Fortescue Metals Group Announces The Approval Of US$2.6 Billion Iron Bridge Magnetite Project

Fortescue Metal Group Announces The Approval Of US$2.6 Billion Iron Bridge Magnetite Project

Global iron ore miner, Fortescue Metals Group (ASX: FMG) is having a successful track record of developing and operating major iron ore projects in the Pilbara. The company is now progressing towards the development of Stage 2 of the Iron Bridge Magnetite Project, an unincorporated joint venture (UJV) between FMG Iron Bridge Ltd (69%) and Formosa (31%).

In an announcement made on 2 April 2019, the company announced that its subsidiary FMG Magnetite Pty Ltd and joint venture partner Formosa Steel IB Pty Ltd have approved the development of Stage 2 of the Iron Bridge Magnetite Project which holds Australia’s largest JORC compliant magnetite resource.

It is expected that this project will deliver a premium product with iron content of 67 percent which will improve the company’s average product grade. This will enhance the range of products available to the company’s customers and will provide the ability to deliver the majority of the company’s products at greater than 60 percent Fe, consistent with its long-term goal.

The company believes that this project will deliver growth in earnings and cashflow and it will increase the returns to the company’s shareholders and its joint venture partners through all market cycles.

It is expected that the total capital cost for Stage 2 development will be around US$2.6 billion which will be paid by the UJV partners. FMG IB’s capital contribution will be US$2.1 billion which includes US$274 million deferred contributions from Stage 1.  Once the full operational capacity of the project is achieved, it will lead to an annual production of 22 million wet metric tonnes per annum.

In order to develop Stage 2, the Project requires up to 225 megawatts of power, delivery of which is the responsibility of Fortescue. Fortescue is currently responsible for delivering the power requirements inclusive of latent capacity transmitted from Fortescue’s Solomon power station, together with new generation and transmission which may involve third party providers and supply.

Fortescue’s Chief Executive Officer, Elizabeth Gaines believes that the company is ready to build this plant as the company’s focus has always been to create the most energy and cost-efficient ore processing facility.

On 2 April 2019, the company also provided an update to the Ore Reserves and Mineral Resources statement for its Magnetite properties according to which as at 2 April 2019, the company’s Magnetite properties had Ore Reserve of 716 million tonnes at 67% Fe and Mineral resources of 5,448 million tonnes at 30.4% Fe.

In the past six months, the share price of the company increased by 91.86% as on 1 April 2019. At the time of writing, i.e., on 2nd April 2019 AEST 3:28 PM, the stock of the company was trading at a price of A$7.645, up by 2.894% during the day’s trade with the market capitalisation of ~A$22.88 Bn. It has 52 weeks high of $7.860 and 52 weeks low of $3.455.


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