Dec. 6 (Bloomberg) -- IRC Ltd., a Russian mining company listed in Hong Kong, said it commissioned China National Electric Equipment Corp. to build a $400 million processing plant to supply iron ore to Asia’s largest economy.
State-run China National Electric’s work is contingent on the Industrial & Commercial Bank of China Ltd. providing $340 million in project financing, IRC said today in an e-mailed statement. Cash from IRC’s share sale, which raised about $241 million in October, will cover the rest of the project costs.
A successful commissioning of the plant at IRC’s K&S iron ore deposit will bring on line 3.22 million metric tons of ore concentrate in 2013, IRC said in a statement before the share sale. Global demand for the ore used to make steel will outweigh supply in the next few years due to growth in Asia, according to Vale SA, the biggest ore exporter.
Improving political relations are boosting Russian commodity sales to China while demand in Europe slows. Russia agreed last year to supply China with oil for 20 years in return for a $25 billion credit to its state-run oil producer OAO Rosneft and pipeline monopoly OAO Transneft. United Co. Rusal, the largest aluminum maker, this year became the first Russian company to list in Hong Kong and said it aimed for Asia to account for 30 percent of sales.
IRC’s shares have dropped almost 21 percent since the initial sale. IRC, which sold shares at HK$1.80, rose to HK$1.43 before trading was suspended at 2.30 p.m. in Hong Kong today, pending what it said earlier was an announcement on a “major transaction.”
IRC is an iron ore unit of Petropavlovsk Plc, a gold mining company developing deposits in Russia’s Far East.
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