fmg shipments

FORTESCUE Metals is trumpeting the delivery of its first trainload of iron ore from the Pilbara to port, but has yet to reach the crucial milestone of loading a ship.

Chief executive Andrew Forrest said yesterday that the loading of ore at the company's Hunter rail siding, about 80km from its mine at Cloudbreak, was "highly significant".

"It is the planned access point for other users as an open access siding, and the point where the proposed spur line out to Fortescue's large Solomon deposit will branch off its main line," he said.

However, with the rail line still 10km short of the mine itself, the ore needed to be transported to the siding by truck before being loaded on to the train. The rail line is expected to be completed later this week.

From the siding, the ore made a 185km rail journey to Fortescue's newly dubbed Herb Elliot Port, named after the company's chairman, who last week lost about $20 million in Fortescue stock that he was understood to have lodged with collapsed broker Opes Prime as collateral on a loan.

Once at port, the ore was unloaded into stockpile areas to provide a base for future deliveries, so that reclaiming systems used to pick the ore up for loading on to ships did not pick up underlying soil.

However, it will be at least a month before Fortescue loads its first ore on to ships for export as the commissioning of the port infrastructure is also yet to be completed.

While Fortescue said the delivery was a successful test of its train unloading and stockpiling systems, it had yet to "wet commission" its ship-loading equipment.

The ship loader, built in China by Thyssen Krupp to an Australian design, was delivered in January, after which Fortescue called in an engineering firm to look it over.

The company is believed to have been dissatisfied with the original assessment and argued that the review was not sufficiently independent of Thyssen Krupp, ordering a second assessment in mid-March. The second review also cleared the loader for use, and Mr Forrest said yesterday that the company remained on track to have its first ore loaded on to a ship in mid-May.

"This is the first and vital step to commissioning the entire operation. It is the major step towards achieving first ore on ship, production ramp-up and overall project completion," he said.

"The operational commencement of Fortescue's rail and port heralds the opening up of Australia's, and one of the world's, richest mineral provinces and is a milestone achievement for the Pilbara and Australia."

A successful delivery of ore on a ship by Fortescue would mark the end of Pilbara iron ore production duopoly currently enjoyed by BHP Billiton and Rio Tinto.

"In so doing it will assist the growth of the Chinese, Indian and broader Asian region economies through their critical steel industries," Mr Forrest said.

Iron ore prices are expected to rise by more than 70 per cent this year, as Chinese demand continues to surge.