PERTH Nov 30 Aquila Resources' funding
dispute with its partners on their A$7.4 billion ($7.7 billion)
iron ore project in Western Australia has not been resolved but
the company said it was hopeful of an agreement early next year.
Aquila aims to build the mine, rail and port with annual
iron ore production of 30 million tonnes, but the project has
been stalled by a delay in securing funding and regulatory
approval, compounded by a slump in commodity prices.
"Unfortunately, the whole project is taking longer, but it's
in an environment where projects do take longer," Aquila
chairman Toni Poli told Reuters after the company's annual
general meeting on Friday.
A budget dispute between Aquila and its partner AMCI (WA), a
joint venture between private mining investment and trading
group American Metals and Coal International (AMCI) and steel
giant POSCO, is further complicating matters.
The partners had been in talks to conserve funds but had not
been able to agree on a budget for the 2012/13 financial year.
Aquila is expecting the dispute to be resolved through
arbitration by late this year or early next year. One possible
outcome of arbitration would be that one party would buy out the
other, but Poli said that was unlikely to happen.
"There's no way we will bought out," Poli said.
Although the project has faced delays, it may be able to
benefit from declining costs, he added.
The West Pilbara Iron Ore project is still waiting for
approvals a year after it had expected to get a green light.
Aquila said assuming all major government approvals were in
place by the December quarter of 2013, it could start
construction by early 2014 and ship its first iron ore by 2017.
Poli said the timeline was conservative and assumed a
resolution to the conflict in June 2013. The development could
be sped up, with a best case scenario of the project being able
to ship iron ore in 2016.
"We're in an environment where cost pressures have gone -- a
few months ago it was important that we hurry, hurry, hurry...
you're better off taking your time a little bit because costs
are coming down," he said.
China and other Asian buyers have been keen to develop
alternative supplies for iron ore needed to feed their mills and
break the hold of the world's top three suppliers -- Brazil's
Vale, Rio Tinto and BHP Billiton.
Aquila, 14 percent owned by China's biggest listed
steelmaker, Baoshan Iron & Steel Co, has been
counting on China Development Bank to help fund the project.
West Pilbara Iron Ore part of a more than A$290 billion
pipeline of planned resource investments in Australia facing
increasing uncertainty as funding dries up amid concerns about
the outlook for iron ore and coal, and escalating costs.
"We are working very hard to make sure it's not the next one
on ice," Poli said of the iron ore development.
Last month, Aquila said the estimated cost of the project
had jumped from A$6 billion to A$7.4 billion due to a general
rise in costs since the previous estimate in 2010 and because of
changes in plans for the new port by the Western Australian
Aquila shares were trading down 4.2 percent at $2.30, down
from A$6.83 a year ago.