Local ironsands business sold

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BlueScope Steel Ltd recently announced the $250 million sale of its New Zealand iron sands mining and export operation, the Taharoa Iron Sands Business, to Cheung Kong Infrastructure Holdings Ltd.

 

New Zealand Steel operates two iron sands mining operations, Taharoa and Waikato North Head, through its subsidiary, New Zealand Steel Mining Ltd.

 

The Taharoa mining operation is a purely export-focused business, whilst Waikato North Head is integral to New Zealand Steel’s steel making operations at Glenbrook, and will remain with the company.

 

The Taharoa operation is based 200km south of Auckland on the west coast of New Zealand’s North Island.

 

It mines and exports iron sand to steel producers in China and Japan. Currently it employs 40 full time staff and exports approximately 850kt of iron sand per annum.

 

In the year ended 30 June 2008, the business reported revenue of approximately $53m and EBITDA of approximately $16.7m.

 

BlueScope Steel managing director and chief executive Paul O’Malley says the sale generates a strong financial return for BlueScope Steel and reflects the current high world demand for iron ore.

 

“We are pleased with the financial outcome from this transaction,” Mr O’Malley says.

 

“I commend the employees of Taharoa who have, over a number of years, run this very successful business. Their work has underpinned the significant value of the asset.

 

“I also commend the significant efforts of employees and management at New Zealand Steel in developing a successful business model and mine expansion strategy.”

 

BlueScope Steel remains committed to the ongoing development of its New Zealand business, and is retaining ownership of its primary iron sands mine at Waikato North Head.

 

The mine supplies New Zealand Steel’s steel making operations and is a strategic component of the overall New Zealand platform. It has ample reserves to provide for current and future steel making at New Zealand Steel and, together with its dedicated employee group, is a key component of New Zealand Steel’s future.

 

The sale is expected to be completed by the fourth quarter of 2008, and is subject to conditions including New Zealand Overseas Investment Office approval.