* Production lines await full start-up
* No date for exports set due to court fight
* Court hearing expected later this year (Adds court fight details)
By Sonali Paul
MELBOURNE, Aug 14 China's CITIC Pacific said repairs at its Australian iron ore project were taking longer than expected and gave no date for starting shipments from the vastly over-budget $8 billion project, already around four years behind schedule.
The latest delay at the Sino Iron project, China's biggest offshore mining investment, is likely to help limit an expected supply glut in the iron ore market later this year, as the first two production lines are due to produce around 8 million tonnes a year of magnetite iron ore.
CITIC Pacific said on Wednesday efforts to repair a key processing plant on the second production line at the project were taking longer than anticipated. The company, however, said it was making progress on starting up the first production line.
"Our focus for the next six months will be to ensure the stable running of production line one, ramping it up to full capacity," the company, controlled by state-owned CITIC Group , said as it released its half-year results.
Costs on the project have more than tripled since work began, which CITIC Pacific has blamed on its own inexperience and that of its contractor Metallurgical Corp of China (MCC) in building a project of this scale and operating in Australia.
Problems on the project, which has yet to generate any returns six years after CITIC Pacific bought the rights from Australian tycoon Clive Palmer, have led Beijing to take a much more cautious approach to approving foreign mining investments.
Following years of delays, CITIC Pacific had hoped to start exporting from the Sino Iron project in May, but due to problems at its grinding mill, it had to postpone that.
While it already has material stockpiled for export, it has not been able to start shipping, as it is now embroiled in a court dispute with Palmer over security management at Cape Preston port, where it will be loading ships.
"The first shipment will be arranged once the relevant authorities grant permission to do so," it said, declining to comment further.
While Palmer is fighting CITIC Pacific on port access, he is also suing it for around A$200 million in royalties he believes he is owed.
His firm, Mineralogy, owns the land at the port and was appointed by the federal government to run security at the port.
CITIC Pacific launched a court action to have Mineralogy's appointment overturned, and Mineralogy in turn is seeking to block the court review. A hearing on the issue is expected later this year.
Shares in CITIC Pacific, which also has a specialty steel business, have slumped by one-third from their high this year to HK$9.35. The stock was not trading on Wednesday as the Hong Kong market was closed due to a typhoon. (Editing by Muralikumar Anantharaman)