EXCLUSIVE-Australia's Rinehart clears hurdles on $10 bln iron ore project -sources
* Export Credit Agencies, shareholders reach compromise on guarantees -sources
* South Korea's STX Corp sells 2.5 pct stake to other shareholder -sources
* Project will add 55 mln tonnes to a market forecast to be in surplus
SYDNEY/SEOUL, July 18 (Reuters) - Australian mining magnate Gina Rinehart's $10 billion Roy Hill iron ore project has overcome key hurdles holding up debt negotiations, a move that could pave the way for the mine to start producing by September 2015, sources said on Thursday.
Getting Roy Hill into production is likely to boost further the fortunes of Rinehart, already Australia's richest person with a net worth estimated by Forbes at $17 billion.
However, it could also add to an expected glut of the steel-making ingredient as rivals Rio Tinto, BHP Billiton and Fortescue Metals Group crank up production just as demand in top consumer China is set to cool.
The 55-million tonnes-a-year project, which would make Roy Hill Australia's fourth-largest iron ore producer, has been steadily pushed back amid delays in lining up $7 billion in debt funding.
Export credit agencies (ECAs), including Export Import Bank of Korea (KEXIM), Japan Bank for International Cooperation (JBIC) and Nippon Export & Investment Insurance (NEXI) had been pressuring Roy Hill shareholders led by Rinehart's Hancock Prospecting Pty Ltd to fully guarantee that the project reaches completion, in return for up to $5 billion of loans.
The ECAs also sought payment guarantees for ore purchase contracts by Chinese steel mills, said a banking source familiar with the talks.
The parties have now negotiated a compromise to break the deadlock that had threatened to delay the project further in Western Australia's iron-rich Pilbara region.
"Although a guarantee from a party with strong credit would be one of the simplest ways to move the project forward in the eyes of the ECAs, it is not the only way to reduce risks," said a second source with direct knowledge of the negotiations.
"Such ways have been sufficiently agreed upon, and negotiations are moving ahead speedily," added the source, without giving more details on the agreement.
A Roy Hill spokesman said talks were advancing with export credit agencies and commercial lenders being tapped for the remainder of the loans required.
"We're cautiously optimistic we'll be able to get it wrapped up in 2013," spokesman Darryl Hockey said.
Aiding progress on the project on the equity side, the weakest partner in Roy Hill, South Korea's STX Corp, has sold its 2.5 percent stake to one of the other partners, said another source, who declined to name or to identify the buyer as the agreement was confidential.
Conglomerate STX first invested in the Roy Hill project in 2010 and last year paid $200 million to take up a 2.5 percent stake, but sold out as it faced a cash crunch following a downturn in its shipping and shipbuilding business.
(Additional reporting by Aaron Sheldrick in TOKYO, Sonali Paul in MELBOURNE and Jackie Range in SYDNEY; Editing by Lincoln Feast and Ed Davies)