By Peter Ker
The first Australian victim of the iron ore price collapse could soon be back in operation, after the liquidators of Sherwin Iron found a suitor for the failed company's mine in the Northern Territory.
Sherwin went into administration in June 2014 when iron ore prices were averaging $US93 per tonne, and has since gone through receivership and liquidation.
A suitor has emerged for Sherwin Iron's Roper River iron ore miner in the NT.Credit: Bloomberg
But more than two years since work halted on Sherwin's Roper River iron ore project, a buyer from the United Arab Emirates is looking to restart the mine and recommence shipments through the Port of Darwin.
Sources have confirmed that liquidators Korda Mentha struck a sale agreement for Roper River in December 2015, and are hoping to finalise the agreement shortly.
The buyer is believed to be Al Rawda Resources Australia; a company with origins in the UAE which only registered with ASIC in November.
According to Bloomberg, Al Rawda produces stone and other construction materials in the UAE, and Roper River is the second iron ore project the company has sought to acquire within the past year.
In September 2015, Al Rawda agreed to pay $10 million for an 80 per cent stake in Glencore's Askaf iron ore project in Mauritania.
By March 29, that sale was still incomplete, prompting Glencore to give Al Rawda an extension to September 30, 2016 on the grounds that the UAE company pay an extra $US120,000 per month for ongoing costs.
Authorities in the Northern Territory are watching the sale with interest, with some known to have doubts that the deal will be completed.
A restart of Roper River would be good for the company that operates the Adelaide to Darwin railway, Genesee & Wyoming, which said in a recent investor briefing that it had agreed to provide rail transport for the iron ore if the restart goes ahead.
"Along the north-south corridor we have a new customer," said Genesee's chief financial officer Timothy Gallagher last month.
"Putting the iron in irony, this new customer is actually the first mine that went bankrupt in June of 2014.
"They went through the liquidation process, the customer of that iron ore mine bought the assets out of bankruptcy … they bought the tailings that were there at the mine site, they're going to ship those and we are going to carry those north of Darwin and ship them to China."
Mr Gallagher indicated that iron ore may not be the main focus of the new owner.
"This iron ore is located in an area where there's actually a lot of gold and copper and so the customer is buying this stuff for the gold and copper and will throw away the iron ore once he processes it out," said Mr Gallagher.
"We will carry the traffic for a year or so and perhaps maybe they reopen the mine. But it is ironic that the new customer, it's an old customer."
ASIC documents show that a Dubai man called Zain al Zbeidi is a director of Al Rawda Resources Australia, along with a Perth man named William Mackenzie.
Neither could be reached for comment.
Sherwin's descent into administration in June 2014 was quickly followed by its closest neighbour Western Desert Resources, which counted billionaire Bruce Mathieson among its major shareholders.
Western Desert was also exporting iron ore via its "Roper Bar" project prior to its failure.
The idled project is now effectively owned by Macquarie Bank which was the largest secured creditor of Western Desert.
Brisbane-based Macarthur Minerals, which originally came out of the stable of companies owned by coal king Ken Talbot, entered into an agreement to buy Macquarie's debt (and therefore take control of Roper Bar) last year, but the deal failed to complete.
Iron ore was fetching $US55.17 on Monday, and most pundits expect the price to decline over the next 18 months.