Citic Pacific Delays Australian Iron Ore Project (Update1) By...

Citic Pacific Delays Australian Iron Ore Project (Update1)

By Jason Scott

June 18 (Bloomberg) -- Citic Pacific Ltd., the Hong Kong traded arm of China's biggest state-owned investment company, said its A$5.2 billion ($4.9 billion) iron ore project in Australia will start output in early 2010, later than estimated.

The Sino Iron project was initially scheduled to begin production in late 2009, Dan Tenardi, chief operating officer at of the Hong Kong-based company's Citic Pacific Mining unit, said today in a presentation in the West Australian town of Karratha. He declined to give a reason for the delay.

Citic Pacific and Aluminum Corp. of China Ltd. are among Chinese companies developing mines overseas to feed demand for raw materials in the fastest-growing major economy. Citic Pacific, which owns three steel plants in China with total annual capacity of about 6.5 million tons, will need more ore for expansion.

The project at Cape Preston, 100 kilometers (62 miles) southwest of Karratha in the Pilbara region, is forecast to export 27.6 million metric tons of pellets and concentrates of magnetite iron ore annually for at least 25 years, Tenardi said.

Citic Pacific fell 0.3 percent to HK$30.75 at the 12:30 p.m. trading break in Hong Kong.

The company will build a pellet plant, a power station and a desalination plant as part of the project the largest planned in Australia, Tenardi said. Environmental approval is ``largely'' in place, he said, without elaborating.

The company may increase production to more than 70 million tons annually, depending on demand, Tenardi said.

Citic Pacific owns 80 percent of the project and the rest is held by China Metallurgical Group Corp., the state-owned diversified metal producer.