05/05/2020 - 13:53

Sino Iron achieves a profit

05/05/2020 - 13:53

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The Chinese conglomerate behind Pilbara magnetite ore mine Sino Iron has said the operation reported a profit for the first time since it started up in 2013, after higher iron ore prices lifted revenue 15 per cent.

Sino Iron achieves a profit
Sino Iron's operation includes beneficiation of the ore. Photo: Tony McDonough

The Chinese conglomerate behind Pilbara magnetite ore mine Sino Iron has said the operation reported a profit for the first time since it started up in 2013, after higher iron ore prices lifted revenue 15 per cent.

CITIC Pacific Mining’s project involved an investment of more than $US10 billion, but the complexity of processing magnetite was just one problem that plagued the mine.

Magnetite has a higher grade than the hematite ore, which is shipped through most Western Australian mining operations, but only after an extensive process to concentrate it.

At least four write-downs had been taken on CITIC's investment.

CITIC Pacific's parent, CITIC, told Hong Kong markets late last month that production at Sino Iron had exported more than 20 million tonnes of concentrate in 2019, below nameplate capacity of 24mtpa.

There had been ongoing issues ramping up production at Sino Iron to hit that capacity.

In the background, a legal dispute with Clive Palmer’s Mineralogy has dragged on over royalties and rights to expand the mine.

CITIC said its $HK53 billion ($11 billion) total profit was helped by its financial services segment and Sino Iron’s performance, although it did not disclose the numbers for the Pilbara operation.

“In resources and energy, profit grew 43 per cent in 2019 to $HK3 billion, primarily as a result of a maiden profit at Sino Iron. In 2019, the mine exported more than 20mt of concentrate, making it the largest seaborne supplier of magnetite concentrate to China today,” the annual report said.

“The project’s profitability was mainly the result of a strong iron ore price in the first half of 2019, as well as ongoing efforts to drive greater efficiency and reduce operating costs.

“Despite solid operational progress, Sino Iron continues to face challenges to long-term financial sustainability. 

“We have yet to secure the approvals necessary to ensure the project has sufficient space to store waste rock and tailings for life-of-mine operations, as well as to mine the ore body in the most efficient manner. 

“Overall project planning is also compromised.

“These approvals are a vital issue, and it is in everyone’s interest to resolve this situation as soon as possible.”

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