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China's oversea projects see big rise in cost

By Ben Yue (chinadaily.com.cn)
Updated: 2011-07-07 15:38

The infrastructure costs of Karara, a project jointly developed by Anshan Iron and Steel Group and Gindalbie Metals Ltd, went up significantly more than first estimated, the 21st Century Business Herald reported Wednesday.

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Gindalbie Metals Ltd, an Australian company that Anshan Iron and Steel Group has a stake in, published the cost budget of the iron ore mining project, which is now at 2.57 billion Australia dollars ($2.76 billion), an increase of 55 percent from its first budget made in 2007.

Gindalbie Metals Ltd said the increase is due to the soaring price of cement, steel and labor costs. The report said other Chinese companies which have overseas projects are worried about their costs as well. Some of them have already stopped their investments in Australia resource projects or have suspended investments.

Gindalbie's public document said the company is thinking of enlarging Karara's annual output from 10 million tons of iron ore products to 16 million tons. Some industry insiders have said this action will lower the project's costs.