April 1 (Bloomberg) -- Citic Pacific Ltd., a Chinese state- backed company run by billionaire Larry Yung, said it agreed to pay $415 million for mining rights in Western Australia.

The Hong Kong-based company will have the right to extract 2 billion metric tons of magnetite ore in the Pilbara region, according to a statement released late yesterday. The capital expenditure is estimated to be $2.47 billion.

The investment will allow Citic Pacific, which is also involved in property development, infrastructure, distribution of cars and consumer products, to secure a supply of raw materials for its special steel manufacturing business.

The company will have the option to buy an additional 4 billion metric tons of magnetite ore at $200 million per metric ton from Mineralogy Pty Ltd., the statement said.

Citic Pacific will partner with Chinese companies in the project, the statement said, without giving more details. Its shares fell 2.3 percent to close at HK$23.3 yesterday.

To contact the reporter on this story: Patricia Cheng in Hong Kong at pcheng9@bloomberg.net

Last Updated: March 31, 2006 20:26 EST