CHINA’S Baosteel Resources and its partners have pushed out plans to develop a long-stalled iron ore project in Australia by at least 18 months in light of weak ore prices, rail operator Aurizon Holdings said.

    Baosteel, China’s second-largest steelmaker, and Aurizon took control of the West Pilbara Iron Ore project last year when they bought Aquila Resources for A$1.4 billion (US$1.1 billion), launching the bid when iron ore prices were around 75 percent higher than now.

    At the time they said they aimed to slash the estimated A$7.4 billion cost of building the mine, rail and port, and would make a final investment decision on the project in early 2016 to start producing ore in 2017 or 2018.

    “Aurizon and the mine participants are mindful of the volatility in the iron ore market price since the completion of the takeover of Aquila Resources in 2014,” Aurizon said yesterday.

    The partners, including steel firm POSCO and commodities investor AMCI, are now targeting a final investment decision in late 2016, as they look to cut project costs further due to poor iron ore prices, Aurizon said.

    “It’s a sign of the times. We’re in a very well supplied market,” said UBS commodities analyst Daniel Morgan,

    Production would now start in 2019 or 2020 at the earliest, Aurizon spokesman Mark Hairsine said. “It’s driven by all parties looking at the nature of the market and the nature of the project, and making some decision about how we progress it in a sensible way,” he said.

    The mine’s 30 million tons a year of iron ore are not needed right now, based on UBS modeling, and the project’s economics would be “troublesome” at current prices, Morgan said.

    Aurizon declined to reveal the latest cost estimates for the project, but Hairsine said they were “certainly consistent with” comments the firm made last July that it expected to be able to cut the A$4.6 billion port and rail cost by about 40 percent. (SD-Agencies)