Stemcor confirms sale of Savage River
Stemcor, the world’s largest independent steel trader, today completed the sale of a majority stake in its Tasmanian iron ore mine and pellet plant to Shagang Mining Pty Ltd, an Australian subsidiary of Jiangsu Shagang Group Co. Ltd, one of China’s biggest steel producers. Shagang has acquired 90% of Australian Bulk Minerals (ABM), the holding company for the 2.5million tonne per year Savage River iron ore pellet operations, which Stemcor purchased from Canadian company Ivanhoe Mines in February 2005.
The sale follows the outcome of a feasibility study to determine the possibility of extending operations at Savage River beyond 2009, the date that pellet production was expected to cease. The study concluded that it is technically, environmentally and financially feasible to extend the life of the mine until 2023, producing an additional 30 million tonnes of pellet.
Stemcor had been seeking a joint venture with a major end-user willing to share the capital costs associated with the mine life extension project and for whom a long term secure supply of high quality pellet would represent a real and substantial strategic benefit.
Paul Whitehead, Managing Director of Stemcor Australia and current chairman of ABM said: ’Thanks to the management and employees of ABM, Savage River has proved a great success over the past two and a half years. With Shagang as the new majority owner, I have every confidence that it has an even brighter future and am delighted that Stemcor will continue to participate in this thriving business with a 10% share.’
ABM’s long-standing and successful management team will remain with the business and Stemcor’s Paul Whitehead will continue as a board director. A Shagang Group representative will take over as chairman of ABM.
Stemcor handled a record 10m tonnes of steel and steelmaking raw materials in the six months to June 2007. Stemcor recently announced plans for a major investment in Brahmani River Pellets, a beneficiation and pelletisation operation in the state of Orissa, India. This followed the decision to purchase iron ore mining company Aryan Mining Corporation, also in Orissa, with proven reserves of 28 million tonnes.