Fortescue to invest $8.4 billion on Pilbara ore expansion
19 Nov 2010
Fortescue Metals Group, Australia's third-biggest iron ore producer has approved plans of spending $8.4 billion on its Pilbara iron ore operations that will see the miner almost triple its iron ore output.
Perth-based Fortescue said that it will spend $4.6 billion on improving and expanding port and rail facilities by constructing 550 kilometers of railroad and expanding port facilities at Port Hedland, and it will spend around $3.8 billion to increase production at its Chichester mine and open up new mines at its Solomon site.
The investment will nearly triple its iron ore production capacity from 55 million tonnes to 155 million tonnes a year by mid 2014.
Led by one of Australia's richest men, Andrew Forrest, Fortescue Metals Group said in a statement that the investment would be funded through one or more new bank or bond debt facilities, cash on hand and cash flow from operations, with the mix depending on market factors including iron ore price.
"I would anticipate that we would take on an additional $4 billion of debt to see us fund the expansion," said Stephen Pearce, chief financial officer of Fortescue.
The expansion is likely to cost the iron ore miner around $84 per annual tonne, which is lower that what Rio Tinto, the biggest producer of iron in the Pilbara recent estimates of $130 a tonne being the norm.