* Sino Iron's first production line still not at capacity
* Sino Iron says Palmer attacks don't represent Australians
(Adds CITIC chairman comments on Palmer)
HONG KONG/MELBOURNE Aug 29 China's CITIC Ltd
reported a HK$1 billion ($129 million) half-year loss
on its Australian iron ore operation, which shipped its first
ore in December but is still struggling to get the first of six
production lines working well.
The $9.6 billion Sino Iron project, China's biggest overseas
mining investment, has sold 1.4 million tonnes of iron ore so
far, after starting exports more than three years behind
schedule and nearly four times over budget.
It is a long way from reaching its planned capacity of 24
million tonnes a year.
"Operationally, production line one has been producing
quality iron ore concentrate. However, it has yet to reach the
desired capacity," CITIC Chairman Chang Zhenming said in a
letter to shareholders released with the group's results.
Sino Iron's second unit is in trial production and the
remaining four lines are under construction, he said. The
first-half loss on the project was in line with the loss booked
a year earlier.
CITIC, previously called CITIC Pacific before absorbing its
state-owned parent CITIC Group's assets this year, has been
fighting lawsuits launched by Australian billionaire politician
Clive Palmer over royalties owed on the Sino Iron project and
control of its export port for more than a year.
The battle with Palmer, whose company Mineralogy sold the
rights to the project to CITIC in 2006, has escalated into
public brawling this year, with Palmer accusing China last week
on television of trying to steal Australia's resources and
calling the Chinese "bastards".
He wrote an apology to China's ambassador to Australia this
week, saying he only meant to attack CITIC Pacific.
Chang criticised Palmer's outburst and said the company
would ordinarily try to settle commercial disputes through
negotiation, but in this case would focus on protecting
shareholders' interests through legal channels.
"We strongly reprimand Palmer's expression. However, we
believe that Palmer's expression does not represent the opinion
of Australians," Chang told reporters at a results briefing in
Palmer has lost two cases in the past month concerning
control over the export port, Cape Preston.
The fight is now centred on how to resolve the calculation
of royalties owed. Palmer wants it to be decided by an external
expert, while CITIC wants a court to rule on the issue.
(1 US dollar = 7.7502 Hong Kong dollar)
(Reporting by Donny Kwok in HONG KONG and Sonali Paul in
MELBOURNE; Editing on Alan Raybould and Tom Hogue)