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Sundance Sees Troubled Africa Iron Ore Project Online By 2018
30/08/2013
PERTH (Reuters) - Australia's Sundance Resources expects to bring its $4.7 billion iron ore project in West Africa online by early 2018, despite the collapse of a takeover by China's Hanlong Group in April that many expected to doom the project.
Giulio Casello, chief executive of Sundance, told Reuters in an interview that the company is also aiming to finalise an equity partner for the project and have offtake secured by the end of the year. By early next year, Sundance expects to have selected a contractor for the development.
Investors saw little hope for the future of the project when the Hanlong deal fell through, but Sundance has said it was talking to potential partners and was to have concluded discussions with them by June.
It remains upbeat about the prospects of the 35 million tonne a year Mbalam-Nabeba iron ore project on the border of Cameroon and the Republic of Congo.
"Late 2017, early 2018 is the time we would expect to see product out of this project," Casello said late on Thursday.
Before the Hanlong deal fell through, Sundance had been aiming for first shipments from Mbalam by late 2015.
Although the collapse of the Hanlong deal was a setback, Casello said the Chinese company's backing did help Sundance expedite permits and environmental approvals.
Sundance's share price, though, has yet to recover from the blow dealt by the Hanlong deal's collapse. Shares were around 8 Australian cents on Friday compared with more than 30 cents at the beginning of the year.
Casello forecast a period of iron ore oversupply in the short- to medium-term as Chinese growth slows, but saw the market turning around by the end of the decade.
"There will potentially be an oversupply. We might see the iron ore price drop down to $100 a tonne or even $80 a tonne over the next few years," he said.
"There will be shakeouts which will result, in 2018, the need for iron ore."
With major producers such as Rio Tinto, Vale and BHP Billiton under pressure to slash costs as commodity prices decline and return money to their shareholders, companies that are proceeding with developments face less competition for resources, the CEO said.
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