Australia’s Roy Hill iron ore mine, expected to be one of the largest in the world, will get a $694 million loan from the Export-Import Bank of the U.S. under a deal that was approved in Washington D.C., but is being opposed by Minnesota lawmakers and a major U.S. mining company.

The deal will benefit U.S.-based equipment companies Caterpillar, Atlas Copco and General Electric, however, Minnesota lawmakers say that helping finance the massive iron ore mine undercuts Minnesota mining, the Duluth News Tribune reported.

“Today’s preliminary approval of a $694 million direct loan to supply American-made equipment for an Australian mining project is an important step toward supporting an estimated 3,400 export-related U.S. jobs,” Daniel Reilly, spokesman for the Export-Import Bank of the U.S., said in a statement.

U.S. Rep. Rick Nolan (D-MN) is among those opposing loan.

“We ought not to be financing foreign companies that are ultimately going to be directly competitive with us,” Nolan said Thursday, adding that the beneficiary would be a mine owned by multi-billionaire Gina Rinehart.

Because the deal is more than $100 million, it will be sent to Congress for review and comment. But it does not require congressional approval, and bank officials said they expect a final board vote on the deal, usually considered automatic, in December.

First reported by the News Tribune in August, the deal was strongly opposed by Nolan and U.S. Sens. Amy Klobuchar and Al Franken. The Minnesota DFLers wrote letters to the bank in advance of the vote saying the loan could weaken U.S.-based mining companies like Cleveland-based Cliffs Natural Resources.

The Roy Hill project 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 will produce 55 million tons annually — more iron ore than all U.S. mines combined.

Cliffs, which operates three Minnesota taconite iron ore mines and one in Michigan, says the deal unfairly benefits the massive mine in Australia’s outback in the competitive global market for iron ore, especially the Asian market including China.

The effects of the mine could also hit the U.S. steel industry as cheaper iron ore for Asia will result in cheaper steel from Asia.

And if less U.S. steel is produced, that means reduced demand for all Minnesota taconite. In its argument against the loan, Cliffs estimated Roy Hill’s output would displace nearly $600 million of U.S. iron ore exports and would cause a reduction of about $1.2 billion in U.S. domestic sales.

The United Steelworkers Union joined Cliffs, some domestic steel producers and politicians in opposing the loan.

Caterpillar officials say the Roy Hill mine will be built with or without U.S. equipment. But without the loan, the equipment used in the mine probably would come from Korea or Japan.

Caterpillar said the $694 million contract to provide giant haul trucks, bulldozers, lift shovels and more is a huge contract that will spur jobs in places such as Decatur, Aurora and East Peoria, Il, and Milwaukee.

The little-known Export-Import Bank generally operates without much public attention. But it has come under fire before from global aircraft manufacturers, free-market think tanks and others for providing billions in loans to foreign airlines to purchase airplanes from U.S.-based Boeing.