Australasian to double iron ore projectAustralasian said on...

Australasian to double iron ore project

Australasian said on Thursday it could double initial production from the project to 24 million tonnes per annum. The project is slated to commence production in 2010/11.

According to Mr Andrew Caruso MD of Australasian Resources Ltd, alliances with Chinese steel makers will be the key to determining whether iron ore explorers become producers and exporters. Mr Caruso was responding to comments by Mr Sam Walsh CEO of Rio Tinto that only a handful of the 90 or so iron ore juniors on the Australian stock exchange would graduate to export the bulk commodity in the next few years.

Mr Caruso told AAP that "I think there is competition for iron ore resources in the market and the more likely aspirants will be competing with Rio Tinto Ltd and BHP Billiton Ltd. Those companies that have the support of China, the support of a major partner are more likely to be able to face that challenge rather than those who are facing longer timeframes to get into production without a major partner."

Mr Caruso told a WA Mining Club function that China's large cash reserves continued to offer great finance opportunities for future iron ore developments in Australia. He said that "The Chinese want to influence iron ore supply and will make more investments in the future."

Australasian is documenting a joint venture agreement for its flagship Balmoral South project in Western Australia's Pilbara region with Chinese state owned Shougang Corporation. Shougang is an 8.4% shareholder in Australasia and China's fourth largest steel maker. Shougang has invested AUD 56 million into Australasian and will decide whether to proceed with financing the Balmoral South project in June after reviewing the feasibility study, which is currently underway. At this point, it can earn 50% of the project and secure all product offtake for 25 years, offering 100% of the project financing interest free in return.