U.S. bank OKs loan for huge new Australian iron mine

Iron Range newsU.S. bank has approved a $694 million loan to a new Australian iron mine despite concerns by Minnesota officials that the deal will affect the market for Iron Range taconite. This new Roy Hill mine will soon outpace all U.S. iron ore production and could potentially affect prices in the Asian market, key to the growing demand for steel that has sustained a strong recovery in the iron ore industry.

From the John Myers story in the Duluth News Tribune:

The Roy Hill project in Australia’s outback is so big and so remote that entire new cities, ocean ports, roads, an airport and a 220-mile railroad are being built for a single mine that annually will produce 55 million tons — more iron ore than all U.S. mines combined. The project is owned by billionaire Gina Rinehart, the richest person in Australia.

Cliffs says the deal unfairly benefits the massive mine in the competitive global market for iron ore. (Cliffs also owns and operates iron mines in Australia and Canada.) It’s not the Australian mine that Cliffs had any thoughts of stopping, but the investment by a U.S. government-sanctioned bank tilting the playing field.

Cliffs officials had said Roy Hill will “substantially injure U.S. iron ore producers” by pushing down the global price of iron ore by increasing the supply of iron ore. Cheaper ore to Asia probably will displace any potential North American ore sales to Asia. But it also means cheaper Asian steel that could displace U.S.-made steel, further reducing demand for Minnesota ore.

Northern Minnesota was in the same situation when the first iron mines started. In that case, it was the infusion of cash from titans of industry like John Rockefeller and Andrew Carnegie that made it possible to settle the area. Those were guys who didn’t wait around for global financing packages to materialize.

Speak Your Mind


This site uses Akismet to reduce spam. Learn how your comment data is processed.