* CITIC says project moving into production phase
* Development is billions of dollars over budget, 4 yrs behind schedule
* Has been marred by legal disputes
SYDNEY, Sept 30 China's CITIC Pacific said it was moving into the initial production phase at its $8 billion iron ore project in Australia, following years of delays at one of China's costliest offshore mining developments.
Already some four years behind schedule and billions of dollars over budget, commissioning of the first of the project's two production lines has been going on since July, CITIC said in an e-mailed statement.
"We are now moving into the production stage," it said.
The project, one of the largest of its kind undertaken by a Chinese entity outside China, has been marred by legal disputes. It has yet to generate any returns six years after CITIC Pacific bought the rights from Australian tycoon Clive Palmer, prompting Beijing to take a much more cautious approach to approving foreign mining investments.
CITIC last month said the focus over the next six months would be to ensure the stable running of the first production line and ramping it up to full capacity.
CITIC Pacific, controlled by state-owned CITIC Group , had hoped to begin exporting iron ore in May. But problems at its grinding mill, a component in the production of the type of magnetite found in the far west Australian deposits mined by the company, forced it to delay.
The development aims to produce up to 24 million tonnes of iron ore concentrate annually. The material will be used by CITIC Pacific's own steel plants and also sold to other steel producers in China.