Mineral Resources (MinRes) plans to acquire a 40 per cent interest in the Red Hill iron ore joint venture (RHIOJV) in Western Australia from Red Hill Iron for $400 million.
As part of the proposed transaction, MinRes has also agreed to pay Red Hill Iron a 0.75 per cent of freight on board revenue for all iron ore extracted and sold from the RHIOJV.
MinRes’ expects the acquisition of Red Hill Iron’s interest in the RHIOJV will enhance its iron ore footprint in the West Pilbara as it progresses the Ashburton Hub development.
“We are pleased to have reached agreement with Red Hill Iron to acquire its participating interest in RHIOJV,” MinRes managing director Chris Ellison said.
“The transaction is in line with our strategy to build, own and operate infrastructure assets to unlock stranded iron ore deposits in the Pilbara and build a long-life, sustainable iron ore business exporting out of Onslow.
“The RHIOJV holds a sizeable iron ore mineral resource in a strategically significant location in the West Pilbara.”
The Australian Premium Iron joint venture, which comprises Aquila Steel (50 per cent) and AMCI (50 per cent), holds the remaining interest in the RHIOJV.
MinRes last week reported record iron ore shipments and production for the 2021 financial year as demand continues to grow.
The company produced a record 19.5 million tonnes of iron ore in the 2021 financial year, which was 38 per cent higher than the previous year.
MinRes also shipped a record 17.3 million tonnes, however, this was under its revised guidance of 17.4 million to 18 million wet metric tonnes of iron ore shipment guidance for the 2021 financial year,
During the June quarter, MinRes stated that COVID-19 outbreaks across the country resulted in the staff reductions.
The company flagged that hard border closures and have caused labour shortages for the company, affecting its ability to freight iron ore.
This caused a shortage of road train drivers to transport its iron ore from its Yilgarn and Utah Point hubs in Western Australia to ports.
Despite the staff shortages, shipments for the quarter reached a record 5.2 million tonnes which was 27 per cent higher than the previous quarter.
Yet the company just missed its revised 17.4 million to 18 million tonnes of iron ore shipment guidance for the 2021 financial year, delivering a total 17.3 million wet metric tonnes.
The company stated that port congestion caused three planned shipments from the Kwinana port to be delayed, resulting in the company slipping under its guidance range.