Mr Philip Kirchelechner a senior consultant with Australian iron ore miner Mt Gibson Iron at an industry forum on December 9th said that CITIC WA iron ore project is not going well and it is facing loss at the start of production.
Problems include:
a) High technical requirements in mining and beneficiating. Further input will be even higher
b) Labor cost is over budget
c) Currency devaluation, Australian dollars is under appreciation
d) The contractor China Metallurgical Group Corporation lack experience in developed economies and having problems in communicating with local government and labor union.
CITIC announced on November 19th 2012, the commencement of its first production line 6 years after its takeover. Investment has risen from previous 2+ billion dollars to current 10+ billion dollars.
Mr Liu Yikang deputy general secretary of China Mining Association said that cost of CITIC WA project would be at least USD 70 per metric tonne and is hardly to profit due to heavy financial burden.
Mr Liu suggests abandonment of iron ore projects in west Australia because projects they bought at that time are leftovers and have beneficiation problems. He added that iron ore interments into projects in West Africa and North America.
