Fortescue inks $1.4 billion deal with Leighton to boost iron ore output
Australian iron ore stalwart Fortescue Metals (ASX:FMG) has signed an AUD$1.4 billion deal with Leighton Contractors which is set to raise iron ore output to 115 million tonnes by early 2013.
Under the freshly inked agreement Leighton will manage Fortescue's Firetail iron ore deposit in the Pilbara and be responsible for the open cut mining fleet and plant infrastructure.
The Herald Sun reports the Leighton will run mining operations at Firetail over the next five years in exchange for the $1.4 billion consideration, and that the site is expected to have an annual production capacity of 20 million tonnes of iron ore per year.
The move is a surprise given the recent slump in spot prices which have afflicted Fortescue worst amongst major listed iron ore players in Australia.
Chairman Andrew "Twiggy" Forrest recently raised his stake in Fortescue by $39 million in order to ease sharp share price declines, while the company's exorbitant debt burden compelled it to request suspension from trading two weeks ago.
Fortescue edged lower less than half a percent in midday trading on Wednesday.