citic progress

Article below mentions latest on Citic's Sino Iron project (just next door), on which ARH will rely for infrastructure sharing.

As SINO approaches first production in July 2011 expect interest / bidding on development of ARH to intensify......disappointing to be waiting another 7 months but for most of us who have held on for so long what's another 7 months between friends.........


http://www.theaustralian.com.au/business/blowouts-delays-hit-projects/story-e6frg8zx-1225991941368

Blowouts, delays hit projects

Matt Chambers From: The Australian January 21, 2011

SURGING labour costs and design problems have led to a $1.7 billion cost blowout and a delay of up to two years in a big resources project.

The affected project is ExxonMobil and BHP Billiton's Kipper Tuna Turrum oil and gas project in Bass Strait.

And in the Pilbara, Citic Pacific has revealed cost overruns are all but certain at its $US5.2bn ($5.19bn) Sino Iron magnetite iron ore project, and has announced a seven-month delay to first production.

Kipper Tuna Turrum operator Exxon yesterday said the cost of the project had risen by more than 60 per cent to $4.4bn, from a previous estimate of $2.7bn.

This was a result of both increased costs and a study that had found the original design needed overhauling. First production from both the Kipper and Turrum fields would now be in 2013, back from original targets of 2011.

Adding to the problems and the delayed production, mercury has been found in the Kipper fields, which Exxon will need to remove before it hits the Longford gas plant in order to prevent corrosion of equipment.

The blowout brings the combined cost overruns at the nation's megaprojects in the past six years to more than $9.6bn, based on figures compiled by The Australian.

With a review still in place on BHP's $US4.85bn Rapid Growth Project 5 iron ore expansion, and Sino Iron ready to boost its cost estimates, the amount of overruns will easily sail past $10bn.

BHP's 50 per cent share of the Kipper Tuna Turrum overruns, when taken against the original US dollar investment, was $US1.15bn.

Santos, which owns a 35 per cent stake in the Kipper field, is not subject to the capital cost blowout.

An Exxon spokeswoman said a design review of the project had led to an extra module and support frame being required for the Marlin B platform and extensive modifications to the existing Marlin B and West Tuna platforms.

"These work scope changes, taken together with significantly higher Australian labour rates, will increase costs and extend the construction schedule," she said.

The review was flagged last year.

Hong Kong-listed Citic Pacific said that after a meeting of contractors and suppliers last week it now expected to start commissioning the first stage of the project by the end of July 2011.

This represents a delay of up to seven months from the last timetable, issued in October.

"Production will then begin and the system will be fine tuned," the company said.

"Export of iron ore is expected towards the later part of the year."

Citic gave no reasons for the delay and a spokesman said it was still using its latest $US5.2bn capital development cost figure.