Australasian ‘Confident’ Shougang Will Fund Ore Mine (Update1)...

Australasian ‘Confident’ Shougang Will Fund Ore Mine (Update1)
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By Jesse Riseborough

Dec. 8 (Bloomberg) -- Australasian Resources Ltd., seeking to build a A$2.7 billion ($1.8 billion) iron ore project, is “confident” partner Shougang Corp. will secure financing next year as funding for resource developments dries up.

“Talks are progressing and they have been quite productive,” Andrew Caruso, chief executive officer of the Perth- based company, said today in an interview in Melbourne after meeting China’s ninth-largest steelmaker in Sydney on the weekend. “Shougang have shown signs of commitment to the project and that gives us the necessary confidence.”

The worst credit crisis since the Great Depression has curbed lending and increased borrowing costs, slowing development of as much as $193 billion in mining projects, according to Credit Suisse Group AG. Steel mills in Asia, Europe and North America have slashed output as the financial crisis curbs demand, forcing producers to cut iron ore production.

The first half of 2009 will be “difficult” for the iron ore market as demand slumps though the first signs of recovery should be seen in the second half of next year, Caruso said

Australasian, controlled by Australian iron ore billionaire Clive Palmer, closed unchanged at 33.5 cents at the 4:10 p.m. Sydney time close on the Australian stock exchange. The stock has dropped 75 percent since June 30 and has a market value of A$148 million.

Shougang will be entitled to all output from the proposed Balmoral South mine and pellet plant provided funding is completed by March 31, Caruso said. Shougang is seeking to boost output of steel to as much as 30 million metric tons a year from about 11 million tons this year, he said.

Balmoral South, in Western Australia’s Pilbara region, is slated to begin annual output of 12 million tons of iron ore concentrate and pellets in 2011, Caruso said.

To contact the reporter on this story: Jesse Riseborough in Melbourne at [email protected]

Last Updated: December 8, 2008 01:10 EST