Citic Pacific, the steel-to-property conglomerate controlled by state-owned Citic Group, said yesterday it had secured a HK$6 billion syndicated loan to fund its mega iron ore project in Australia.
The Sino Iron Ore project, in the Pilbara region of West Australia, is expected to start production by August. As the largest iron ore facility in the world it could process about 100 million tonnes of iron ore a year, chairman Chang Zhenming said on the sidelines of the firm's shareholders' meeting.
The first two production lines would come on stream first, followed by the third to sixth lines, which were still under construction, he said. 'We are working together with China Metallurgical Corp and pressing hard to meet the schedule,' Chang said.
Citic Pacific needed to increase its investment in the mammoth project by US$822 million owing to big cost overruns.
Chang said the company would need to continue to invest in the third to sixth production lines. The timetable for their roll-out will depend on its assessment of the first two production lines.
The budget for the mine project doubled to US$3.41 billion, inflated by a surge in material costs, labour and management fees as well as the appreciation of the Australian dollar. Miscalculations by the contractor also contributed to the overrun.
A dozen banks reportedly took part in the syndicated loan: Australia and New Zealand Banking, Bank of China (Hong Kong), Bank of Tokyo-Mitsubishi UFJ, China Construction Bank, DBS Bank, Hang Seng Bank, HSBC, Industrial and Commercial Bank of China (Asia), OCBC Bank, Taipei Fubon Commercial Bank, United Overseas Bank and Wing Lung Bank.