US heavy equipment makers welcome Ex-Im Bank’s $694m Roy Hill loan
The USA’s Export-Import Bank (Ex-Im Bank) has approved a controversial $694.4 million loan to the Roy Hill iron ore project in Australia, on condition that it buys heavy mining and rail equipment from US companies.
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The long-term financing request to aid the export of US-manufactured mining and rail equipment from Caterpillar, GE and Copco, has been opposed by US-based miners who believe the project will cause economic harm to US producers.
The Ex-Im Bank is the official export credit agency of the USA that assists in financing the export of US goods and services to international markets.
The loan will support the development of a new 55 million-tpy iron ore mine at Roy Hill, which is 70% owned by Hancock Prospecting.
Hancock Prospecting is led by Australia’s richest woman, mining billionaire Gina Rinehart.
It’s estimated that the deal with support 3,400 jobs across the USA and about 20% of the job support will benefit small businesses.
“After a comprehensive review, [Ex-Im] determined that this transaction represents a significant opportunity for American exporters to create and sustain American jobs,” Fred Hochberg, EX-Im Bank chairman and president, said on December 19.
“Our financing positions American companies on a level playing field so they can close the sales and expand their homegrown workforces. Projects this size can be difficult to finance, that’s where Ex-Im comes in,” he added.
The news was welcomed by Caterpillar, which has been working with members of the US Congress and trade associations in support of the loan.
“Caterpillar applauds Ex-Im Bank for approving the long-term financing request for the Roy Hill’s Australian iron ore project,” Steve Wunning, group president with responsibility for Caterpillar’s Resource Industries Group, said on December 20.
“By backing this project, Ex-Im Bank is bolstering US manufacturing competitiveness, supporting American jobs and promoting exports,” he said.
US miners, led by Cliffs Natural Resources and backed by senators from the iron ore producing states of Minnesota and Michigan, object to the financing as its promotes competition against US companies.
“Cliffs is deeply concerned by the US Export-Import Bank [decision] to approve a $694 million direct loan for the massive Roy Hill iron ore project in Australia,” Patricia Persico, director of global communications at Cliffs Natural Resources told Steel First on December 20.
“With the approval of this transaction, Ex-Im Bank has [now] played a role in financing 254 million tonnes of new iron ore capacity since 2009 alone, an amount which represents nearly 500% of annual US iron ore production.
“In pursuing this unsustainable pattern, the bank continues to bring substantial harm to the US iron ore industry by providing subsidsed raw materials for foreign steel producers that compete directly with US steel manufacturers,” she added.
The Ex-Im Bank performed a detailed economic impact analysis and found that the transaction was more likely have a significant net positive effect on the US economy, Ex-Im Bank said.
Roy Hill could not be reached for comment at the time of publication.