With FMS having an Opex of $35/tonne FOB we would look very...

With FMS having an Opex of $35/tonne FOB we would look very attractive to RIO.

Below is an article of interest. This part is a big positive for FMS:

"a 40 megawatt open-cycle gas turbine will be built at the existing Yurralyi Maya Power Station near Dampier."

http://www.theage.com.au/business/rio-plans-nobrainer-50-per-cent-pilbara-expansion-20110915-1kbuh.html

Barry Fitzgerald
September 16, 2011

Rio is the cheapest of the Pilbara iron producers with full costs of less than $US40 a tonne.

RIO Tinto is to plough $US833 million ($A812 million) into power and fuel supply projects in support of a 50 per cent expansion by 2015 of its highly lucrative Pilbara iron ore business in Western Australia.

The commitment was something of a ''no brainer'' given that iron ore has largely been immune from the sell-off in other commodities in response to slowing global economic growth.

The continued price strength of iron ore is delivering Rio record profit margins from its Pilbara iron ore operations.

Under continued strong demand from China and India, iron ore has continued to hold at levels of $US175 a tonne. Rio is the cheapest of the Pilbara iron producers with full costs of less than $US40 a tonne.

Rio is the Pilbara leader with current installed capacity of 225 million tonnes a year. The power and fuel support projects announced yesterday are part of the previously announced push to get to annual capacity of 283 million tonnes by 2013.

The fuel infrastructure project - it has been priced at $US313 million from the total $US833 million budget - is particularly important in supporting the next expansion to 333 million tonnes from 2015.

Rio and its junior partners in the Pilbara plan to spend US$520 million (Rio Tinto share $US417 million) upgrading the integrated power and gas network so it can deliver an additional 120 megawatts.

Two 40 megawatt open-cycle gas turbines will be installed as part of a new power station near the West Angelas mine site and a 40 megawatt open-cycle gas turbine will be built at the existing Yurralyi Maya Power Station near Dampier.

While most analysts are forecasting iron ore prices will retreat to $US80-$90 a tonne by 2015 as global supplies catch up with demand, Australian exports of the key steelmaking raw material are expected to remain strong due to the volume growth planned by Rio, BHP and others.