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Sale of IRC Bridge Subsidiary Company

IRC Limited (‘‘IRC’’ or the ‘‘Company’’, together with its subsidiaries, the ‘‘Group’’; Stock Code 1029) announces the signing of an agreement for the sale of its Amur River Bridge subsidiary LLC Rubicon to Russian and Chinese development funds for RUB174 million (approximately US$4.4 million). The new owners intend to fast-track the financing and construction of the bridge. The new bridge will reduce the rail transportation to IRC customers to as little as 250 kilometres, further positioning IRC as a supplier of choice to customers in North East China.


  • New Sino-Russian trade link across the Amur/Heilongjiang River
  • IRC operations to benefit from shorter and lower-cost route to market
  • IRC customers to benefit from rapid and frequent deliveries, optimising working capital
  • Sale proceeds and gain on disposal of RUB174 million (approximately US$4.4 million)

Commenting on the transaction, Jay Hambro, Executive Chairman of IRC said: ‘‘IRC conceived the idea of the bridge and with a decade of work has taken it through from concept to feasibility study and to detailed design. We will continue to work with the new owners as they fast-track its construction. The new bridge will generate great opportunities for Far East Russia, North East China and indeed to IRC. We are recouping our costs with the proceeds of the sale and look forward to generating significant advantage from its operation in the future. With our K&S Mine set to quadruple our Group production, the new bridge will enable us to deliver our products more rapidly and frequently to our customers in northern China. Our transport costs will reduce, and our status as the preferred international supplier of iron ore will be boosted as our customers also benefit from lower domestic transport costs and improved working capital as they can better manage their inventories. As the iron ore price remains low, this bridge project reinforces IRC’s K&S project’s position as an oncoming low-cost producer with a unique advantage in proximity to market and access to infrastructure.’’


LLC Rubicon (‘‘Rubicon’’) is a wholly owned subsidiary of IRC. Created in 2006, Rubicon has advanced the concept, design, feasibility study and tariff proposals for a freight railway bridge over the Amur/Heilongjiang River that separates China and Russia. Rubicon is being sold for RUB174 million (approximately US$4.4 million) to subsidiaries of the Russian Direct Investment Fund and China Investment Corporation. The sales proceeds will be recorded as a gain on disposal.
The bridge is a substantial international project and is best progressed by the purchasers who have both the access to the capital and political experience necessary to develop the bridge in the shortest possible timeframe.
Under the terms of the agreement, IRC will benefit from guaranteed capacity over the bridge of 3.2 million tonnes per annum, approximately 30% of the total bridge transport capacity.
The sale of Rubicon is subject to Russian Anti-Monopoly Approval. This is expected to be obtained by the end of 2014.


The Russian named Amur and Chinese Heilongjiang River form the Far Eastern section of the Russia-China border. Currently there is no permanent all-year-round river crossing point, with only two railway-crossing points, Zabaikalsk-Manzhouli and Grodekovo-Suifenhe, situated some 3,450 kilometres apart.

The project to build a railway bridge across the river border, between Nizhneleninskoye and Tongjiang was first proposed by IRC in 2006. IRC’s subsidiary Rubicon was then established and has worked ever since with local and national authorities in Russia and China to seek approval for the design and financing of the bridge, and also to secure an inter-governmental agreement between the two states.

The design proposed by Rubicon, is for a bridge spanning 2,209 metres, of which 309 metres will be in the Russian Federation and 1,900 metres on PRC territory. The design requires approximately 24 months for construction and testing. Whilst the final design and construction schedules will be decided by the acquirers, the IRC feasibility studies suggest a 24-month build and testing period, suggesting that the bridge could be commissioned in early 2017.

IRC will benefit from the bridge project. Its new K&S Mine, due to start commercial operations soon, will more than quadruple Group’s production. The mine is situated 240 kilometres from the proposed bridge site and consequently, the bridge would reduce transportation distance, shipment time and could reduce transport costs materially. Guidance on the full cost savings will be provided at a future date, yet the new bridge could achieve potential railway tariff savings of up to US$5 per tonne for IRC.

Source: IRC Limited

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