Gindalbie Metals which is developing an iron ore mine in Australia along with China’s Anshan Iron and Steel Group has said that the project cost will go up by 30% thanks to rising prices of raw materials and labour. The company may have to sell Australian $150 million worth of shares to help pay the difference.
The Chairman George Jones said in a statement that all projects in Western Australia are currently subject to significant cost escalations and this situation is almost certainly going to get worse as the resources boom strengthens, pushing up the price of both labour and materials.
The company is also expecting a change of managing director as Garret Dixon gets replaced as the Gindalbie Metals’ Chief Executive Officer by Tim Netscher by the end of April 2011. Tim Netscher is currently the senior vice president of operations for Newmont Mining Asia – Pacific.
It is believed that the blow out of the extra cost is what forced the CEO Garret Dixon to step down after being with the company for five years. George Jones said that they reached the stage with Garret Dixon where it was a mutual discussion and they came to the resolution that it was in the best interest of all parties, the project, the company and Garret himself that he step down.