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Roy Hill project’s impact on iron ore prices “overstated”

Gina Rinehart’s Roy Hill Project won’t hit an October deadline for the shipment of its first ore from the massive iron ore project, according to a statement from the company this afternoon.

Roy Hill chief executive Barry Fitzgerald dismissed media reports it was targeting an October 21 date for the shipment of its first ore as “incorrect”.

The first shipment is imminent in the coming weeks, but will occur after 21 October 2015,” Mr Fitzgerald said in the statement. 

For projects of this scale and complexity it is not unusual for minor slippages such as this. Our equity partners and lenders are fully aware of this schedule and are supportive.” 

The comments were issued shortly after Hancock Prospecting executive director Tad Watroba issued a statement which also rejected media speculation towards the project.

Some media have got it wrong and are overstating the impact on the iron ore price from the Roy Hill Project,” Mr Watroba said. 

They ignore that the prices dropped last year, pre-Roy Hill even shipping, and that when Roy Hill commences shipments in the last two months of this year, these initial shipments will only represent a small portion of its capacity of 55Mtpa. They have also ignored the significant increases from now to end 2017 from other companies which will significantly exceed shipments from Roy Hill.

Their assessments don’t take into account that over 50% of Roy Hill’s 55 million tonne output is going to be taken by the minority investment partners and all are outside of China. It demonstrates their faith in the project.”

He said close to 90% Roy Hill’s product is already under long term contract, so very little ore will actually enter the spot iron ore market.
“Roy Hill will produce high quality fines and lump. Unlike some competitors’ products, Roy Hill’s products have lower impurities, particularly phosphorus, and a consistent grade. This gives Roy Hill a significant revenue advantage over competitors’ lower quality products, and inconsistent grades,” he said. 
“The fact is Roy Hill was not in the market when the iron ore price crashed last year or continued to drop this year, and won’t be shipping 55Mtpa next year as it continues to ramp up production. Roy Hill has worked hard to ensure that its cost position remains in the lowest quartile of the industry cost curve and
therefore will be competitive in the changing market environment.”

 

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