Sunday 20th Oct, 2019

FMG approves $1.7bn mine and rail project

FMG railway - photo FMG
Photo: FMG

The board of iron ore miner Fortescue Metals Group has approved a $1.67 billion mine and rail project, which includes adding 30 million tonnes of annual processing capacity, and 143 kilometres of new railway.

FMG owns and operates a 620-kilometre railway in the Pilbara, linking its three iron ore mine to export berths at Herb Elliott Port at Port Hedland.

Plans announced on Monday morning are for a fourth mine, Eliwana, which will underpin the introduction of a 60% iron grade product from Fortescue.

The higher grade product, which would still be slightly below the spot market’s standard grade, would look to tackle the recent growth in the discount being applied to below-grade iron ore, like that produced by Fortescue.

Fortescue will spend US$165 million in FY19, US$760 million in FY20, and US$350 million in FY21 developing the project.

“This project allows us to commence the supply of Fortescue Premium product to the market from existing operations in the second half of FY19 with volume increased as Eliwana ramps up to full production,” Fortescue chief executive Elizabeth Gaines said.

Gaines, who was made chief executive in November 2017, said the new mine and rail project would allow FMG to maintain a minimum output of 170 million tonnes every year over 20 years.

“Fortescue has now shipped over one billion tonnes of iron ore in just ten years, generating strong returns from our position at the lowest end of the global cost curve,” Gaines said.

“This project is important to Fortescue and the state of Western Australia, creating up to 1,900 jobs during construction, 500 full time site positions once operational and the continued flow of benefits to our communities and the state economy.”

Fortescue has completed a definitive feasibility study (DFS) into the mine and rail project, and will soon begin detailed design work.

WA premier Mark McGowan welcomed the news from Fortescue, saying the 1,900 construction jobs would boost the economy from mid-2019.

“It is business investment decisions like this that highlight the capacity of our economy, and is just another sign of our state getting back on track,” the premier said. “Our economy continues to turn the corner and WA jobs are being created.”