Gindalbie and Ansteel have an off-take agreement for Karara iron that has Ansteel taking 100% of the production of the mines to Ansteel’s new 6.5 million tons per year Bayuquan steel mill. Ansteel is already exploring opportunities to expand its steel producing capabilities at Bayuquan above 6.5Mtpa in expectation of additional iron from Karara. The $600 million loan will help finance that.
The Karara iron ore project begain in late 2010, and is expected to see initial production of around two million tons at some point in 2012, according to Gindalbie.
Demand for iron ore is strongly correlated to Chinese steel production growth. Since 2002 the Chinese market has absorbed nearly all related capacity in the global iron ore production system and is expected to continue driving future market growth, according to BHP Billiton, one of Australia’s biggest multinational miners.
BHP, Rio Tinto and Brazilian mining company Vale are the top three suppliers of iron ore to China.(sourced Forbes Blog)