* Funding woes hit West Pilbara Iron Ore project
* Funding key to winning port, rail approvals
* Project director goes to rival
* Shares slump to one-month low
MELBOURNE, Feb 4 Australia's Aquila Resources
Ltd has put its A$7.4 billion ($7.7 billion) West
Pilbara iron ore project on ice at least through June due to
funding difficulties, sending its shares down nearly 10 percent.
Aquila and its partners AMCI, a mining investment firm, and
South Korean steel giant POSCO, effectively froze
the project last September, when iron ore prices hit a
three-year low. They had failed to agree on a budget for the
year to June 2013 and sent the dispute into arbitration.
Arbitration was due to begin on Feb. 18, but Aquila said on
Monday it had bowed to its partners and would continue the
suspension on the project for the rest of this financial year.
"Aquila will continue to focus its efforts on how best to
progress the project," executive chairman Tony Poli said in a
The company also said last week that the project's director,
Kevin Watters, had quit. He will take up the role of head of
project development at a competitor Brockman Mining,
working on the Marillana iron ore project also in the Pilbara,
which has more options to export its ore.
Aquila and its partners have yet to agree on a replacement
Shares in Aquila, 14 percent owned by China's biggest listed
steelmaker, Baoshan Iron & Steel Co, sank to a
one-month low of A$2.82 and last traded down 8.3 percent at
The West Pilbara Iron Ore project won state environmental
approval last week, but still needs rail and port construction
approvals, key to its plans for exporting 30 million tonnes a
year of ore.
The Western Australia state government has said it will not
approve construction of Anketell Port until it is certain the
project's backers have the funds to build a mine, rail and port,
which will depend on what has become an increasingly volatile
iron ore market.
The API joint venture has wound down all engineering and
design work for now, Watters told Reuters.
He said that with the heat having coming out of the
construction market as several projects have been put on hold,
the joint venture should be able to negotiate lower construction
and engineering costs when it comes back to the market.
"It's certainly a keener market now in the engineering space
and in the construction space," Watters said.