PERTH (miningweekly.com) – Iron-ore miner Fortescue Metals has pushed back first production from its Iron Bridge magnetite mine, in the Pilbara, to the second half of 2022, confirming cost blow-outs on Thursday.
The miner said that a review into the Iron Bridge mine had upwardly revised the capital cost of the project from $2.6-billion to $3-billion, with first production now expected in the second half of 2022, as opposed to the first half.
A technical and commercial assessment of the project is under way, and is scheduled to take some 12 weeks to complete, Fortescue told shareholders.
The assessment would focus on enhancing the use of Fortescue’s port and rail infrastructure for the project, assessing the magnetite concentrate transportation solution and return water pipelines to Port Hedland, contractor strategy and selection, and the logistics infrastructure to maintain the scheduled delivery of the large modular components through Port Hedland.
While this assessment is under way, limited project works on critical path items will continue, including engineering, off-site fabrication, procurement activities and site-based civil works.
“Iron Bridge represents a strategic investment which enables Fortescue to deliver a full portfolio of products to the market, generating growth in earnings and cashflow, and resulting in enhanced returns for our shareholders and joint venture (JV) partners through all market cycles. The outcome of the technical and commercial assessment will be subject to the approval of the JV partners,” said CEO Elizabeth Gaines.
Fortescue earlier this week announced the immediate resignation of COO Greg Lilleyman, director of projects Don Hyma, and director of Iron Bridge, Mani McDonald, in relation to the cost blow-outs at Iron Bridge.
Gaines said that the newly appointed Iron Bridge team would assess the pathway to underpin the revised forecast capital estimate, as well as the identification and mitigation of execution and scheduling risks through a comprehensive review of the project.
Fortescue on Thursday reported record shipments, earnings and operating cashflow for the half year ended December, with revenues increasing 44% to $9.3-billion and underlying net profit after tax increased by 66%, to $4.08-billion.