Grange Resources has slowed work at its $1.6 billion Southdown iron ore venture in Western Australia due to the market downturn and delays in approvals.
"With the markets doing what they have done, we have slowed up on Southdown - we are not going to get into the detailed engineering yet," Grange managing director Russell Clark said.
"The ability to raise finance right now is difficult."
Perth-based Grange, 47 per cent owned by China's Jiangsu Shagang Group, had planned a 6.6 million tonnes a year mining and processing operation starting in 2012 or 2013.
Many iron ore miners have cut production and delayed expansions in the past nine months as demand for the steel-making commodity slumped in line with the global economic downturn.
Mr Clark is unwilling to provide new estimates on the timing of Southdown, which aims to produce iron pellets for use in steel furnaces.
"Certainly our Chinese shareholders Shagang have a keen interest in the project," Mr Clark said.
"I'm not sure they want to push the button right now but they certainly want it to continue to move forward."
Grange, which owns 70 per cent of Southdown in partnership with Japan's Sojitz Corp, recently completed a drilling program that increased mineral resources by 37 per cent to 654.4 million tonnes grading 36.5 per cent magnetite.
Any further major investments will require certainty on mine and port permits, and land access for a pipeline, Mr Clark said.
Grange has invested $35 million in Southdown to date, spending four years seeking clearances from Western Australia's Environmental Protection Authority.
The EPA recommended approval of the mine a year ago but the company is still waiting on authorisation from WA Environment Minister Donna Faragher.
"My understanding is the permit will be issued in the next two or three weeks," Mr Clark said.
Separately, an EPA recommendation on Southdown's port proposal at Albany - which requires dredging of a shipping channel - is also expected in July, he said.
Grange already produces around 2.5 million tonnes a year of iron ore pellets at the Savage River operation in Tasmania state, with much of the output sold to long-term customers Shagang and Australia's Bluescope Steel.
Grange is trying to cut costs at the mine after it was hit by the downturn in iron ore, with contract pellet prices slumping 48 per cent in the Japanese fiscal year that started April 1, Mr Clark said.
The mine became part of Grange early this year following its merger with Chinese-backed Australian Bulk Minerals.
Source: The Australian
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