Grange Resources Ltd. (GRR), Australia’s largest iron ore pellet producer, said companies in Asia are interested in buying a stake in its A$2.9 billion ($3 billion) Southdown project, whose cost estimate rose about 12 percent.
“We’re looking at a number of finance options, one of which is selling a stake in the project,” Russell Clark, managing director of the Perth-based company, said today in an e-mailed response to questions from Bloomberg. “Potential sell down targets are varied and there is interest in Southdown from around the globe, particularly China and Asian countries.
Grange today announced the completion of a feasibility study for Southdown, 70 percent owned by Grange with the rest held by a joint venture of Japan’s Sojitz Corp. (2768) and Kobe Steel Ltd. (5406) Grange appointed Standard Chartered Plc in September to advise on funding the project, set for first output in 2015.
‘‘No formal process to sell down assets has been initiated,’’ Clark said.
Grange, whose biggest shareholder is Jiangsu Shagang Group Co., China’s largest closely held steelmaker, fell 3.3 percent to 58 cents at the close of trading in Sydney, compared with a 0.8 percent gain in the benchmark S&P/ASX 200 Index.
The projected cost of development of Southdown is A$2.9 billion, the company said today. That compares with a A$2.6 billion estimate in February.
‘‘The project partners are now considering the findings of the study and are expected to make a final investment decision when finance is in place, expected by the end of the year and subject to broader global credit conditions,’’ Grange said in the statement.
Steelmakers including Kobe, which bought its indirect 10 percent stake in Southdown in March, and ArcelorMittal (MT), the world’s biggest producer, are looking to secure iron ore and coking coal resources as increasing purchases by China and India tighten global supplies.
The Southdown mine, located 90 kilometers (56 miles) northeast of Albany Port in Western Australia state, is slated to produce about 10 million metric tons of iron ore a year starting 2015, according to Grange. The company also produces iron ore pellets from the Savage River mine in Australia’s Tasmania state.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at email@example.com
To contact the editor responsible for this story: Rebecca Keenan at firstname.lastname@example.org