Fortescue Metal Group shares ended up 3% at $7.65 after announcing the $US2.6 billion ($A3.7 billion) second stage of its Iron Bridge project in the Pilbara has been approved.
The expansion of the original $US500 million first stage, will take what was essentially a trial operation aimed at testing the economics of upgrading the huge Iron Bridge magnetite deposits.
The project is owned Fortescue subsidiary FMG Magnetite and Taiwan’s Formosa Steel. The first stage saw the construction of a full-sized grinding plant at the project, 145 kilometres south of Port Hedland, which tested the processing magnetite into an exportable product with an iron content of 67%.
The second stage is expected to create 3,000 construction jobs and 900 full-time positions once operations start in the first half of 2022. 22 million tonnes of 67% iron ore product will be produced when fully operational from around 2022-2023.
Fortescue chief executive Elizabeth Gaines said in yesterday’s statement the resource supported a long mine life of more than 20 years, with the premium iron content of 67%
Higher grade iron ore and other products are in increasing demand from steelmakers, especially in China as it produces more crude steel and lowers pollution levels, especially at sintering plants (where coke and low-grade iron ores are mixed).
“The project is well progressed and ready for detailed design and execution with the majority of key approvals already in place,” she said.
“The innovative design, including the use of a dry crushing and grinding circuit, will deliver an industry-leading energy efficient operation with globally competitive capital intensity and operating costs.
“In developing the Iron Bridge project, Fortescue has demonstrated and refined each step of the ore processing system and conducted full-scale trials. Our focus has been to create the most energy and cost-efficient ore processing facility, tailored to the specific ore we will mine.
“We are now ready to build this plant and develop this mine, and are confident that our early work will support rapid progress to full production.”
Ms. Gaines said when combined with Fortescue’s $1.8 billion Eliwana mine, ore from Iron Bridge would mean the miner could deliver the majority of its products at greater than 60% (as opposed to around 58% at the moment which sells at a discount to higher grade ores such as the standard 62% Fe Pilbara fines and lump products of BHP and Rio Tinto.
Stage two works will include building an airstrip and expanding the accommodation village, construction of a 195km water pipeline, a 135km concentrate pipeline to FMG’s Hert Elliot port facility and a return process water pipeline and extra port-handling facilities.
The project is owned by FMG Iron Bridge (69%) and Formosa (31%). Fortescue owns an 88% stake in FMG IB and its subsidiary FMG Magnetite. A subsidiary of Chinese steel giant, Baosteel holds 12% FMG IB.
Fortescue says five binding off-take agreements have already been secured for 5.3 million tonnes a year
FMG Iron Bridge is expected to spend $US100 million on the project this financial year, ramping up to $US850 million and $US630 million in FY21 and FY22, respectively.
