Fortescue gives green light to $3.6b project in WA's Pilbara - 3,000 jobs

Posted: 2nd Apr

Andrew Forrest's Fortescue Metals Group (FMG) has given the green light to its second major iron ore mine development in just 12 months, promising to deliver 3,000 jobs during construction.

The world's fourth-largest iron ore miner approved stage two of its Iron Bridge magnetite project south of Port Hedland, which follows its commitment to build the $1.7 billion Eliwana mine last year — taking the total investment to well over $5 billion.

FMG chief executive officer Elizabeth Gaines said the $3.6 billion project would create thousands of jobs.

"Iron Bridge will [create] approximately 3,000 jobs during construction and create 900 full-time positions once operations commence," she said.

"We've already highlighted that we've got 5.3 million tonnes per annum secured with five customers, so I think that alone demonstrates there will be strong demand.

"Now that we've made this announcement, we anticipate there will be demand not only from China but also more globally as well."

FMG confident it has 'de-risked' project

Magnetite iron ore projects have had a chequered history in Western Australia, struggling to compete with higher grade hematite exports due to the high cost of processing the product.

WA's Mid West region, which is home to vast magnetite iron ore reserves, was pitched to become the next iron ore province, but weakening prices made most projects unprofitable.

Despite the challenges facing magnetite developments, Ms Gaines said the company had spent the past nine years "de-risking" the project.

"From a risk perspective, we've very successfully de-risked this project through the development and investing up to $500 million just to get to this stage," she said.

Ms Gaines said the company also had an unparalleled track record on successfully developing and building infrastructure and mining projects in the Pilbara.

'Another positive sign for WA economy'

Katana Asset Management analyst Romano Sala Tenna said while Iron Bridge faced higher risks, it also had the potential to provide significant rewards for both FMG and Western Australia.

Mr Tenna said magnetite projects produced higher-grade iron ore [once processed] and also employed 40–50 per cent more full-time employees than traditional hematite operations.

"They are producing a higher-grade product, it's less tonnes they're producing [and] it can be more capital intensive and more operational intensive," he said.

"Once this is up and running it will mean that the majority of the product that FMG produces will be north of 60 per cent iron content.

"As we move forward, customers are looking for a higher-grade product to produce steel more efficiently with less pollution. I think that's a net positive for FMG."

Mr Tenna said the Iron Bridge announcement came on the heels of confirmation over the past six months that three other mining projects would be proceeding.

He said Iron Bridge was another positive sign for the WA economy and showed capital expenditure was returning to the resources sector.

But it has not been smooth sailing for all magnetite projects in the region.

Citic Pacific's Sino Iron project in the Pilbara is also a magnetite mine and is of a similar size to Iron Bridge.

Technical problems with that project meant it ended up costing more than $12 billion, a figure several times higher than the original budget.

Kathryn Diss - ABC News 2nd April 2019 - https://www.abc.net.au/news/2019-04-02/fortescue-metals-gives-green-lights-to-iron-bridge-project/10963088?pfmredir=sm