Bloomberg reported that CAP SA, Chile largest steel producer, fell after announcing a 39% increase in the cost to develop an iron ore project in northern Chile.

The company will invest USD 800 million to develop its Cerro Negro Norte iron ore mine which will begin production activities in the fourth quarter of 2013. The company had initially announced the project would cost USD 574 million to develop and would begin operations in the first quarter of 2013.

Mr Mauricio Seguel an analyst at Banco Santander SA said “The delay and the increase in costs will have an effect on the production estimates of approximately 1 million tons of iron ore in 2013. If we punch the numbers into the model, it shows a 3% fall in the target price. That is affecting the stock today.”

CAP SA said yesterday its Totoralillo port will be shut for about three months after a fire damaged the facility. CAP will use the Huasco and Coquimbo ports to maintain iron-ore exports to customers.

(Sourced from Bloomberg)