Fortescue Metals Group has revised its cost estimate for the Iron Bridge joint venture (JV) in Western Australia with up to an additional $1 billion needed to complete the build.
First production at the 22-million-tonnes-per-annum magnetite project is now slated for December 2022 with a ramp-up to full production in 12-18 months.
Fortescue’s technical and commercial assessment of Iron Bridge, which commenced in February, has anticipated the project will cost between $US3.3 billion ($4.2 billion) and $US3.5 billion to build.
This has eclipsed the original $US2.6 billion and revised $US3 billion budgets, with setbacks in February leading to the resignation of Fortescue chief operating officer Greg Lilleyman, director projects Don Hyma and director Iron Bridge Manie McDonald.
Iron Bridge JV partners, Chinese steel giant Baowu and Formosa Steel are required to approve Fortescue’s revised cost estimate.
Formosa Steel owns a 31 per cent stake in Iron Bridge, while Baowu owns a 12 per cent stake in FMG Magnetite, a subsidy of FMG Iron Bridge which is owned by Fortescue.
Fortescue chief executive officer Elizabeth Gaines said Iron Bridge is an important asset for the company to meet iron ore demand, with a way forward for the project now in sight.
“Led by our highly experienced project team, completion of the technical and commercial assessment of the Iron Bridge project has confirmed the optimal transportation solution, while also addressing contractor and logistical constraints, managing capital costs and confirming first production by December 2022,” she said.
“Underpinned by Fortescue’s unparalleled track record and capability in safely developing and operating major iron ore projects, Iron Bridge is well positioned to meet market demand and deliver strong returns for the joint venture and our stakeholders.”
According to Fortescue, the JV has spent $US1.5 billion on the project as of April 30, 2021.