CITIC Pacific Australia iron ore start-up delayed to Nov

MELBOURNE Thu Aug 16, 2012 1:25am EDT

MELBOURNE Aug 16 (Reuters) - China's CITIC Pacific Ltd has delayed the start-up of its $6.2-billion Australian iron ore project, saying on Thursday it now expects trial production to begin in November, three months later than last flagged.

The company's Sino Iron project in Western Australia, originally expected to start producing in 2010, is one of several Chinese-controlled projects in Australia that have faced delays and soaring costs, turning China more cautious about splashing out on iron ore investments.

The budget on the project has more than doubled over the past five years, swelled by a shortage of skilled labour, higher prices for equipment and construction materials and an expansion of the project.

"Bringing our Sino Iron project into production as soon as possible remains our top priority," CITIC Pacific Chairman Chang Zhenming said in a statement along with the company's half-year results.

CITIC Pacific, a steel and property conglomerate controlled by China's state-owned CITIC Group, blamed its contractor, China Metallurgical Group Corp (MCC) , for missing a commitment to complete construction of the Sino Iron project by the end of August.

"Based on the most recent meeting with MCC during which another detailed review was conducted, integrated commissioning of the first line is planned to begin in October and trial production is expected to start in November," Sino Iron said. (Reporting by Sonali Paul;Editing by Clarence Fernandez)