"We've identified the major steel works in China who have signed up preliminary sales agreements," said Barry Fitzgerald, chief executive officer of CITIC's Australian unit, CITIC Pacific Mining. The balance of the output will be used by the company's own plants in the mainland, he said.

CITIC Pacific shares jumped 9.09 percent to close at HK$22.20. Of the mine's 28 million-tonne output, as much as 20 million tonnes may be sold to customers, with the rest kept for CITIC Pacific's own mainland steel plants, Fitzgerald said in Perth. "China demand will continue."

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First output is scheduled for the fourth quarter next year from CITIC Pacific Mining's Sino Iron project at Cape Preston in Western Australia's Pilbara region.

The open pit mine will be one of the largest in the world and over its estimated 25-year life will be 5.5 kilometers long, 3km wide and 600 meters deep.

After the material is mined, it will be transported to six grinding mills. The mills, being built in China, will be supplied from January.

The strong Australian dollar is affecting construction costs, Fitzgerald conceded. "We sell our products in US dollars and a lot of our costs are in Australian dollars. It's pretty well known that with any of the exporters out of Australia that any time you see the Australian dollar go up the profit forecasts godown."

The Aussie dollar is trading at its highest in more than a year boosted by economic growth in China, Australia's biggest trading partner. BLOOMBERG