|Plummeting iron ore prices and slower-than-anticipated ramp-up of magnetite production have put CITIC under pressure to write down the value of its Sino project in Western Australia.|
CITIC Ltd. reported on January 20 that it will likely incur an impairment charge of $1.4 billion to $1.8 billion against its Sino Iron magnetite iron ore project in Western Australia in its 2014 financial reports. Impairment is not a cash item, but it would reduce the company’s profits for 2014. “A key component for consideration is the current and forecasted price of iron ore,” the CITIC statement said.
The Sino Iron project is operated by a CITIC subsidiary, CITIC Pacific Mining. The project shipped its first magnetite concentrate in early December 2013. It is designed to produce 24 million metric tons per year (mt/y) of magnetite concentrate from six concentrator lines and ships its concentrate product to CITIC Pacific steel mills and to other steel producers in China.
Project development has run behind schedule, with only two of the planned six concentrator lines currently compete. Of the remaining four lines, two are targeted to begin commissioning in late 2015, followed by the final two lines 2016. Current planning calls for all six lines to be at full production by the end of 2016.
The Sino Iron project is located 100 km southwest of Karratha, Western Australia. The concentrate is shipped from the Port of Cape Preston, which was built to serve the project.