Fortescue Metals Group (ASX: FMG), the world’s fourth-largest iron ore producer, raised the cost estimate for its Iron Bridge magnetite project to between $3.3 billion and $3.5 billion, the second time this year.
Initially, Iron Bridge was expected to cost $2.6 billion and, prior to this recent hike, its price tag had already risen to around $3 billion.
In February this year, Fortescue’s chief operating officer, Greg Lilleyman, and two other executives resigned following a review of the project that – according to Australian media – showed that its cost had blown out by as much as 25%.
Iron Bridge is located 145 kilometers south of Port Hedland in Western Australia’s Pilbara region. Project development started in 2019 and first production is planned for December 2022. Once it is completed and fully ramped up, it is expected to deliver 22mtpa of high-grade 67% Fe magnetite concentrate product.
The asset includes the North Star and Glacier Valley magnetite ore bodies. Its production, when combined with ore from the company’s Eliwana mine, is expected to increase Fortescue’s product grade and give it the option of delivering the majority of its products at greater than 60% iron, thus meeting China’s demand for high-grade ore.
The project will host a dry crushing and grinding circuit which, according to Fortescue, will deliver globally competitive capital intensity and operating costs.
Iron Bridge is an unincorporated joint venture between Fortescue’s subsidiary FMG Iron Bridge and Formosa Steel IB. Baosteel also has an interest in the project, as a minority shareholder of FMG Iron Bridge.