Yilgarn Australia in iron ore rail deal with China

Iron ore infrastructure group Yilgarn Infrastructure Ltd. said the Export-Import Bank of China had signed a letter of intent to provide A$1.5 billion ($1.3 billion) in debt financing for its planned Oakajee port and rail project in Western Australia.

Yilgarn, which plans to list on the Australian Stock Exchange, is carrying out a feasibility study into construction of the A$2 billion project, which would involve laying up to 460 kilometres (286 miles) of rail line to link iron ore mines to a new port at Oakajee, 25 km north of Geraldton.

The agreement, signed in Perth on Monday, is conditional on economic and financial feasibility assessments by the Chinese government and Export-Import Bank, and the approval of the Western Australian government for Yilgarn to proceed with the project.

It follows a recent agreement signed between Yilgarn and China Overseas Engineering Corporation, part of China Rail Engineering Corporation. China Rail Engineering and China National Overseas Engineering hold about 15 percent of Yilgarn.

“This is a significant milestone for Yilgarn and the Oakajee port and rail project, representing a huge vote of confidence in the future of the mid-west region as a potential world-class iron ore producer,” Yilgarn chairman John Saunders said on Tuesday.

The development of 10 planned and potential iron ore mines in the mid-west of Western Australia depends on the provision of new rail and port facilities.

China is Australia’s biggest buyer of Australian iron ore after overtaking Japan in recent years. ($1=A$1.20)

Information from: au.biz.yahoo.com