Chinese steelmaker Baotou Iron and Steel (Group) Co., Ltd, has signed an agreement to invest A$40 million ($34.7 million) to obtain a share in an iron ore project owned by South Australian miner Centrex Metals Limited.
According to the agreement, Baotou Steel will obtain half of the Bungalow magnetite deposit near Cowell on South Australia's Eyre Peninsula through a new joint venture to be formed between the two companies. Bungalow mine is expected to yield three million metric tons of magnetite concentrate per annum.
Centrex MD Gerard Anderson said that work on stage one was expected to commence early in 2008, subject to the approval of the Chinese government. The project will be carried out in three stages.
Baotou Steel already has a 10.13 percent stake in Centrex and has agreed to take one million metric tons of hematite ore for five years from Centrex' Wilgerup iron ore project, which is to begin production next year.