CITIC appeals judgment in fight to secure Sino Iron's future

Found in: News

 

CITIC Limited, parent company of the developer/operator of the Sino Iron magnetite project, has appealed Justice Kenneth Martin’s decision in the WA Supreme Court in the Royalty Component B proceeding (CIV 1808 of 2013), brought by Clive Palmer-controlled Mineralogy Pty Ltd.

CITIC Pacific Mining (CPM) Chief Executive Officer, Chen Zeng, said the Royalty Component B judgment (24 November 2017) was disappointing and had serious ramifications for project viability.

“We owe it to our 2600-strong workforce, our shareholders and the wider Western Australian community to pursue all avenues of appeal,” Mr Zeng said.

“Different royalties are payable to Mineralogy and the State. It’s important that the overall royalty burden is fair and reasonable to the project and royalty recipients.”

CITIC has spent more than a decade developing Sino Iron, investing more than $US12 billion in the local economy and creating a new downstream processing industry for the Pilbara. 

Today, Sino Iron is Australia’s largest exporter of magnetite product, with the majority of its concentrate sold to independent steel mills in China.

All six processing lines are now in operation and last year Sino Iron achieved an annual production record of more than 16 million tonnes.

“I’m pleased with our progress over the past 18 months – our costs are coming down and we’re working hard to demonstrate the potential for magnetite processing in WA. But we still face challenges – both on and offsite,” Mr Zeng said.

“Because we’re processing low-grade ore into a high-grade premium product, we’re a higher cost producer compared to traditional dig-it-up and ship-it-out operations.

“We’re still ramping up and the fact is, right now, we’re not yet profitable.”

Last August CITIC Limited Chairman Mr Chang Zhenming wrote to shareholders, warning that one or a combination of factors including the outcome of the Royalty Component B dispute, commodity prices or the inability to secure vital life-of-mine expansion approvals could lead to project suspension.

Mr Zeng said these risks remained real.

“Our parent company has been very patient. They are conscious of the project's progress to date and understand the potential long-term benefits, if we can overcome these challenges.

“But they’ve made it very clear that, like every other asset in the group, we must demonstrate financial sustainability. If we’re not commercially viable, we don’t have a future. Right now we’re focused on this goal.”
CITIC is a seasoned investor in Australia.

In the 1980s, CITIC acquired a 10 per cent stake in the Portland aluminium smelter in Victoria. Today, CITIC is the single-largest shareholder in ASX-listed Alumina Limited - the joint venture partner of Alcoa in Alcoa World Alumina & Chemicals (AWAC), the world's largest alumina business and assets including bauxite mines and alumina refineries in WA.

“We pride ourselves on being a good corporate citizen and making a significant socio-economic contribution to the communities in which we operate,” Mr Zeng said.

An independent economic impact assessment, conducted by Deloitte Access Economics, recently confirmed Sino Iron’s status as a project of national and global significance.

The analysis found that more than $50 billion would be spent on the procurement of WA goods and services over the 40-year life of the project. During the same period, export earnings for Australia will surpass $100 billion and wages to the project’s WA workers will reach almost $9 billion.

“The Deloitte report begins to put a dollar value on what Sino Iron is delivering to the WA community – now and, hopefully, in the years to come,” Mr Zeng said.

“For these benefits to continue to flow, first we must have a viable project.”

Ends

About CITIC Pacific Mining
CITIC Pacific Mining (CPM) is developing the Sino Iron magnetite project, south of Karratha. Sino Iron represents a new downstream processing industry for Australia, transforming magnetite ore into a premium concentrate for export, delivering major socio-economic benefits in the coming decades. For more information, please visit www.citicpacificmining.com or betterpartnerships.com.au.

Media enquiries:
Rob Newton
Head of Corporate Affairs

CITIC Pacific Mining
P: 08 9226 8158; 0400 705 916
E: Robert.Newton@citicpacificmining.com


© 2018 Citic Pacific Mining. Website by Bam Creative .