Former Leighton Holdings CEO Wal King has been called in by Hong Kong’s CITIC Pacific to deal with problems afflicting the troubled Sino Iron project, situated on one of Clive Palmer’s tenements in Western Australia.
CITIC has appointed Mr. King as a special adviser on the project, and hopes that “his advice will be particularly helpful in respect of the Sino Iron project.”
The Sino Iron project has been blighted by legal conflict and interminable delay in the past several years of development. The project was originally slated for completion almost four years ago, and has since overrun its budget by almost $7 billion, while CITIC and Mr. Palmer have been parties to a legal dispute in relation to project royalties, which concluded with a court determining in May that Mr. Palmer was owed $400,000 in payments dating from 2008.
Industry observers now believe that the magnetite iron project, which was originally budgeted at under $3 billion, could have a final price tag of as high as $11 billion.
Further woes emerged for the project in the just the past few weeks, after CITIC announced that more time would be required for determining the stability and reliability of the project’s first production line, while the project’s second production line still remained a long way from entering operation.
CITIC has found a highly formidable and experienced troubleshooter in the form of Mr. King.
Mr. King spent 42 years at Leighton, and was chief executive of its engineering, construction and mining contracting business for over two decades. During most of that run was held in high esteem by company shareholders.
A number of key investments made by Mr. King during his tenure at the top have proved duds since his departure in 2010, however. In particular, investments in a desalination plant in Victoria and the Brisbane airport link turned out to be bum deals, forcing Leighton to announce profit downgrades and write down over $1 billion.
CITIC nonetheless retains confident that Mr. King’s long-term experience will enable him to dispose of the project‘s confounding problems.
“Building a greenfield project is complex and has not been smooth sailing for us, but I am pleased that we have proven we have the technical knowledge and management expertise to build and oeprate the mine,” said CITIC chairman Chang Zhenming.