Western Australia's Third Magnetite Mine Still Years Away From Production

---

Researched by Industrial Info Resources (Perth, Australia)--Thanks to the likes of BHP Billiton Limited (NYSE:BHP) (Melbourne, Australia) and Rio Tinto Limited (NYSE:RIO) (Melbourne), Western Australia is well-known globally for producing massive amounts of high-grade hematite iron ore and is now one of the largest producing regions on the planet. While these companies have continued to focus on expanding their hematite production, a number of other companies have been actively developing the state's lesser-known magnetite resources. So far, only two companies have managed to progress their magnetite projects into the construction and production phases, and it looks as though it may be quite a while before any other projects advance to this stage.

Gindalbie Metals (ASX:GBG) (Perth, Australia) recently began magnetite production at its Karara project, becoming Western Australia's first magnetite exporter, and it is now ramping up production. The only other project close to production is Citic Pacific Mining's (Perth) Sino iron project, but it has been plagued with delays and cost blowouts, and it is not expected to produce its first shipment until the second half of this year.

One of the larger projects to have slowed dramatically is Asia Iron Australia's (Perth) $2.86 billion (AUD$3 billion) Extension Hill project. Magnetite was initially discovered in the Extension Hill region as far back as the 1960's, but serious development did not begin until the mid-2000's. Asia Iron is looking to produce 10 million tonnes per year of magnetite concentrate when the project moves into production, but at this stage it looks as though first production will not occur until 2017.

Back in early 2011, Asia Iron was expecting to commence construction in early 2012, which would have enabled it to begin shipping first product by mid-2013. Unfortunately, the project has been delayed due to financing difficulties and issues with the project's Chinese joint venture partner, Chongqing Chonggang Minerals Development (CCMD). CCMD is a joint venture between Chongqing Iron and Steel Group and Chongqing Foreign Trade and Economic Cooperation Group, both of which are Chinese state-owned companies.

In mid-2012, the Extension Hill project fell afoul of political events in the Chongqing region of China, when the head of the city's communist party, Bo Xilai, was arrested for corruption. Since that time, development of the Extension Hill project has slowed dramatically, as no funding will be approved by CCMD until the political changeover in Chongqing is completed.

The recent drop in global commodity prices, as well as the continued tightening of the financial markets, is contributing to the delay. Asia Iron is slowly progressing its feasibility studies and hopes to be in a position to begin construction of the project by early 2015.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.