Australia rejects large mining deal with China
24 Sep 2009
The Australian government has rejected a potential $30-billion iron ore deal with China's state-owned Wuhan Iron and Steel's (WISCO), citing security concerns.
A proposed joint venture between WISCO's Australian subsidiary, Wugang Australian Resources Investment and Australian iron ore miner, Western Plains Resources Ltd (WPG), was rejected yesterday by the Australian Defence Department, as one of the mines was located in the Woomera weapons testing site.
Under a deal announced on 12 June 2009, WISCO had agreed to take an approximately 10-per cent stake in WPG for $3 million and pay $45 million to acquire a 50-per cent participating interest in the Hawks Nest iron ore mine as well as a board seat on WPG.
WISCO, China's third-largest, had planned to conduct a feasibility study for developing WPG's magnetite deposits at Hawks Nest, which covers an area of about 10km.
According to estimates, Hawks Nest has 569 million tons of iron ore of 35 per cent grading and a potential reserve of up to one billion tons.
WPG said that in a study prepared by the company in 2008, the Hawks Nest iron ore mine has the potential to yield an output of 6 million tonnes annually with projected revenues over its 30-year life of $18 billion.
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