Bloomberg reported that Chinese leaders have signaled they will continue to support investment in iron ore in Western Australia despite the recent slump in demand for the bulk commodity.

Beijing's most powerful economic planning agency the National Development and Reform Commission is considering more policy support for Chinese companies struggling to get overseas projects off the ground.

WA's iron ore sector has been challenging for several Chinese aspirants, with infrastructure difficulties and skills shortages leading to cost and schedule overruns.

Most notable has been CITIC Pacific's Sino Iron project, which is now involved in a court battle with its local partner, Clive Palmer.

But a senior commission official said that Chinese companies at the weekend that they should not be deterred.

Mr Wang Jianjun deputy head of the overseas investment division of the commission said that ''Investment activity must not slow down as a result of recent short term economic challenges. The real task is to prepare for the iron ore demand in the next 5 to 10 years.''

Mr Wang said that some magnetite projects were likely to cost astronomical sums. Many projects are low quality or magnetite, the development cost per tonne of ore could be as high as USD 300.

Sino Iron is a magnetite project, while China has also backed the Karara magnetite project being developed by Gindalbie Metals near Geraldton.

Mr Wang said China would still need to import more than half of its iron ore by 2020 and development of Chinese owned mines was crucial in breaking the supply stranglehold enjoyed by 3 big miners: BHP Billiton, Rio Tinto and Vale.

He said that the government would offer more support to companies investing in iron ore assets abroad.

BHP, Rio and Vale control more than 70% of the seaborne iron ore market. Chinese authorities forecast the country will still need more than 1.2 billion tonnes of iron ore per year by 2020.

Beijing has poured more than USD 10 billion into iron ore investments in the last 5 years, mainly in WA, Canada and West Africa, but has seen limited production so far. The lack of infrastructure has been blamed as a key reason.

Mr Wand further added that ''The need to build basic infrastructure such as water, electricity, rail and ports are key factors constraining the production capacity of iron ore mines.'