Mitsubishi secures Australian iron ore

<p>Japan’s Mitsubishi Corporation has helped secure a supply of iron ore after its Australian offshoot, Mitsubishi Development, signed a deal with Murchison Metals to jointly invest $3bn (US$2.53bn) to develop Murchison’s iron ore assets in Western Australia.</p> <p>Under the deal, the two companies will build a multi-user port and a railway and expand the Jack Hills mine in the midwest region of WA.</p> <p>The expanded Jack Hills mine is expected to produce about 25m tonnes of iron ore a year starting in 2011.</p> <p>Neither Mitsubishi nor Murchison Metals gave a breakdown on how much would be spent on the port, railway or mine.</p> <p>Under the agreement, Mitsubishi and Murchison Metals will establish and jointly control two special purpose joint venture companies that will each own and actively develop the mining and infrastructure facilities.</p> <p>Mitsubishi will also be the exclusive marketing agent for all iron ore sales excluding supplies to certain customers.</p> <p>Mitsubishi will take 50% ownership of the mining and infrastructure companies after paying $150m when the final joint venture agreements are made and making a further payment based on an agreed valuation of the Jack Hills project.</p> <p>Mitsubishi will arrange limited recourse debt to finance the project.</p> <p>Assuming the joint venture agrees to go-ahead with the mine and supporting infrastructure, Mitsubishi will also provide Murchison with additional subordinated loans and an overrun facility.</p> <p>South Korea’s Posco is already a Murchison Metals customer after the first shipment was sent from the Jack Hills mine to South Korea in April. </p> <p>Posco has agreed to buy 10m tonnes of iron ore a year.</p> <br />