Fortescue flags more delays at Iron Bridge, but hits fresh annual export records anyway
Over time and over budget, Fortescue’s Iron Bridge is finally into production – but won’t hit full export rates for some time.
Fortescue Metals Group is facing yet more delays at its Iron Bridge magnetite project, with the company pushing back the ramp-up to full production at the new mine as it said it hit a new export record last financial year.
Fortescue Metals chief executive Fiona Hick flagged the fresh delays at Iron Bridge on Thursday, as the company set a target to hit a fifth successive iron ore export record in the current financial year, after shipping 192 million tonnes out of the Pilbara in the 12 months to the end of June – the top end of its export guidance.
But Ms Hick flagged further delays to the full ramp-up of the 22 million tonne a year Iron Bridge project, saying Fortescue does not expect it to hit its full run rate until mid 2025.
Under the company’s original plans, announced in April 2019, the mine would already be exporting at full capacity, at a cost of about $US2.6bn. But Covid-19 interruptions helped push back its completion date and the cost has blown out to $US3.9bn.
Fortescue only shipped its first cargo of concentrate from Iron Bridge this month, and Ms Hick told analysts on Thursday the company now expects the ramp up to full production to take up to two years, up from earlier estimations of 18 months.
Fortescue blamed the delay in shipping its first product from the mine on the impact of Cyclone Isla and a defect in the construction of a water supply pond that required “remedial works”.
“The remedial works have now been completed, while commissioning activities continue in the dry circuit pipelines and concentrate handling facility at Port Hedland. Reflecting the updated commissioning schedule, the project is now anticipated to transition to operational production in mid August,” Ms Hick said.
The Fortescue Metals boss said the company expects to initially sell the concentrate, which aims for a grade of 67 per cent iron, as a stand-alone product rather than blending it to bring up the quality of Fortescue’s lower grade export ores – although Ms Hick said that remains an option for the company.
But aside from the ongoing troubles at Iron Bridge, the iron ore major delivered a strong year, saying on Thursday it had 48.9 million tonnes in the June quarter, for 192 million tonnes for the full financial year.
The company received an average $US94.74 a tonne for the fiscal year for its iron ore – about 86 per cent of the $US109.60 average benchmark price for ore grading 62 per cent iron.
Fortescue said its average cash costs came in below its $US18 to $US18.75 a tonne guidance, at $US17.54, with the company flagging average costs of $US18 to $US19 a tonne for the current year.
Fortescue now expects Iron Bridge to contribute about 7 million tonnes of iron ore in the current financial year, pushing the company’s total export target to 192 to 197 million tonnes.
The company also expects a minor contribution from its new mine in Gabon, where Fortescue is spending about $US200m to develop a small iron ore export operation as a prelude to the development of the broader Belinga deposit – formerly targeted for development by BHP and then a consortium of Chinese majors.
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