NEW YORK The
U.S. mining equipment industry and miners are clashing over a
government-backed financing plan for the development of the Roy
Hill iron ore mine in Western Australia.
Caterpillar Inc. said the U.S. mining equipment industry faces
more than $500 million in potential lost sales if miners
succeed in opposing the $650-million financing for Roy Hill,
which is 70-percent owned by Gina Rineharts Hancock
Prospecting Pty. Ltd.
Cleveland-based Cliffs Natural Resources Inc., backed by
senators from Minnesota and Michigan, has led objections
against the loan, saying it promotes competition against U.S.
to AMM sister publication Steel First that it
has been working with members of Congress and trade
associations to back the loan, which will support the
development of a new 55-million-tonne-per-year iron ore
"This project presents
a significant business opportunity for Caterpillar to support
Roy Hill with mining equipment that would be manufactured in
the United States," Caterpillar spokeswoman Barbara Cox said in
Export-Import Bank of
the United States (Ex-Im Bank) is considering financing that
would aid the export of about $522 million in U.S.-made mining
equipment to the mine, which will be used to ship iron ore to
Asian steel producers.
These types of foreign
investments by the Ex-Im Bank have direct competition against
U.S. iron ore and steel industries, which could jeopardize
domestic jobs, Cliffs said.
Most of the iron ore
production supported by past Ex-Im Bank transactions is
exported to China and other nations where it is turned into
iron and ultimately steel, it added.
Steel produced by
China and other Asian consumers of subsidized iron ore is
finding its way to U.S. shores in increasing quantities and is
displacing U.S. steel production, the company said, also
claiming that the Roy Hill Mine would produce more iron ore
than the entire U.S. mining industry did in 2012.
"Under the banks
charter, Ex-Im is prohibited from financing projects whose
production either will contribute to a structural global
oversupply or will compete with U.S. production," Cliffs
director of global communications Patricia Persico said.
production will substantially injure not only U.S. iron ore
producers but also cause global iron ore prices to fall by
increasing the supply of iron ore. The sheer volume of iron ore
production supported by Ex-Im Bank would contribute to a
volatile global pricing environment for iron ore," she
Australian iron ore operations will be in direct competition
for the same consumers in Asia if the Roy Hill project goes
Roy Hill Mine
representatives couldnt be reached for comment.
A version of this
article was first published in AMM sister publication Steel