9pc profit fall latest setback for Citic
Falling steel demand hits bottom line as firm struggles to get giant Australian mine up and running
Citic Pacific, which recently suffered setbacks in a US$8 billion iron ore project in Australia, saw net profit fall 9 per cent year on year to HK$5.48 billion in the first half.
The drop in underlying profit of the property-to-steel conglomerate is even steeper after stripping off a HK$2.49 billion gain from the sale of its interest in computer network company Citic Guoan and a HK$909 million revaluation gain from investment property.
The company said yesterday the trial run of its Sino Iron project in Australia has been delayed until November. The contractor, China Metallurgical Group, failed to recruit enough licensed Australian engineers to sign off on construction certifications and meet local safety regulation standards, leading to the postponement in production, the company said.
As of June, the company had invested US$7.8 billion in the mine and expects the total cost to be under US$10 billion.
"As I have said before, in developing the world's largest magnetite iron ore mine, we have faced unpredictable challenges in completing a project of this scale," chairman Chang Zhenming said yesterday.
Differences in the regulatory requirements in China and Australia have hit China Metallurgical Group hard despite its experience of developing mines in China.