Eurasian Natural Resources Corp., a maker of ferroalloys and iron ore in Kazakhstan, pulled out of a $910 million rail project to connect its plants to China after failing to reach an agreement with the central Asian nation.
ENRC agreed to terminate a concession with Kazakhstan to build and run the so-called China Gateway project, the London- based company said today in a Regulatory News Service statement, adding it’s “finalizing the legal and financial aspects.”
The company and the Kazakh government failed to agree on sharing risks relating to volumes and tariffs, ENRC spokeswoman Elly Williamson said by phone from London. ENRC didn’t believe the project was currently commercially viable, she added.
“It is our understanding the project will still go ahead,” Williamson said, without elaborating. “ENRC will still be able to use the rail line for its shipments.”
ENRC, which held an initial public offering in London in 2007 and also produces aluminum, said in April 2008 the railroad would help increase annual trade volumes between the two nations by as much as 30 million metric tons. Kazakhstan aims to boost trade with China, the world’s biggest consumer of industrial metals, by opening a second rail terminal on their border.
The proposed 300-kilometer (186-mile) track would link Zhetigen in Kazakhstan and Khorgos on the Chinese border. Work on the project was scheduled to begin in September, ENRC said in a presentation in Abu Dhabi on May 27. The company was seeking funding from the Middle East country, ENRC said in June.
To contact the reporter on this story: Simon Casey in London