ENRC pulls out of Kazakh-China railway
July 31. Reuters. LONDON
* Kazakh-China rail not commercially viable for company
* Firm, govt could not agree on volumes, tariffs
* Rail project likely to go ahead with another partner
Kazakh miner Eurasian Natural Resources Corporation Plc has withdrawn from a concession to build a rail link between China and Kazakhstan after talks collapsed over operating terms.
ENRC, the world’s largest ferrochrome producer, said on Friday it had agreed with the Kazakh government to terminate its participation in the $900 million “China Gateway Project”.
“ENRC and the government could not reach agreement on the basis for the sharing of risks in relation to volumes and tariffs. At this stage the group does not regard the project as commercially viable,” a spokeswoman said.
Although building the railway was not regarded as creating shareholder value for ENRC because the terms could not be agreed upon, the project would probably go ahead with another partner and the company could still benefit from using it, she added.
The project to build 300 km of railway line was announced in May 2008 and was due to begin operations in 2012. ENRC said at the time that the link would enable it to improve the delivery of its goods to China.
Shares ENRC fell 0.2 percent to 890 pence by 1343 GMT, compared to a 0.7 percent increase in the UK mining index.