* 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
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
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
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)