Ore grade gam­ble pays off for Fortes­cue Met­als Group

North West Telegraph - - News - Peter Milne The re­porter trav­elled to the Pil­bara cour­tesy of Fortes­cue Met­als Group.

Fortes­cue, fa­mous as the Pil­bara’s low-grade iron ore pro­ducer that slashed costs to sur­vive when prices plunged, now sees it­self as the in­no­va­tive, nim­ble player re­spon­sive to a chang­ing mar­ket.

Fortes­cue chief ex­ec­u­tive El­iz­a­beth Gaines said in the past the fo­cus had been on how many tonnes Fortes­cue was go­ing to pro­duce and at what cost.

Ms Gaines said a new high-grade 60.1 per cent iron prod­uct, West Pil­bara Fines, to be shipped later this month, could at­tract a pre­mium of $10 a tonne with a neg­li­gi­ble ef­fect on costs.

“It’s straight through to the bot­tom line,” she said.

Fortes­cue is pick­ing the eyes out of two of its mines to col­lect high iron ore con­tent for the new prod­uct.

Low phos­pho­rous Cloud­break ore and higher phos­pho­rous ore from Fire­tail are stock­piled at the mine and every third week railed to Port Hed­land and lay­ered in al­ter­nat­ing slopes on the stacks.

As a re­claimer slices hor­i­zon­tally through the stack to col­lect ore for load­ing, the prod­uct from the two mines is mixed to keep the level of phos­pho­rous within spec­i­fi­ca­tion.

The self-styled third force in iron ore plans to ship five to 10 mil­lion tonnes of the new prod­uct this fi­nan­cial year. Fortes­cue plans to load the first ore from its $US1.275 bil­lion Eli­wana mine in De­cem­ber, 2020 to grow pro­duc­tion of West Pil­bara Fines to an even­tual 40 mil­lion tonnes a year.

The prospect of higher mar­gins does not seem to have changed Fortes­cue’s ap­proach to its costs.

Chief op­er­at­ing of­fi­cer Greg Lil­ley­man said Fortes­cue had bought Chevron’s 2000-bed ac­com­mo­da­tion camp from the Wheat­stone LNG project.

“We picked it up for a song,” he said of the pur­chase that will be split be­tween the Eli­wana mine con­struc­tion site and two rail camps.

“Some very fru­gal think­ing from the project team. The guys are start­ing to call them­selves Step­toe and Sons be­cause they went and bought a sec­ond-hand power sta­tion from Roy Hill as well.” Sales and mar­ket­ing di­rec­tor Danny Goe­man said he was less con­cerned about China’s ef­forts to im­prove air qual­ity this north­ern win­ter.

Af­ter pre­vi­ous dras­tic shut­downs of steel mills to re­duce pol­lu­tion, re­main­ing mills have switched to higher-grade ore to meet de­mand, in­creas­ing the dis­count for lower-grade ore that is the bulk of Fortes­cue’s cur­rent pro­duc­tion. He said the au­thor­i­ties were main­tain­ing their fo­cus on air qual­ity but tak­ing a more tar­geted ap­proach.

Mr Lil­ley­man said by mid-Novem­ber last year, firm and ab­so­lute re­stric­tions were in place.

“This year that hasn’t oc­curred, there hasn't been a blan­ket X per cent cut,” he said.

Pic­ture: Pho­tog­ra­phy Project

Fortes­cue chief ex­ec­u­tive El­iz­a­beth Gaines at Fortes­cue’s Port Hed­land load­ing fa­cil­ity.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.