Australia-based Aquila Resources Ltd has held talks to bring in new investors for a long-delayed $7 billion iron ore project as one of its key partners may no longer be committed to the development.
Aquila and AMCI Pty Ltd’s joint venture West Pilbara Iron Ore Project (WPIOP) was postponed earlier this year as the partners could not settle on a budget to proceed with preparatory work. The partners failed to sign off on an agreement for the 2014 financial year.
AMCI may be looking to quit the project, said Aquila in a Reuters report.
“Should AMCI Investments Pty Ltd seek to divest its interest, the joint venture agreement contains pre-emptive and change-of-control rights that give (Aquila) some influence over such a divestment and (Aquila) has held discussions with parties exploring potential equity investment in WPIOP.”
The WPIOP is 51-49 owned by US based resources investor AMCI Investments and South Korean steel giant POSCO.
The A$7.7 billion ($7.14 billion) development is among a number that have stalled since the mining boom cooled last year in the world’s top iron ore exporter after Chinese demand slowed.
Several iron ore projects are on hold in Western Australia due to lack of access to rail lines, which will cost billions of dollars to build.
With mining giants Rio Tinto, BHP Billiton and Fortescue Metals Group Ltd forging ahead with massive expansions at much lower production costs, projects by smaller producers are becoming tougher to justify.