(Repeats story published late Friday; no change to text)
* West Pilbara iron ore project already on ice
* Aquila says investor may look to sell its stake
* Building rail lines to project will cost billions
By Sonali Paul
MELBOURNE, Sept 13 A dispute between Aquila
Resources and a partner on the long-delayed $7 billion
West Pilbara Iron Ore project in Australia erupted in the open
on Friday, heralding a possible ownership shake-up.
The project in western Australia is one of several that has
stalled globally as Chinese demand growth has cooled and
aspiring miners have struggled to fund multibillion dollar rail
lines and ports needed for their new mines.
The proposed mine, once expected to be up and running by
2014, has been held up as Aquila has not had the funds to foot
its 50 percent share of the equity funding for the A$7.7 billion
($7.1 billion) mine, rail and port.
Its partners, AMCI and South Korean steel giant POSCO
, put the brakes on project spending last year and
had again not signed off on a budget for the 2014 financial
year, Aquila said in its annual results announcement on Friday.
Aquila said it was uncertain whether AMCI remained committed
to holding its 25.5 percent stake in the project.
"Should AMCI Investments Pty Ltd seek to divest its
interest, the joint venture agreement contains pre-emptive and
change-of-control rights that give (Aquila) some influence over
such a divestment and (Aquila) has held discussions with parties
exploring potential equity investment in WPIOP," the company
However, AMCI co-founder Hans Mende had a different view.
"AMCI retains plenty of liquidity to finance its share of
the API development in addition to making other investments in
the resources sector," Mende told Reuters in an email. API is
the name of the joint venture between Aquila and its partners.
POSCO has not been informed of any plan by AMCI to quit the
joint venture, a POSCO spokesman said in Seoul.
Mende said he was under no financial pressure from tax
disputes in Australia or a dispute with a major Indian steel
Aquila Chief Executive and top shareholder Tony Poli and
general manager Martin Alciaturi declined to say in a phone
interview who Aquila had talked to about investing in the
project in the event that AMCI decided to sell its stake.
They did not rule out Aquila increasing its stake, given the
company is sitting on A$591 million in cash following a string
of asset sales, but said the company did not see itself owning
100 percent of the project.
"It needs partners, whether they're off-takers, or whether
they're people who are going to help you build the
infrastructure," Alciaturi said.
Aquila values its 50 percent stake in the West Pilbara Iron
Ore project at A$224 million. So theoretically, AMCI's stake
would be worth around A$114 million.
Analysts said even if there was a change in ownership at the
project, it would be tough to secure debt funding for the
project, despite iron ore prices having proved more resilient
than expected this year.
Volatile iron ore prices over the past two years and
competition from massive new supplies from giants such as Rio
Tinto and BHP Billiton at much lower cost
would raise the hurdle rate, said Lawrence Grech, senior
resources analyst at PhillipCapital.
"Nothing will be vanilla in this development. And if we're
talking about an extended time period to develop this, they will
enter the marketplace in an environment where the growth rate in
China's consumption of iron ore is tailing off," he said.
($1 = 1.0781 Australian dollars)
(Reporting by Sonali Paul; Editing by Joseph Radford and