Andrew Forrest's Fortescue Metals Group Ltd is in discussion with Clive Palmer's Mineralogy Pty Ltd about the potential of blending low-grade iron ore to supply the Chinese market.
Andrew Forrest's Fortescue Metals Group Ltd is in discussions with Clive Palmer's Mineralogy Pty Ltd about the potential of blending low-grade iron ore to supply the Chinese market.
The two companies have signed a memorandum of understanding to investigate "geological, infrastructure, financial, technical and approval matters as a prelude to a potential project".
If the blend meets the requirements of Chinese customers the two companies would look to export between 50 million tonnes per annum with the potential to expand to 100 mt/a.
For the project to get off the ground the two companies would need to find a way to get Fortescue's ore from its Solomon deposit in the Pilbara to Mineralogy's project in Cape Preston.
Fortescue spokesman Julian Tapp said this might include developing a 250 kilometre railway, building a spur line from Fortescue's Port Hedland operations or, if Fortescue is successful in its third-party rail access fight, using Rio Tinto's existing rail infrastructure.
Mr Tapp said the discussions with Mineralogy were in the very early stages and the two companies would need to establish whether their ore blend was suitable for the Chinese market before proceeding with any infrastructure discussions.
He said the ore Fortescue planned to use was not part of its main project, which aims to produce 200 million tonnes of iron ore.
Fortescue is arranging for sinter tests but needs to first get a representative ore sample. Mr Tapp said the sinter results were not expected until the first half of next year.
A copy of Fortescue's statement is pasted below:
Fortescue Metals Group Limited ("Fortescue"; ASX: FMG) and Mineralogy Pty Ltd ("Mineralogy") have signed a Memorandum of Understanding ("MoU") to investigate geological, infrastructure, financial, technical and approval matters as a prelude to a potential project involving the blending of iron ore from both companies.
Fortescue will arrange for sinter tests to establish the productivity of a sinter blend comprising Mineralogy's concentrate and material from Fortescue's Resource within its Solomon tenement holding. On 15 November 2007 Fortescue announced an Inferred Resource estimate for the Serenity deposit which comprises part of the Solomon
project area.
Under the terms of the MoU, it is intended that port facilities would be investigated at Cape Preston capable of exporting a variety of products ranging from high grade magnetite concentrate through varying blends of magnetite/hematite mix to a 'direct ship' hematite.
The plans encompass an initial export capability of around 50Mt/a, with the potential to expand to more than 100Mt/a.
The Chairman of Mineralogy, Professor Clive F. Palmer stated that "the blending of Western Australian iron ores to produce high quality direct shipping iron ore products for specific needs in the iron ore industry is the way of the future for Western Australian iron ore production."
Mr. Graeme Rowley of FMG stated that "with Fortescue having the largest iron ore tenement area holding in the Pilbara and Mineralogy having billions of tonnes of Magnetite resources and an approved port, the alliance makes sound business sense for both companies."
