Shanghai: China Gezhouba Group signed an initial agreement with Australia’s third-largest iron ore producer Fortescue Metals Group to raise iron ore output at its Chichester Hub in Western Australia, the Chinese engineering group announced on Tuesday.
Gezhouba will help the Australian miner expand output at its Chichester Hub to 95 million tonnes per annum. The project is expected to reach an annual production capacity of 55 million tonnes by March 2011, Gezhouba said in a statement to the Shanghai Stock Exchange.
The expansion plan will proceed despite the proposed resource tax aimed for by Australia government in 2012, FMG said.
Fortescue also said it will finance the project from internally generated cash flow, while Gezhouba may also provide a source of competitively priced finance.
The companies did not give details on the size of the deal, adding that the final agreement was pending the outcome of certain conditions.