Company has blamed inflation, foreign currency exchange rates, and labour constraints for the increased project cost
The Iron Bridge project is located in the Pilbara region. (Credit: Fortescue)
Fortescue Metals Group has revised the cost estimate of the Iron Bridge project in Western Australia in the range of $3.3bn and $3.5bn.
The first production from the magnetite project located in the Pilbara region is expected to be achieved by December 2022. The revised estimate and production schedule have been announced by the company following the completion of a technical and commercial assessment that was launched in February 2021.
This is the second time that Fortescue Metals has increased the project’s estimated capital. In February, it was increased from the original estimate of $2.6bn to $3bn.
The company has blamed the increase in the cost estimate on inflation, foreign currency exchange rates, and labour constraints.
The Iron Bridge magnetite project is owned by a joint venture between FMG Magnetite (69%) and Formosa Steel IB (31%).
FMG Magnetite is a subsidiary of FMG Iron Bridge, which is owned by Fortescue Metals (88%) and Baosteel Resources International (12%).
FMG Iron Bridge’s share in the project investment under the revised estimate is $2.5bn-$2.7bn. The revised estimate is subject to Iron Bridge joint venture approval, said Fortescue Metals.
Fortescue Metals CEO Elizabeth Gaines said: “Iron Bridge represents a strategic investment with compelling returns for Fortescue and the Joint Venture. It further enhances our range of products through our integrated operations and marketing strategy and increases our overall production and shipping capacity to meet strong demand from customers.
“The iron ore market fundamentals support the investment in the Iron Bridge project, and we anticipate strong demand for this high value-in-use product, which will attract a premium to the Platts 65% Fe CFR Index.”
The Iron Bridge magnetite project includes a 22 million tonnes per annum (mtpa) ore processing facility, the 195km Canning Basin water pipeline, a 135km concentrate pipeline to Port Hedland and return water pipeline, and others.
The project has seen an expenditure of $1.5bn incurred till 30 April 2021 ever since its investment decision was taken in April 2019.