citic pacific lines up buyers

Nothing annoys me more than some folk on here who post every good thing they hear about Citic on the assumption that what's good for Citic must be good for ARH.

So at the risk of annoying myself :-) - here's something from "The Age"

http://www.theage.com.au/business/citic-pacifics-aussie-mine-lines-up-chinese-buyers-20091112-ibig.html

Citic Pacific's Aussie mine lines up Chinese buyersNovember 12, 2009 - 2:03PM
Citic Pacific, an arm of China's biggest state-owned investment company, signed initial agreements to sell as much as two-thirds of the iron ore from its $US4 billion ($4.3 billion) project in Australia to Chinese steel mills.

''We've identified the major steel works in China who have signed up preliminary sales agreements,'' Barry Fitzgerald, chief executive officer of the Hong Kong-based company's Australian unit, said in an interview. The balance of the output will be used by the company's own mills in China, he said.

China is expected to use more iron ore in the next five years than Australia, the biggest exporter, has produced throughout its history, Rio Tinto Group said this month. The Asian nation's economic growth is projected to accelerate to 10.5 per cent this quarter, according to a Bloomberg News survey, as stimulus spending boosts demand for automobiles and fridges.

''China's appetite for iron ore will continue to be very strong,'' said Michael Heffernan, a client adviser with Austock Securities. ''While the rest of the world has been floundering around looking for lifeboats, China just keeps on surfing. Its growth is improving again.''

Citic Pacific gained 0.5 per cent to close yesterday at $HK20.35 in Hong Kong trading. The stock has more than doubled this year.

China has proposed 90 investments in Australia valued at about $34 billion in the past 18 months, the Canberra-based Foreign Investment Review Board said in September. Fox Resources Ltd., backed by China's Jinchuan Group, said yesterday it's in talks with a potential Chinese partner to help develop an iron ore project in Australia.

Three mills

Of the mine's 28 million metric ton output, as much as 20 million tons may be sold to customers with the rest kept for Citic Pacific's own steel plants in China, Fitzgerald said. Citic Pacific also develops properties and runs toll roads.

''China demand will continue,'' Fitzgerald said in an interview in Perth yesterday, declining to name the mills who'd signed initial accords. ''The stimulus package is a short-term issue. The long-term market will be there.''

First output is scheduled in the fourth quarter next year from Citic Pacific Mining's Sino Iron project at Cape Preston, 100 kilometers (62 miles) southwest of Karratha in Western Australia's Pilbara region.

Capacity increase?

Citic Pacific Mining may consider expanding the project, Fitzgerald said. The company ''can either increase the length of our operation or increase the capacity,'' he said. ''Once we are able to move our focus from delivering the start-up of production and adding the additional lines, I'm sure we'll need to review what the demand is and what the pricing points are.''

The open pit mine will be one of the largest in the world, and over its estimated 25-year life span will be 5.5 kilometers long, 3 kilometers wide and 600 meters deep. After the material is mined, it will be transported to six grinding mills. The mills, being built in China, will shipped on site from January.

The strong Australian dollar is affecting construction costs, Fitzgerald said. ''We sell our products in US dollars and a lot of our costs are in Australian dollars,'' he said. ''It's pretty well known that with any of the exporters out of Australia that any time you see that the Australian dollar goes up, the profit forecasts goes down.''

The Australian dollar is trading at the highest in more than a year, boosted by economic growth in China, the South Pacific nation's biggest trading partner.

Pipeline, port

Citic Pacific owns 80 per cent of the Sino Iron project, which will mine magnetite iron ore, and the rest is held by China Metallurgical Group Corp.

A 25-kilometer slurry pipeline will transport the product from the mills to the port, which is being built specifically for the project. Water to the operations will be supplied by a custom-built 51-gigaliter desalination plant.

Citic Pacific is building a 450-megawatt on-site combined-cycle gas fire power station. That will be fueled by gas from the Reindeer natural gas field, a joint project between Apache and Santos.

The power plant's capacity is equivalent to the current energy needs of the entire Pilbara region, according to the company. The region includes 11 iron ore mines operated by Rio, seven by BHP Billiton, and other projects and towns.

Bloomberg News