cfe and sinosteel

Sinosteel back at Cape Lambert
Email Print Normal font Large font John Phaceas
March 26, 2007

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AdvertisementCHINA'S appetite for West Australian iron ore is showing no signs of letting up, with Pilbara magnetite hopeful Cape Lambert Iron poised to become the latest start-up to secure Beijing's backing to get a new operation off the ground.

After calling a trading halt on Friday while "commercial negotiations" with an unnamed third party were continuing, Cape Lambert told the London Stock Exchange it was negotiating a deal that "may or may not lead to a part disposal of the company's iron ore project".

It is believed that Beijing conglomerate Sinosteel is seeking a formal offtake and equity deal that will deliver it all output from Cape Lambert's namesake project near Wickham as well as a controlling stake in the $500 million-plus venture.

It is understood that Cape Lambert chief executive Tony Sage flew to Beijing on Friday, in the hope of finalising a deal over the weekend.

Several international parties have expressed strong interest in Cape Lambert's 2.5 billion tonne magnetite venture over the past 18 months, including Indian steel group Essar, and Chinese companies Xingxing Iron Pipes, Shandong Yuansheng International Trading Co, Fujian San'an Group and Citic Pacific.

But Sinosteel has long been the favourite to lock in a formal deal after signing a non-binding heads of agreement with Cape Lambert in March last year.

Under that agreement, Sinosteel was seeking an offtake deal for most of Cape Lambert's proposed output of 5-10 million tonnes of magnetite concentrate a year as well as a direct stake of at least 50 per cent in the project itself.

Sinosteel's interest appeared to have cooled by late last year but it is understood to have since undertaken several new visits to the site after learning it may be gazumped by other parties.

Already the major partner in Gindalbie Metals' $1 billion-plus Karara magnetite project in the mid-west, Sinosteel has been an aggressive bidder for other steel-related projects in recent months.

The West Australian