Sheffield Resources banks on Foreign Investment Review Board tick for tie-up with China’s Yansteel to fund Thunderbird

Sheffield Resources boss Bruce McFadzean is confident a proposed joint venture with a Chinese entity over the Thunderbird mineral sands project will get the Federal Government’s nod despite recent knockbacks for similar deals. The West Australian revealed this morning Sheffield had struck an agreement with Chinese steel maker Yansteel that would see it take a 50 per cent stake in the Kimberley project for $130.1 million, a 9.9 per cent stake in Sheffield for $12.9m and supply of 100 per cent of ilmenite production from Thunderbird stage one. However, the deal is subject to approval by the Foreign Investment Review Board, which has recently intervened to block Chinese investments in rare earths play Northern Minerals and lithium explorer AVZ Minerals. The knockbacks come amid a souring of diplomatic relations between Australia and China in recent months amid the coronavirus pandemic and fears about the Middle Kingdom’s market dominance of so-called critical minerals. But Mr McFadzean noted the recent FIRB knockbacks involved critical minerals, whereas the products of Thunderbird, zircon and ilmenite, were not. He said the FIRB process and guidelines were clear and Sheffield supported them. “We’ve got an independent, privately owned counterparty which has a really good track record and who is committed to the same things we’re committed to ... on the values side, we’re very close to each other,” he said. “The project delivers a massive lift in economic development including indigenous and local employment. “And we’re of the view that Australia needs all the positive economic momentum it can get at this time.” Thunderbird is expected to generate 400 jobs during construction and 200 Kimberley-based operational jobs for 37 years, with an indigenous employment target of 40 per cent of the workforce. It is also forecast to deliver $750m in royalties and $2 billion in taxes over its project life. The project has attracted a $90m loan from the Federal Government’s Northern Australia Infrastructure Facility. Mr McFadzean said he believed the FIRB would treat the deal on its merits without any prejudice against Yansteel for being a Chinese entity. “Our view, and the view of many, is that this project will be looked at favourably in the FIRB process,” he said. Yansteel, which generates annual revenue of about $6b from the production of 10 million tonnes of steel products, has begun construction of a 500,000 tonne-a-year integrated titanium dioxide processing facility, which would use ilmenite from Sheffield as a feedstock. Securing the hefty $478m capital requirements of Thunderbird has proven a challenge for Sheffield but Mr McFadzean said the Yansteel investment would complete its funding puzzle. The company hopes to begin construction of the project in the dry season of next year. Shares in Sheffield were up 10.5¢, or 49 per cent, to 32¢ at 1pm after emerging from a trading halt.