News

Fox Resources in talks for Chinese project partner

(China Daily/Agencies)
Updated: 2009-11-12 08:55

Fox Resources Ltd, backed by China's Jinchuan Group Ltd, is in talks with a potential Chinese partner to help develop an iron ore project in Australia.

Executives from a State-owned steel mill, one of China's top-five producers, are scheduled to visit the site later this month, Bruno Seneque, managing director of the Perth-based nickel and copper company, said yesterday in an interview to Bloomberg, declining to name the mill.

China has proposed 90 investments in Australia valued at about A$34 billion ($32 billion) in the past 18 months, the Canberra-based Foreign Investment Review Board said in September. CITIC Pacific Ltd, a unit of China's biggest State-owned investment company, is building a $4-billion magnetite iron ore mine in Western Australia to meet surging demand.

Fox aims to agree an initial accord with a Chinese partner by the end of the first half of next year, Seneque said in Melbourne. The company is seeking to boost estimated resources at the project to 1 billion tons of ore, from 72.4 million, he said.

Shares of Fox closed 4 percent higher yesterday to 26 cents on the Australian stock exchange. Jinchuan, China's biggest nickel producer, is the company's second-biggest shareholder with a 10.4-percent stake. Chairman Terry Streeter is the company's biggest shareholder with a 17.6-percent stake.

The Mount Oscar project is located 30 km from Western Australia's northwest coast and a study has shown it's capable of producing 8 million tons of concentrate a year, Seneque said. A possible accord will follow a similar investment model to that used by Centrex Metals Ltd, which agreed an investment of A$271-million with Wuhan Iron & Steel Group.

Wuhan agreed this year to buy a 60-percent stake in the iron ore rights of five of Centrex's projects and a 13-percent interest in the company. Fox also plans to use some funds from its Chinese partner to finance the A$15-million restart of its Radio Hill copper and nickel operation, also in Western Australia, planned for the third quarter of 2010, Seneque said.

Magnetite ore is a lower grade of iron that needs more processing than higher-grade hematite ore, which accounts for most of Australia's output. Australia's Atlas Iron Ltd has hired Goldman Sachs JBWere Pty to help it sell a majority stake in its Ridley magnetite project, which was estimated to cost A$3 billion to develop.