Citic Pacific wins HK$6b loan for ore project | South China Morning Post
  • Mon
  • Mar 30, 2015
  • Updated: 1:01pm

Citic Pacific wins HK$6b loan for ore project

PUBLISHED : Saturday, 19 May, 2012, 12:00am
UPDATED : Saturday, 19 May, 2012, 12:00am
 

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.

The loan was priced at 210 basis points over Hibor. One basis point is one hundredth of 1 per cent.

In March 2009, Hong Kong police began a criminal investigation of the company, accusing it of defrauding three banks by failing to notify them about hefty losses before borrowing HK$1.75 billion from them. Citic Pacific lost HK$15.5 billion on a wrong-way bet on Australian dollar futures in September 2008 but only made it public six weeks later.

Lawmaker James To Kun-sun, who attended the meeting, said he was worried that a court ruling in March denying police access to six documents deemed confidential by the company would harm the interests of individual shareholders. 'It's not right for the company to use its internal funding to launch a lawsuit against the police for the protection of some former employees or senior executives,' To said yesterday.

'We are concerned that the ruling will compromise the police's effort to gather sufficient evidence for the Justice Department to prosecute the appropriate people.'

Chairman Larry Yung Chi-kin and managing director Henry Fan Hung-ling resigned from their posts in April 2009 after the speculation on the Australian dollar came to light.

Shares of the company fell 1 per cent to HK$11.54 yesterday, while the Hang Seng Index fell 1.3 per cent.

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or