3 dollars by xmas, page-17

Nigel Wilson, Energy writer | November 27, 2007
THE Chinese-government backed Citic Pacific Mining has announced a $5.2 billion project to mine and process magnetite at Cape Preston in the Pilbara.

The investment, one of the largest in an Australian resources project, is another twist on the huge expansion of the Pilbara's commodity export capacity fuelled by the huge sustained growth in the Chinese economy.

Magnetite is an iron ore oxide that is selling on the world market for about $US70 a tonne. The Sino Iron Ore project, about 100km southwest of Karratha, is based on a resource of about 2billion tonnes of magnetite ore.

Citic Pacific Mining chief executive Barry Fitzgerald said yesterday that magnetite prices had been tracking iron ore prices for several years, which meant magnetite deposits, once despised in Australia, were now among the world's best minerals resource.

Citic Pacific Mining is a subsidiary of Hong Kong-listed Citic Pacific, a steel and property giant, which has a mix of Chinese government and private-sector investors.

Citic Pacific's chairman, Larry Yung Chi Kin, reputed to be China's richest businessman, is a 25 per cent shareholder.

"This project is very significant for our company because it will deliver an integrated steel business during a time of advancing economic development in China," Mr Yung said.

Speaking before the official launch of the project in Perth last night, Mr Yung said it was Citic's first big investment in Australia, but it had huge potential because it included a further four options for project expansion that would increase production to more than 70 million tonnes a year.

Citic Pacific last year bought two Australian iron ore mining companies for $US415 million and said it would spend $US2.5 billion more in capital spending on its first overseas project to boost China's steel industry.

The Sino Iron Ore project has an expected mine life of 25 years.

It is designed to produce 27.6million tonnes of a mix of high-grade pellets and concentrates a year.

A dedicated shipping fleet is being constructed to transport the product to steel plants in China belonging to Citic Pacific and other companies.

The project involves construction of a magnetite concentrator, pellet plant, slurry pipeline, port facilities, a 450 megawatt power station, a 51 gigalitre desalination plant and an accommodation village.

Mr Fitzgerald said the process was similar to the Savage River project in Tasmania, now owned by London-based Stemcor but which has been operating for more than three decades.

"Our project will be obviously better because of vastly improve technology and higher prices," he said.

Mr Fitzgerald said the project was dependent on changes to a state agreement act which currently allowed only the export of pellets from Cape Preston.