FMG gives go-ahead to Eliwana project
Fortescue Metals Group has opted for a $US1.5 billion development of its Eliwana deposit to replace the depleting Firetail mine as part of a long-term plan to open up its massive landholdings in the west Pilbara.
The company revealed yesterday it had chosen Eliwana, west of its existing Solomon Hub, in favour of the massive Nyidinghu deposit, which lies south of its Chichester Hub, with the new mine expected to be in production by 2020.
Addressing his last Fortescue annual general meeting before his departure in February, chief executive Nev Power said it was a close call but the company believed Eliwana offered more product options, better capital and operating costs, and quicker speed to market.
Eliwana contains not just Brockman-style ore, similar to that mined at Firetail, but also the Marra Mamba ores produced from the company’s Chichester operations.
“There’s 2.1 billion tonnes of resource already identified there (Eliwana), it’s highly prospective and has great grades,” Mr Power said
“Of course, Nyidingu remains a very significant ore body for future development and this just means that, in timing, the Eliwana Western Hub project will come before Nyidinghu.”
FMG founder and chairman Andrew Forrest said Nyidinghu was a huge deposit but Eliwana extended the company’s operations to the Western Hub, which he described as the great frontier for Fortescue.
“There’s geology there that we haven’t had a chance to explore. It’s highly prospective,” he said.
“Extending infrastructure out there will be one of Nev’s great legacies. You’ll see mine after mine after mine developed off that.”
Developing Eliwana, a 30Mtpa project with a 24-year mine life, will involve extending Fortescue’s existing rail line 130km west from its Solomon Hub.
Fortescue has the biggest Pilbara footprint of the big iron ore miners and an inventory of 12 billion tonnes of hematite ore and 8 billion tonnes of magnetite ore.
Addressing the question of widening discounts for Fortescue’s lower grade (58 per cent) ore, Mr Power said the company’s product had become incredibly valuable in markets outside of China. “It is only in China that the very high premiums are being paid for the high-grade iron ore,” he said.
He said Fortescue wanted to grow its customer base outside China and its eight big ore carriers offered a competitive advantage in reduced shipping costs to markets such as Europe.
Mr Forrest said Fortescue had resisted the temptation to highgrade its mining operations in response to the lower-grade discount, because it would leave big portions of its ore deposits noncommercial — an outcome that would be a tragedy for Australia.
Fortescue yesterday named board members Mark Barnaba and Sharon Warburton as codeputy chairman and chairwoman to Mr Forrest. Shares in the company closed down 13¢, or 2.6 per cent, at $4.90 yesterday.