Despite the slumping iron ore price, Australia’s Roy Hill iron ore mine is set to ship its first cargo, marking the start up of the last of the mining-boom era mega projects in Australia.
Reuters reported that the $10 billion development has been led by Gina Rinehart, one of the world’s wealthiest women, whose fortune comes from mining the rust-red northwestern Australian outback.
“This is a truly momentous occasion as we receive the first vessel alongside the Roy Hill wharf and the first of our high grade product is loaded for the steel mills of Asia,” Rinehart said in a statement.
The project was financed with $7.8 billion in funding from export credit agencies and commercial lenders, but was dogged by concerns over its timing, with a surge in new iron ore mines already waning as the Roy Hill mine took shape.
Iron ore price have slumped globally and in Australia Fortescue Metals Group stopped further expansion of its iron ore mines. In the United States, more than half of the iron ore operations in Minnesota’s Iron Range have been shuttered, at least temporarily.
Iron ore prices have slumped more than 75 percent since construction of the Roy Hill mine began four years ago in partnership with South Korean steelmaker POSCO, Japan's Marubeni Corp and Taiwan's China Steel Corp.
The Roy Hill partners closely guard the project's cost of production, although analysts estimate ore can be mined and shipped for $40/t, slightly above Fortescue. At the time of the report iron ore prices were $42.80/t.
Most of the ore will be shipped to the partners and other buyers under long-term contracts, with less than 10 percent sold into the spot market, according to the company.