Fortescue Metals Group has officially awarded NRW Holdings a rail project contract first announced at the end of last year.
NRW will provide stage one earthworks, roadworks and drainage works for a rail line that will service Fortescue’s $US1.27 billion ($1.78 billion) Eliwana iron ore project in the Pilbara region of Western Australia.
The contractor will receive $62 million for the works, just shy of 9 per cent greater than the $57 million figure that was previously announced.
Fortescue approved the Eliwana project in 2018 and is scheduled to commence production at the site at the end of 2020.
The project is intended to support Fortescue’s introduction of its high-grade 60.1 per cent iron ore, branded by the company as West Pilbara Fines.
Fortescue delivered its first shipment of West Pilbara Fines — a mix of ore from the Cloudbreak and Firetail mines — to China in December last year, and expects to deliver a further 8-10 million tonnes of it in the 2019 financial year.
Eliwana is being developed to maintain the company’s minimum production rate of 170 million tonnes a year over 20 years, according to Fortescue chief executive Elizabeth Gaines.
The 60 per cent fines are expected to fulfil a perceived preference in the Chinese market for lower and mid-tier grade fines for steel manufacturing, as opposed to the more expensive 62 and 65 per cent fines.
The price of iron ore has surged in the last two weeks across the 58, 62 and 65 per cent fines categories on the back of Vale’s Brumadinho disaster that occurred on January 25 in Brazil.