“Very Large Losses” for Export-Import Bank Project

Fourteen months ago, the taxpayer-backed U.S. Export-Import Bank authorized a $700 million loan to Australia’s richest person, mining heiress Gina Rinehart.  Today, Australia’s Business Spectator (sub. req’d) reported the new mining project “is set for very large losses.”

In the short term, the capital costs for Gina Rinehart’s Roy Hill mine are almost certain to blow out — and a lower iron ore price will make matters worse.

If the current iron ore price decline continues into 2017 and beyond, then Gina Rinehart’s massive $10 billion Roy Hill mine project is set for very large losses when it starts production next year.

And if the reports of safety problems in the construction phase are right, then the capital costs will blow out beyond $10bn, especially if unions start playing hard ball, as they often do when there is a safety cause.

The slump in iron ore didn’t come out of the blue, though.  According to the Business Spectator, “When Roy Hill was being conceived, there were already dark clouds on the iron ore pricing scene.”  Will Rinehart’s Roy Hill Holdings be able to repay the $700 million it owes American taxpayers?  We’ll find out in about seven years.

Please Share Your Thoughts

5 thoughts on ““Very Large Losses” for Export-Import Bank Project

  1. Tell your Congressman: “No more Export – Import Bank!” This is corporate welfare on citizens’ backs! Ex-Im should have been allowed to expire 7 months ago. Hold your Congressman accountable to their promise to limit government with sound fiscal policy.

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  3. Ex-Im makes money for the US govt. Private banks will not loan on intl projects/AR w/o Exim backing. Most govts provide govt backing for intl loans to customers buying from their companies. Unilateral disarmament of the Exim Bank will cost jobs and make the US weaker.

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