Australian iron ore producer Fortescue Metals Group (ASX:FMG) is going ahead with its plans to build a new $1.3 billion mine in the Pilbara region, which will lift the grade of its ores and so satisfy the new demands of its biggest customer, China, which is increasingly asking for higher quality ore for steel mills to help cut smog.
The world’s No. 4 iron ore miner said its Eliwana project, the first new mine announced by the company in several years, included developing 143 kilometres of railway and a new dry ore processing facility capable of processing 30 million tonnes annually. It also said it would will use the latest technology, including autonomous trucks.
Production at the mine, the first one Fortescue builds in its so-called Western Hub area, is expected to begin in December 2020. Eliwana is set to yield higher quality ore, closer to the benchmark of 62% iron content, helping the company keep an annual production rate of 170 million tonnes for over 20 years.
“This project allows us to commence the supply of Fortescue Premium product to the market from existing operations in the second half of FY19 with volumes increased as Eliwana ramps up to full production,” Chief Executive Elizabeth Gaines said in the statement.
The project, which will replace the almost depleted Firetail mine, is expected to employ up to 1,900 people during construction and 500 full-time positions once at full tilt.
After recording its largest gain in over a month on Thursday, the price for benchmark 62% iron ore fines followed up that move with an even larger decline on Friday and dropped again on Monday — though slightly (-$0.05/tonne) — to $63.89 according to the Metal Bulletin index.