Today I approve the application by Anshan Iron and Steel Group Corporation (Ansteel) to acquire an additional shareholding in Gindalbie Metals Ltd, up to a maximum of 36.28 per cent, conditional upon legally enforceable undertakings by Ansteel.
Ansteel is also a 50 per cent partner in a greenfields joint venture with Gindalbie to develop the Karara Iron Ore Project, a $1.8 billion development in the Mid West region of Western Australia.
My approval under the Foreign Acquisitions and Takeovers Act 1975 is conditional upon Ansteel supporting the wider development of infrastructure in the Mid West, and maintaining agreed levels of Australian participation in a greenfields joint venture in China's Liaoning Province. This involves the construction of a pellet plant to process iron ore product from Karara into pellets for use in steel mill furnaces.
Ansteel has undertaken to:
- Support the development of the Oakajee Port and Rail Project approved by the Western Australian Government;
- Use the Oakajee Port when that Port is available to ship Karara production to customers; and
- Not alter the proposed 50:50 ownership of the pellet plant that joint venture participants intend to build in China without first seeking the prior approval of the Australian Government.
These undertakings support Australian mining jobs, and protect Australia's investment participation in the Chinese resources market.
The Foreign Acquisitions and Takeovers Act 1975 provides a range of penalties for non-compliance, including divestment orders where conditions of approval are breached.
In September 2007, Gindalbie and Ansteel concluded a development agreement for the Karara Project (see Attachment). The Project will play a key role in developing the Mid West and in further strengthening Australia's important economic relationship with China.
The Karara Project will deliver substantial economic and social benefits for Western Australia, generating jobs in the Mid West, particularly benefiting Indigenous communities in the region.
Ansteel's proposed investment will ensure that production at the Karara Project proceeds, which will underpin the development of the $3 billion Oakajee deepwater open access port (north of Geraldton) and the open access railway for this new iron ore province (see Attachment).
Attachment
Karara Project
Gindalbie has stated the Karara Project's benefits will include:
- 500 new long term jobs and in excess of 1,500 construction jobs, including for infrastructure;
- Annual export revenue of $1 billion increasing to $3 billion;
- Annual State taxes and royalties of $60 million increasing to $150 million;
- Project underpins the likely success of Oakajee Port; and
- Project life of over 50 years.
Oakajee Port
The new Oakajee Port is expected to facilitate the development of Western Australia's Mid West region as Australia's second major iron ore mining region after the Pilbara. It will have an initial start up annual capacity of some 35 million tonnes and potential to expand to 80‑100 million tonnes.
The Oakajee Port and associated new railway from other mining projects under development is expected to create several thousand jobs during construction and several hundred ongoing jobs.