Citic May Write Down $1.7 Billion on Australian Iron Ore Projectby
Company cites 'significant decline in the price of iron ore'
Citic expects 2015 profit to be reduced by the write down
Citic Ltd. said it will probably announce a writedown of $1.5 billion to $1.7 billion to reflect the declining value of its Sino Iron project in Australia.
The impairment for the financial year ended March was caused by a “significant” decline in iron ore prices during the past year, the company said in a statement Tuesday to the Hong Kong stock exchange.
The project was the largest magnetite iron ore development in Australia and has been shipping concentrate to steel mills in China since late 2013, Citic’s statement said.
“There has been a significant decline in the price of iron ore during the past 12 months, due to weak demand,” the statement said. “Impairment is a non-cash item, but it will reduce the Citic Ltd.’s 2015 profits to be reported in March 2016.”
The Hong Kong-based company said construction of the final two processing lines at the project is expected to be completed on schedule, with lines five and six targeted to begin in the first half of this year.
“This will mark the end of the main construction task, with our focus now turning to optimizing production and ensuring the smooth performance of the fully integrated mining, processing and export operation,” Citic said in the statement.