Chinese withdraw from $3bn iron ore project in Western Australia
Metallurgical Corporation of China has decided to shelve an AUD$3bn iron ore project in Western Australia as well as shut its Perth headquarters and withdraw all but five of its staff.
The Australian reports that the state-owned Chinese resource company purchased the Cape Lambert iron ore mine for $400 million in 2008 from Perth businessman Tony Sage, but that the project has since become the latest to join the ranks of several China-backed iron ore developments in Australia which have been sidelined or delayed.
One steel industry analyst says MCC has suffered from setback because of the same problems which have beleaguered other Chinese miners in Australia this year – surging labor and operating costs and weak commodities prices.
SinoSteel was forced to shelve its USD$2bn Weld Range project last year due to delays and cost problems with its transportation infrastructure, while Ansteel's joint venture with Gindalbie Metals has also been impeded by burdensome costs
In MCC's case power, water and transportation expenses for the project have become a "black hole", while the Australian government has also refused to allow MCC to import cheaper Chinese labor for the project.
The company has reportedly said it will be shutting its Perth office and retaining no more than five staff members at a smaller premises in order to keep its Australian mining license.