Ore processor Hanking to double capacity by 2015

Iron ore producer China Hanking plans to more than double its ore-processing capacity by 2015, as it puts two new mines into operation.

The Liaoning province-based firm aimed to have an annual processing capacity of 11.4 million tonnes in 2015, chief executive Pan Guocheng said.

The largest iron ore producer in the northwest processed 4.5 million tonnes last year, and plans to handle 7.3 million tonnes this year and 9.25 million tonnes next year.

Pan did not give details about iron ore output in the period, saying it was 'difficult to accurately quantify', although he added that they should grow in line with processing capacity.

An analyst said Pan's reticence probably reflected uncertainty over the iron content of the firm's output, which may fall over time.

On Thursday, Hanking posted a net profit of 403.54 million yuan (HK$493.8 million) for last year. Underlying profit was up 35.1 per cent at 670.56 million yuan from the previous year minus costs and compensation to warrant-holders after its stock market listing last September.

The profit growth was driven by a 14.3 per cent rise in average selling price to 1,060.8 yuan per tonne, from 927.8 yuan in 2010. Sales fell 4.5 per cent to 1.26 million tonnes, due to restrictions at its Xingzhou mine.

Including value added tax, the company's selling prices fell to as low as 1,000 yuan a tonne in the fourth quarter amid a global economic slowdown triggered by Europe's sovereign debt crisis. They ranged between 1,060 yuan and 1,100 yuan in this year's first two months.

Pan said that despite high inflation last year, cash production costs had been largely stable at about 252 yuan a tonne. He said this was achieved through an increase in cost controls on mining and processing procedures, and cuts in electricity and materials usage.

The chief executive said Hanking was in talks to invest in mines in Western Australia and take over other mines in northeast China, adding it would only invest in high iron-content mines.

The management of state-backed Citic Pacific - a diversified company with a focus on steelmaking, property and iron ore mining - last year said that most of Western Australia's high-quality mines had already been bought by the world's mining giants.