DLA Piper has advised Fortescue Metals Group (FMG) on its $1.5 billion joint venture with Taiwan’s Formosa Plastics Group.
Formosa will invest $1.15 billion to buy nearly a third of the FMG Iron Ore Bridge project in Western Australia’s Pilbara iron ore belt from partners FMG and China’s Baoshan Iron & Steel (Baosteel). The project is 88 percent owned by Fortescue and 12 percent by Baosteel.
Formosa will prepay $500 million to a Fortescue subsidiary, The Pilbara Infrastructure Pty Ltd (TPI), allowing it access to the Australian miner’s coveted Indian Ocean rail port facilities as part of the deal. It will also pay $123 million for a 31 percent stake in the project.
The Taiwanese conglomerate will also provide $527 million of capital expenditure on the project, Fortescue said.
DLA Piper Brisbane partners Jim Holding and Stephen Webb led the team that advised FMG, while ClarkeKann Lawyers acted for Formosa.
The FMG Iron Bridge development is located 100 kilometres (62 miles) from Fortescue’s Port Hedland operations and is within 25 kilometres of the company's existing rail line. The development comprises two deposits, North Star and Glacier Valley, as well as two exploration sites that could be developed at later dates, Fortescue said.
Construction of the first stage is expected to take 12 months and start producing 1.5 million tonnes of iron ore annually in early 2015, according to the company.
Kanishk Verghese is North Asia journalist at ALB. Follow us on Twitter: @ALB_Magazine.
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