The Roy Hill iron ore project in Western Australia is back in the news again, this time as cost-overruns cause a budget rethink.
The WA mining operation spearheaded by Gina Rinehart has reported to have blown out by another $60 million.
Huge mining projects underway in Australia
Despite the lack of substantial mining investment over the past few months, there are still huge mining projects underway in Australia. Mining companies like Gina Rineharts Roy Hill iron ore project in Western Australia is forging ahead in the construction phase.
“a new phase of mining productivity”
Many of WA’s iron ore miners such as Rio Tinto, BHP and Fortescue Metals Group have entered a new phase of mining productivity having invested heavily in new machinery, infrastructure and logistics projects. Productivity is something that’s way off the radar for the Roy Hill project at the beginning of 2014.
The mining company has been in the news again as reports are circulating of Roy Hill extending the construction contract with Samsung C&T to the end of 2016.
Fluctuations in the US dollar exchange rate have also added more fiscal pressure to the project with indications that a further $60 million has been added to the cost of the already $5.5 billion project.
Since the initial contract was signed with the Korean based Samsung C&T, the Australian dollar has weakened almost 19 per cent against the Korean currency.
All is well in the Roy Hill camp
This latest news has Roy Hill and Gina Rinehart’s mining executives insisting that all is well in the Roy Hill camp. However a Roy Hill spokesperson was quoted as saying the project is starting to lag behind schedule.
Cost blow-outs and project completion times have plagued Australian mining companies as well as the famous Gorgon LNG project in WA which has almost doubled its initial construction costs to almost US$60 billion.
Roy Hill mine attracts more Asian investment
Financing for the massive iron ore project, which adjoins Fortescue Metal’s Group mining tenements has been a mix of local investment as well as Korean funds of some $US3 billion. It’s though as the mine takes shape and construction forges ahead, further Asian interest will induce further funding of the project.
“Roy Hill – one of the biggest iron ore mines in Australia”
Asian countries are keen to get their hands on the precious red dirt as they continue urbanisation and development programs. Roy Hill mine is set to become one of the biggest iron ore mines in Australia, with expectation of some 55 million tonnes of iron ore exports per year.
Despite the cost increases, iron ore production at Roy Hill is set to begin around the third quarter of 2015.
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