Iron Road Limited has signed non-binding agreements with five globally significant Chinese steel companies aimed at progressing long-term iron ore supply agreements for the Central Eyre Iron Project (CEIP) in South Australia.
The company believes the five Memoranda of Understanding (MoU) will underpin development of the CEIP. The MoUs will see Iron Road and the Chinese parties work together to evaluate the benefits of using high quality CEIP product in Chinese steel mills.
The steel companies will conduct technical evaluations of CEIP iron concentrate, to verify the commercial and technical merits, including value in use, of the high quality product as a precursor to entering discussions towards a Letter of Intent for the long term supply of concentrate.
At this stage, four of the Chinese companies counterparty to the MoUs have requested anonymity for reasons of commercial confidentiality. Iron Road is confident of their commitment to undertake the activities contemplated in the MoUs and ultimately, to use significant quantities of CEIP product in their operations.
One of the MoU parties, Shandong Iron & Steel Group Co Ltd (ShanSteel), has signed a further agreement, progressing its intention to enter into a Letter of Intent with Iron Road. The proposed Letter of Intent will cover the supply of premium iron products to ShanSteel from the CEIP. ShanSteel is China’s seventh largest producer of steel.
The ShanSteel agreement also proposes that ShanSteel and Iron Road will collaborate to seek a project funding solution to enable Iron Road to reach a final investment decision, in order to commence construction in 2017.
The ShanSteel agreement was signed at a ceremony alongside the Shandong-South Australia Friendly Cooperation Action Plan (2015-2018) and observed by South Australian Premier Jay Weatherill and Shandong Provincial Committee of the Communist Party of China secretary Jiang Yikang together with other honoured guests. ShanSteel is headquartered at Jinan in Shandong Province and is a state-owned entity.
Iron Road managing director Andrew Stocks said the agreements were a major milestone for Iron Road as it progressed towards development of the CEIP. “Our high quality product from the CEIP offers significant advantages for steel mills intent on running the most efficient and environmentally compliant operations, hence the strong interest we have received from a number of parties.
“We are very happy that ShanSteel wishes to strengthen our relationship and continue its evaluation of the CEIP. We also look forward to collaborating further with ShanSteel on enabling the successful completion of our final preparations prior to funding and construction of the Central Eyre Iron Project.”