Hong Kong's Burwill Holdings has announced plans to invest $100 million to quadruple its iron concentrate output using ore from a mine it is buying in eastern China's Shandong province.
The company last year agreed to pay HK$500 million ($64.39 million) for a 51 percent stake in the iron ore mine in a deal expected to close by the end of this month, Chairman Chan Shing told reporters.
"The $100 million capex will be invested in this year and next," he said.
Burwill will build new ore dressing plants which are expected to increase the mine's production to 700,000 tonnes of iron concentrate by the end of this year. Production will then rise to 1.5 million tonnes in 2011 and to 3 million tonnes in 2012.
Burwill has the rights to buy another 19 percent of the mine for HK$259 million, taking its interest to 70 percent. Mr Chan said he hopes to exercise that right in the second quarter of 2010. The seller guaranteed a profit of at least HK$120 million for the mine, but due to a relatively low production cost of about 326 yuan ($47.77) per tonne and a market price of below 1,000 yuan, the project could generate net profit of around 250 million yuan in 2010 and 1 billion yuan in 2012, based on company estimates.
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