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Wuhan Steel Spokesman: Not Much Progress in Talks With Hanlong on Iron Ore Deal

 By Chuin-Wei Yap and Gillian Tan 

Wuhan Iron & Steel Group, one of China's largest steelmakers, and Sichuan Hanlong Group haven't made much progress in talks to jointly develop a West African iron ore project, and Wuhan is unlikely to take over development of the deposit, a Wuhan spokesman told the Wall Street Journal Wednesday.

Mining-sector investor Hanlong had sought to purchase the Mbalam-Nabeba iron ore project, owned by Australia's Sundance Resources Ltd. (SDL.AU), for $1.4 billion. The deposit, which straddles Cameroon and the Republic of Congo, could potentially yield 35 million metric tons of iron ore a year.China's top economic planning agency, the National Development and Reform Commission, last month ordered closely held Hanlong to find a "large Chinese partner with sufficient capability to undertake the Mbalam-Nabeba project with Hanlong" if it wants the deal to progress.Wuhan Iron, also called Wisco, has for months been identified in media reports as a leading candidate to partner Hanlong, but the company said Wednesday a deal isn't likely."The two sides have interacted but there's not much material substance to it," Wuhan's spokesman said

.He added that the likelihood of Wuhan independently taking over the development of the project "isn't very high."

Sundance said Wednesday in a statement it is seeking clarity from Hanlong on the status of the deal following Chinese media reports that Hanlong's chairman has been detained by police.

Sundance said that Hanlong had not yet finalized discussions with a potential Chinese partner or partners, in accordance with the NDRC requirement."Hanlong has advised Sundance that it is therefore not likely that Hanlong will be in a position to deliver the credit approved term sheets" by a March 26 deadline, Sundance said.In the absence of those term sheets from Hanlong's financiers--China Development Bank and China Everbright Bank Co.--Sundance said a five-business-day "good faith" consultation period would be triggered. In the following 10 days, either party may terminate the deal.Sundance also confirmed an earlier Wall Street Journal report that it was in discussions with other parties, but declined to comment further. Write to Chuin-Wei Yap at [email protected] and Gillian Tan [email protected]