The board of iron ore miner Fortescue Metals Group will consider a $3.2 billion expansion of its Pilbara operations next month, the company said today.
The board of iron ore miner Fortescue Metals Group will consider a $3.2 billion expansion of its Pilbara operations next month, the company said today.
In a teleconference with analysts, Fortescue business development chief Peter Meurs said a presentation on Fortescue's next major expansion from 55 million tonnes to 155 million tonnes per annum would be presented to the board in November.
The centrepiece of the expansion will be the development of Fortescue's Solomon Hub project in the central Pilbara, expected to add 60mtpa starting in late 2012, as well as further upgrades of its existing Chichester Range operations.
"The feasibility study for the Solomon Hub has been released, but we are working on further refinement of all of those studies leading up to a board presentation in November on the way forward from 55mt to 155mt," Mr Meurs said.
"We are also continuing to look beyond 155mt with studies on Anketell Port and a new central Pilbara rail line under way."
Asked how Fortescue could start shipments from Solomon, which will require its own 150km rail spur to Fortescue's existing line, in just 18 months, Mr Meurs said he believed limited production could actually begin even sooner.
"We have a fully developed prjoject schedule for Solomon that allows us to get early production in 2012," he said.
"What we are in fact planning is to have some production to stockpiles before that using ... some mobile type plant ready for loading on a train as soon as the rail is completed.
"We won't have our complete facility finished (by) mid 2012 but we will certainly be ready to ship from early production and will be ramping up production very soon after that."
Mr Meurs said the development schedule for Solomon was actually less aggressive than Fortescue's original schedule for its flagship Cloud Break mine.
Fortescue's expansion schedule follows its sucessful refinancing of $2 billion in existing debt earlier this week that will cut its annual interest payments by over $50 million, and remove funding covenants that hindered further expansion.
Though it would not comment further on its immediate funding plans, it is rumoured to be considering a fresh bond raising of up to $6 billion to finance its expansion plans.
Today's briefing was scheduled to coincide with the release of Fortescue's September quarter report which revealed shipments had dipped nine per cent in the quarter but still beat its forecast for the period.
The company shipped 10.08mt of iron ore from its mines in the Pilbara region in the three months to September 30, down from 11.04mt in the June quarter.
"The quarterly result of 10.1mt of Fortescue shipped product was above guidance of 9.5mt and was achieved despite a number of scheduled maintenance shuts at the port and the mine's ore processing facility," Fortescue said.
The company mined 11.05mt in the September quarter, down three per cent from 11.39mt in the prior quarter.
It processed 9.7mt of ore, down seven per cent from 10.49mt in the three months to June 30.
"This was achieved notwithstanding an aggregate of seven and a half days down time during which the OPF (ore processing facility) team successfully completed two major scheduled maintenance shuts," Fortescue said.
Fortescue said its Chichester operation, comprising the Cloudbreak and Christams Creek mines, should continue to operate at a steady rate of about 40mtpa until the commissioning of a new OPF at Christmas Creek, scheduled to begin in February 2011.
Production will ramp up after that to the company's 55mtpa target.
Fortescue achieved a run rate of more than 50mtpa in September, the company said in its annual report released on Wednesday.
The average CFR (cost and freight) price received by Fortescue for the September quarter was about $US125 per dry tonne, the company said.
"During the period, Fortescue continued to diversify its customer base with three shipments made to new customers in Japan and Australia," the miner said.
"This follows the previous quarter where shipments were made to Korea and Europe."
