IRC Limited, the loss-making iron ore unit of Russian miner Petropavlosk, is seeking to raise up to HK$3.98 billion in a Hong Kong initial public offering. The company, which is 93 per cent owned by Petropavlosk and whose minority shareholders include Li Ka-shing's Cheung Kong (Holdings), owns three mines on the southern tip of Russia's Amur region, close to Heilongjiang province in northeastern China. According to a term sheet sent to investors yesterday, IRC will list its shares in Hong Kong on October 14. Two of IRC's mines are not producing any iron ore yet, according to a research note prepared by Bank of China International, which is working on the deal. The company's only operating mine, Kuranakh, is small, holding just 21.7 million tonnes of iron ore. According to the bank, however, IRC's two other mines - K&S and Garinskoye - hold 593 million tonnes and 200 million tonnes of iron ore respectively. The company is expected to make a US$49 million loss for 2010, according to the BOCI research, on sales of just US$27 million. The miner racked up losses of US$139 million last year and US$427 million in 2008. On the plus side, BOCI forecasts the miner will turn a profit in 2011, as its project-related costs fall. The bank believes IRC's net income will then ratchet up to US$136 million in 2013, as IRC begins selling iron ore from its K&S project. IRC benefits from 'the ability to deliver its products efficiently to the People's Republic of China,' the firm states in its marketing literature. In its IPO information pack filed with the Hong Kong Stock Exchange, IRC claims the mainland's consumption of iron ore, which is used in steelmaking, will reach 1.53 billion tonnes in 2015, up from 1.23 billion tonnes last year. Last year the mainland imported 23 per cent of its iron ore from Brazil and 41 per cent from Australia, while only 2 per cent came from Russian producers, according to BOCI. IRC also discloses in its marketing material that the mainland does not lack domestic iron ore miners. They include Angang Iron and Steel Company and Hebei Iron and Steel Mining Company. But, together, the mainland iron ore miners produced 677 million tonnes of the raw material last year, which was just over half of the amount the mainland consumed. IRC's parent, Petropavlosk, is Russia's third largest gold miner and its shares are traded in London. The parent company was formerly called Peter Hambro Mining. As well as its three main Russian projects, IRC has two further deposits that are at the initial exploration stage, according to BOCI. The investor term sheet says IRC is seeking to sell its shares at between HK$2.20 and HK$3. Bank of America Merrill Lynch, Boci and UBS are handling the sale. An IRC spokesman declined to comment.