Trafigura, one of many world’s largest commodity merchants, was the client, individuals accustomed to the matter instructed Bloomberg Information, asking to not be recognized because the transaction is non-public.
For Trafigura, the deal represents the most recent step in a push into iron ore buying and selling. Between 2012 and 2022, the corporate boosted its iron ore volumes greater than fivefold to 31 million tons, in line with its annual studies. The buying and selling home has superior additional in 2024, because of greater volumes at its Brazilian port and “elevated commerce of iron ore from Australia and India,” it mentioned in its half-year report.
“Because of confidentiality restrictions, we can’t disclose the phrases or the client that the transaction was undertaken with,” a spokesperson for Mineral Assets mentioned in an announcement to Bloomberg on Wednesday. The prepayment is repayable through supply of iron ore between fiscal 2026 and 2028, they added. A spokesperson for Trafigura declined to remark.
Prepayments are a standard means for merchants to safe entry to sources by serving to to finance commodity producers. They’re much like loans and customarily incur curiosity, however are structured as superior funds for future provides.
The deal comes as Mineral Assets’ internet debt has quickly risen, because it builds its Onslow mine together with a haulage street. The corporate’s iron ore tasks are producing at the next price to most different miners within the area. Earlier within the yr, it closed its Yilgarn iron ore undertaking as a consequence of falling margins.
Costs of each iron ore and lithium, the corporate’s two key commodity merchandise, have slumped this yr. In the meantime, shares of Mineral Assets have dropped greater than 50% since mid-Might to the bottom in additional than three years.
“We’re throwing every thing off the deck simply to ensure we will protect money,” billionaire chief govt officer Chris Ellison instructed analysts final week.
Web debt at Mineral Assets rose to A$4.4 billion ($3 billion) on the finish of June, up from $698 million two years earlier than. The most recent debt complete was diminished by the A$600 million of money acquired underneath the prepayment deal.
On the July name with analysts, Mineral Assets was peppered with questions in regards to the deal.
“Simply on the prepayment once more. My mother and father all the time instructed me there’s no such factor as a free lunch. So on the A$600 million prepayment, what’s the gentleman on the opposite aspect, the corporate on the opposite aspect getting in return?” requested Glyn Lawcock, head of sources analysis at Barrenjoey. “Is there a much bigger low cost, or are you paying curiosity? Like, there should be a rub on the opposite aspect?”
The deal and its phrases had been “not dissimilar” to different prepayments, mentioned Mineral Assets Investor Relations Supervisor Chris Chong, whereas declining to remark additional. The corporate mentioned it’s nonetheless totally uncovered to market costs underneath the prepayment deal.
(By Jack Farchy, Archie Hunter and Paul-Alain Hunt)