First Roy Hill shipment framed by slumping iron ore price

In the same week iron ore slipped below US$43 a tonne, the first shipment of iron ore has been loaded from Gina Rinehart’s Roy Hill mine in Western Australia’s Pilbara Region.

Rinehart, who according to Forbes is Australia’s richest person, paraphrased Winston Churchill on Tuesday, telling her employees: “The light of history shall shine on all your hard hats, and the first Roy Hill ship.”

The context of Churchill’s original quote – “The light of history will shine on all your helmets” – was perhaps more historically appropriate than Rinehart’s reinterpretation. But one could forgive the Hancock Prospecting and Roy Hill chairman’s enthusiasm.

Starting in 2007 with two geologists recording thousands of drill logs to a small local area network, Roy Hill has over eight years developed into a 68mtpa iron ore mine, rail and port project.

First ore was originally scheduled for September, but a series of safety issues, and legal disputes between primary contractor Samsung C&T and some of its sub-contractors, delayed proceedings.

“This is a truly fantastic occasion,” Rinehart said, “as we received the first vessel alongside the Roy Hill wharf and the first of our consistent product is loaded for our partners in Asia.” Roy Hill’s Asian partners are South Korean steelmaker Posco, Japanese conglomerate Marubeni and the China Steel Corporation.

Roy Hill CFO Garry Korte praised Rinehart’s commitment to the mining project.

“I would like to acknowledge and pay tribute to Mrs Rinehart for the incredible work that she has done over 20 years to overcome so many challenges and come what may to develop and bring the Roy Hill project together,” Korte said.

“Without your efforts there would be no Roy Hill.”

The first shipment is being loaded onto the MV Anangel Explorer at Roy Hill’s South West Creek Wharf at Port Hedland.

The news comes in the same week another Port Hedland iron ore exporter, Atlas Iron, was reported to be battling debt figures in the lead-up to a December 31 deadline.

The AFR’s Street Talk column reported this week the embattled junior miner, which earlier this year secured new deals with suppliers and contractors to keep its Pilbara mines open, will be seriously challenged to meet the terms of its major debt facilities at their next test at the end of this month.

Atlas has been reviewing options to tackle its $270m debt for some time, but – according to Street Talk – the miner could be running out of options as it struggles to maintain a required two-to-one ratio of total asset value to secured debt.

The miner is said to be attempting to negotiate a partial relief from the debt covenant ahead of the deadline.

Atlas has for some time been on the bubble of the plummeting iron ore price. Iron ore hit US$42.97 a tonne on Monday this week, and dropped further to US$42.80 on Tuesday.

The decline has led to suggestions the government will have to seriously amend its budget forecasts in May, as the current budget took in an estimated average iron ore price of US$48 a tonne. Prior to the budget, treasurer Joe Hockey was said to be considering a projected iron ore average as low as US$35 a tonne.