CITIC’s Sino Iron mine to post $1.8 bn writedown

Citic has been forced to writedown the value of its Sino Iron project in the Pilbara by $1.8 billion due the falling price of iron ore.

The Chinese company said it expected its February financial results to include an after-tax asset impairment of between $US1.4 billion to $US1.8 billion.

It said the decision was made after considering the current and predicted price of iron ore.

"A key component for consideration is the current and forecasted price of iron ore," Citic said.

Citic only has two production lines out of six up and running at the $10 billion mine.

The company said two more units would start work later this year, with the rest set for commissioning in 2016.

The mine has been in production for just over a year, and has exported 2.4 million tonnes of iron ore.

It is the first time a Chinese-owned mining company has shipped iron ore products from WA to China.

The project ran into a spate of delays and cost blow-outs during the commissioning phase.

Legal disputes with billionaire Clive Palmer over royalty payments have also hampered the development and driven up costs.

The value of iron ore has nearly halved since this time last year, and analysts predict there is more pain to come as the three majors – BHP Billiton, Rio Tinto, and Vale- ramp up production that will push more supply into the market.

Last week Macquarie Group joined the list of major banks that have their iron ore price forecasts.

The bank said it expects iron ore prices to average $US68 a tonne in 2015 and $US65 a tonne in 2016.

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