MELBOURNE (Reuters) - Mitsubishi Corp (T:8058) has handed over the full ownership of an iron ore expansion and rail and port infrastructure project in Western Australia to China's state-owned Sinosteel that has been slated to cost A$10 billion ($6.86 billion) to develop, the Japanese conglomerate said on Monday.
The Japanese trading house divested all of subsidiary Crosslands Resources shares to Sinosteel unit Sinosteel Ocean Capital for an undisclosed sum, according to a statement from Mitsubishi. The shares were transferred on Friday, according to the statement.
The project, which includes the mothballed Jack Hills iron ore mine, expansion project as well as a proposed rail and port facility, was once considered Australia's next big prospect for iron ore riches outside of the Pilbara, now the world's biggest export hub for iron ore.
Mitsubishi paid $A150 million for its initial 50% stake in Crosslands in 2007 and a further A$325 million for the rest in 2012, before it placed the mine on care and maintenance the following year as iron ore prices tanked.
The Japanese group agreed to exit the project considering its own divestment strategy and "the environment surrounding the project," it said in the statement.
The mine has iron ore resources that are costly to develop because they require added processing. Sinosteel had been set to be a major customer of the port and rail infrastructure because of its nearby deposits.
Crossland Resources has a capital of A$548 million, according to the document, while Sinosteel Ocean is capitalised at A$1 million, the statement said.
($1 = 1.4579 Australian dollars)