PERTH, July 21 China's Citic Pacific Ltd
said the cost to build its Sino Iron project in
Western Australia's remote Pilbara region has reached $8
billion, The Australian newspaper reported on
Saturday, representing a jump of at least $1 billion.
But CITIC Pacific Mining executive chairman Hua Dongyi told
the paper that Australia's biggest magnetite mine will be able
to start production in line with the latest scheduled estimate.
"In September, everything will be ready for the whole
project to be running," Hua said.
The project, China's largest mining investment, has already
suffered a series of cost overruns and delays. With production
at least two years behind schedule, the mine has become a
cautionary tale of the difficulties that Chinese firms face as
they develop resources abroad.
The project - a joint venture between CITIC Pacific Ltd
and Metallurgical Corp of China Ltd - was
signed in January 2007, with an estimated value of $1.1 billion.
The project cost then rose to $1.75 billion in 2007, before
jumping to $2.59 billion in 2010.
A company official told The Australian on Friday the latest
estimate at the end of 2011 was $7 billion due to rising
equipment and labour costs. In July last year, newspapers
reported a cost estimate of $6.1 billion
The project has also faced other hurdles including a
stronger Australian dollar and the imposition of a mining tax
and carbon tax by the Australian government. In May, Australia's
Immigration Department confirmed it was investigating union
claims that CITIC Pacific underpaid Chinese workers at the mine.
CITIC had originally targeted the middle of 2010 for first
production from the Sino Iron project, which will produce 24
million tonnes per year of the steel-making ingredient.
Another Chinese firm, Sinosteel, has also
suspended work on its $2 billion Weld Range iron ore mining
project in Australia's midwest region due to setbacks in
developing port and rail infrastructure.
(Writing by Morag MacKinnon; Editing by Ed Lane)