr Saunders said.

"With substantial preliminary works done, including engineering pre-feasibility, key environmental investigations and specialised geotechnical, rail alignment and vessel handling studies, Yilgarn is now moving onto definitive feasibility studies with a strong team well equipped to handle this extremely complex development."

Yilgarn also plans to list on the Australian Stock Exchange to enable further investment in the company from the Australian public and institutions.