Reuters reported that China's Citic Pacific Ltd said the cost to build its Sino Iron project in Western Australia's remote Pilbara region has reached AUD 8 billion, The Australian newspaper reported on Saturday, representing a jump of at least AUD 1 billion.

But CITIC Pacific Mining executive chairman Mr Hua Dongyi told the paper that Australia's biggest magnetite mine will be able to start production in line with the latest scheduled estimate.

Mr Hua said that "In September, everything will be ready for the whole project to be running.”

The project, China's largest mining investment, has already suffered a series of cost overruns and delays. With production at least two years behind schedule, the mine has become a cautionary tale of the difficulties that Chinese firms face as they develop resources abroad.

The project a joint venture between CITIC Pacific Ltd and Metallurgical Corp of China Ltd was signed in January 2007, with an estimated value of AUD 1.1 billion. The project cost then rose to AUD 1.75 billion in 2007, before jumping to AUD 2.59 billion in 2010.

A company official told The Australian on Friday the latest estimate at the end of 2011 was AUD 7 billion due to rising equipment and labor costs. In July last year, newspapers reported a cost estimate of AUD 6.1 billion.

The project has also faced other hurdles including a stronger Australian dollar and the imposition of a mining tax and carbon tax by the Australian government. In May, Australia's Immigration Department confirmed it was investigating union claims that CITIC Pacific underpaid Chinese workers at the mine.

Source - Reuters

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