fortescue expansion plans to cost $6.2b

Fortescue expansion plans to cost $6.2b
AAP
2010-03-12
Iron ore producer Fortescue Metals Group Ltd has increased the production target at its planned third mine and put a $US5.7 billion ($A6.24 billion) price tag on a two-stage operation.

The company was initially targeting a 60 million tonne per annum (Mtpa) operation, at Solomon in Western Australia's Pilbara region, expanding to 100Mtpa thereafter.

But in a presentation to an investment forum on Friday, it flagged an expansion to 160Mtpa after a 60Mtpa first stage.

Capital expenditure for both stages is expected to comprise $US3.6 billion ($A3.94 billion) in port facilities, $US1.17 billion ($A1.28 billion) in rail facilities and $US900 million ($A984.5 million) in mine development costs.

Fortescue also indicated it envisaged a third rail hub, dubbed the `Western Hub', which would take in the company's planned magnetite mining operations to the proposed new Anketell Point port south west of Port Hedland.

Fortescue and coal and iron ore miner Aquila Resources Ltd are driving plans for the new port, just 10km from a major Rio Tinto Ltd export facility.

The state government gave the port proposal the nod last week and offered to contribute $3.5 million for its construction, which is expected to cost several billion dollars.

Fortescue executive director Russell Scrimshaw said last week the miner would consider building a railway line to Anketell Point if it did not succeed in gaining access to an existing rail network in the region owned by Rio Tinto.

Shares in Fortescue were one cent higher at $4.93 at 1342 AEDT.