Sundance Seeking China Partner for $4.7 Billion African Iron Ore Project
Sundance Resources Ltd., seeking to develop a $4.7 billion iron ore mine, port and railroad in West Africa, may sell as much as half of the project to a Chinese partner to help fund construction.
“We are targeting to have a strategic partner selected by the end of June, so we can then move towards a final investment decision towards the end of September,” Giulio Casello, chief executive officer of the Perth-based company, said in an interview. “We are getting very strongly focused towards China.”
Chinese companies are scouring the globe for investments in steelmaking raw-material assets to feed surging demand in the world’s fastest growing major economy. A number of groups have visited the Mbalam project that straddles the border of Cameroon and Republic of Congo and another potential partner is scheduled to visit “shortly,” said Casello.
“They need to secure funding partners or off-take agreements,” Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney, said by phone. “Any news on them finding a strategic partner would be considered positive.”
A partner would “buy into the project level” and be able to sign up for sales accords, while Sundance will retain no less than 50 percent of Mbalam, Casello said in Sydney. The company’s biggest shareholder is China’s Sichuan Hanlong Group, which owns 17.94 percent.
Sundance rose as much as 5.8 percent in Sydney, trading at 35.5 cents at 12:30 p.m. local time, compared with a 0.4 percent drop in the S&P/ASX 200 Resources Index.
Rio Tinto Group and Vale SA’s are among companies making acquisitions in Africa. London-based Rio has acquired control of Riversdale Mining Ltd., which owns coking coal projects in Mozambique.
Sundance completed a study of Mbalam last month and plans to start construction at the end of the year. It aims to start shipping iron ore by 2014 and produce 35 million metric tons a year. This includes building a 510-kilometer (320-mile) heavy- haulage railroad through Cameroon and a deep water port for bulk iron ore carriers, Sundance said April 6.
“We’ve had our technical teams in China pretty well full- time for over three weeks now going through and explaining to the potential partners how we made up” the study costs, said Casello. The company last year signed an initial accord with China Harbour Engineering Co. and China Rail Construction Co. to study building the port and rail.
Sundance may use China Development Bank Corp. and Export- Import Bank of China to help arrange financing, given the existing relationships Sichuan Hanlong, Casello said.
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