Atlas Plans to Sell Stake in Ridley Iron Ore Mine This Half

By Rebecca Keenan and Jesse Riseborough

Jan. 7 (Bloomberg) -- Atlas Iron Ltd., an Australian iron ore producer, expects to sell a stake in its A$3 billion ($2.8 billion) Ridley project by the end of the first half after lining up buyers from China, India, South Korea and Japan.

Atlas wants to sell 70 percent of Ridley, located in Western Australia, Chief Executive Officer David Flanagan said today in an interview. Goldman Sachs JBWere Pty is the adviser for the sale for Perth-based Atlas.

Steelmakers worldwide are increasing purchases of iron ore, used to feed furnaces, as the economic recovery fuels demand by carmakers and builders. The cash price for iron ore rose to the highest in more than a year as demand from China, the largest buyer, rose and India announced plans to levy duties on exports.

“Goldman Sachs have a got a nice group of people in the final stages now and as soon as we complete we will let the market know,” Flanagan said by phone. He didn’t give details.

Atlas shares rose 4.7 percent to A$2.23 at the 4:10 p.m. close in Sydney trading. The stock gained 121 percent last year.

The company today also said it received “strong interest” from steel mills seeking supplies from its Wodgina project. Talks are advancing and are not complete, Atlas said in the statement to the Australian stock exchange.

Wodgina Production

Atlas plans to start production from Wodgina this year at an initial rate of 2 million metric tons a year, it had said in November. The company produces about one million tons of iron ore a year from the Pardoo mine in the Pilbara. It plans to increase output to 12 million tons by 2012.

“Atlas notes that the market for iron ore is very strong, reflected in the spot price, and that the strength of demand is reflected in Atlas’ discussions,” the company said in the statement. The higher spot prices may be reflected in Atlas’ cargoes later, Flanagan said.

The company last year estimated the Ridley project, which will cost A$3 billion to build, could produce 15 million tons of ore concentrate over 30 years. A study had estimated average annual earnings before interest, tax, depreciation and amortization of A$535 million.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.netJesse Riseborough in Melbourne at jriseborough@bloomberg.net