(Adds Karara comments, details)
MELBOURNE, Jan 8 (Reuters) - China's Angang Steel Co (Ansteel) <000898.SZ> won't be able to inject new funds to shore up the Karara iron ore mine in Australia, according to an email to Karara staff cited in a newspaper report on Friday.
Ansteel's minority partner in the A$3 billion Karara project, Gindalbie Metals Ltd (GBG), called a trading halt in its shares after the report, saying it would make an announcement on Karara by Tuesday, Jan. 12.
The mine, 52 percent owned by Ansteel, produces mainly magnetite that has to be processed heavily to produce high quality iron ore concentrate, and has been hit like most iron ore producers by a plunge in iron ore prices.
In an email to staff, Karara's chief executive Zhang Zhao Yuan said the project was making losses and facing "significant cost pressure", according to a report in the West Australian newspaper on Friday.
"Firstly, its parent company is unable to continue providing funding support to Karara due to the impact of economic and industry downturn," the email was quoted saying.
A Karara Mining spokesman declined to comment on future funding for the mine, but said the main point of the email was to focus on the business strategy for this year, including cutting costs and improving the mine's production performance.
"Ansteel remains committed to Karara," the spokesman who is a senior executive, told Reuters.
"What we're trying to emphasise is that Ansteel continues to provide support to the board and the leadership team of Karara," he said.
Karara, which started exporting magnetite in 2013, has a capacity of 8 million tonnes a year and last year produced 5.9 million tonnes of magnetite concentrate, a tiny fraction of Australia's total 748 million tonnes of iron ore exports in the year to June 2015.
Gindalbie, which booked an A$11 million loss in the year to June 2015, said in its annual report: "Karara is a highly geared project and needs the ongoing financial support of Ansteel to continue."
Gindalbie's spokesman did not return an email or phone call on Friday.
A phone call to Anshan Steel, the parent of Ansteel, in Liaoning province went unanswered.
