Fortescue to slow Iron Bridge development

The Iron Bridge magnetite project. Image: Fortescue Metals Group.

Fortescue Metals Group will continue limited project works on critical path items at the Iron Bridge magnetite project during the next 12 weeks following a review of the project’s finances.

The review indicated a revised preliminary capital estimate of $US3 billion ($3.8 billion), topping its original $US2.6 billion budget.

Further technical and commercial assessments are underway and are expected to be completed in 12 weeks.

The assessments will focus on magnetite concentrate transport solutions and return water pipelines to Port Hedland, enhanced use of port and rail infrastructure, contractor selection strategy and logistics for delivery of large components via Port Hedland.

Works that will continue during the 12-week review period include engineering, off site fabrication, procurement and site based civil works.

Yesterday, Fortescue announced that chief operating officer Greg Lilleyman, director projects Don Hyma and director Iron Bridge Manie McDonald would depart the company.

Derek Brown was appointed acting director projects and will lead a team comprising Andrew Hamilton (project director Iron Bridge), Corey Dennis (project director port, rail, pipelines and power) and Warren Harris (project director Iron Bridge ore processing facility and operational projects).

“The newly appointed Iron Bridge project team will draw on all of Fortescue’s DNA, world class expertise and our values as we challenge ourselves through innovative thinking and capital discipline,” chief executive officer Elizabeth Gaines said.

“The team will assess the pathway to underpin our revised forecast capital estimate, as well as the identification and mitigation of execution and scheduling risks through a comprehensive review of the project.”

The Iron Bridge blow was softened by Fortescue delivering a record half financial year performance, with shipments, earning and cashflow surpassing any half year in the company’s history.

Fortescue shipped 90.7 wet metric tonnes of iron ore during the period, up from 88.6 wet metric tonnes in the first half of the 2020 financial year.

This puts it well on track to meet its increased financial year guidance of 178 to 182 metric tonnes.

The company’s earnings before interest, taxes, depreciation and amoritisation (EBITDA) also increased by 57 per cent compared with the prior period to $US6.6 billion and its revenue of $US9.3 billion was 44 per cent higher than the first half of the 2020 financial year.

Fortescue attributes this to a 3 per cent rise in iron ore sold to 90.2 million tonnes.

“Fortescue’s performance for the first half of financial year 2021 has been outstanding,” Gaines said.

“Fortescue’s excellent operating performance and continued focus on capacity optimisation has supported an increase in financial year 2021 shipments guidance and against the backdrop of continued strength of the Australian dollar, we have revised our guidance for C1 costs (to $US13.50 to $US14 per wet metric tonne).”

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