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Bluescope sweetens Taharoa ironsands sale

NZN 4/04/2017 Pattrick Smellie

Former timber industry lobbyist-turned-tourism entrepreneur Wayne Coffey will take management control of the Taharoa ironsands mining lease on Maori land near the Glenbrook steel mill.

This follows completion of a deal with New Zealand Steel's ASX-listed owner Bluescope Steel, scheduled for April 30.

Taharoa Mining Investments Ltd, currently listed on the Companies Office as 100 per cent-owned by the Taharoa C Block Incorporation, will take over the leases, which involve supplying substantial tonnages of titano-magnetite iron ore sands, mined on the beach at Taharoa and piped to an offshore loading point to three leased ships, for use in North Asian steel mills.

TMIL will also take on some $76.5 million of liabilities relating to the current ironsands mining operation.

In return, Bluescope will "make a cash contribution of approximately $51m" to TMIL, allowing Bluescope, which is aggressively seeking balance sheet rationalisation as fortunes in the global steel market continue to improve, to declare a reduction in corporate net debt of $25.5m.

Mr Coffey told BusinessDesk the deal was "complex" and that confidential elements of the transaction meant there was "a good price paid" by TMIL, which BusinessDesk understands to have been in the several hundreds of millions of dollars.

Taharoa C has a wide shareholder base that owns the land at Taharoa, a black-sand beach area on the northern Waikato coast.

Mr Coffey said the investment was "good news for Wellington" as he would be hiring a team of around 20 in the city to take on work currently done in Australia or at the Glenbrook site as well as continuing to hire a workforce of 170 in the mining operation and returning the operation to New Zealand ownership.

NZ Steel has mined Taharoa ironsands for export to Asian steelmills since 1972, but Bluescope placed the asset on the market for sale in February 2016 as it sought ways to make its New Zealand operation commercially sustainable.

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