Sinosteel freezes $2bn iron ore project

One of China’s biggest overseas mining projects has been put on hold after owner Sinosteel Midwest Corp said it faced uncertainty over a more than US$5.25 billion connected port and rail development in Western Australia, the Wall Street Journal reported. Sinosteel’s US$2.1 billion Weld Range iron ore mine was originally slated to start production in 18 months, but continued delays to the Oakajee port and rail project would have a significant impact on its operations – to the tune of US$105 million per year, according to Sinosteel Midwest chief operating officer Julian Mizera. Brokers believe the Oakajee port and railway, being developed by a 50-50 joint venture of Mitsubishi Corp (MTU.NYSE, 8058.TYO) and Murchison Metals (MMX.ASX), will not be built if the Sinosteel project does not go ahead. Oakajee was originally expected to cost around US$2.1 billion, but a preliminary study commissioned by the joint venture last year estimated that the cost had risen to US$5.5 billion, equivalent to around 17 times Murchison’s own market value.