Gina Rinehart’s Roy Hill iron ore project is closing in on final investment approval after Korea Export-Import Bank agreed to offer up $1.12 billion for the mine’s development.
South Korean media reported that the Korea EximBank will provide $US550 million in loans and $US450m in loan guarantees to the mine, with several other financiers jumping on board.
Korea Trade Insurance Corporation is reportedly offering $US1bn, the US Ex-Im Bank $US700m, Japan Bank for International Co-operation $US900m and Nippon Export and Investment Insurance Corporation $US750m.
A Korea Exim Bank official told the newspaper the deal was low in risks.
"With this project, Korean companies will be able to secure iron ore supplies of 15 million tons, equivalent to 22 per cent of annual iron ore imports."
However, the official also said some Korean commercial banks had decided not to take part in financing the project.
"Although the deal is low in risk as our bank provides guarantees, the six banks that initially showed interest in the deal decided to stay away from it because it takes too much time to see any profit and they had little experience in resource development lending."
Gina Rinehart’s $10 billion Roy Hill iron ore development is undertaking one of the largest debt-raisings ever attempted in the mining sector, seeking $4 billion in funding from export credit agencies and an additional $3 billion from commercial bank.
The project includes a new 55 million tonne per annum iron ore mine, 344 kilometres of railway and a new port at Port Hedland.
Roy Hill Holdings is 70 per cent-owned by Rinehart's Hancock Prospecting with the remainder owned by South Korea's Posco, Japan's Marubeni and Taiwan's China Steel Corporation.
The company has previously said it is pushing to complete financing before the year is out, with production scheduled to commence in September 2015.
In early November, POSCO offered its 12.5 per cent share in Roy Hill Holdings, or $1.4 billion, to export credit agencies in Korea, Japan, the US and to other companies.
Construction of the Pilbara-based project is continuing, despite chatter around delays, with some analysts predicting full production will not commence until 2017.
Analysts predict the mine has the potential to add 7 per cent to Australian iron ore supply.