Iron ore price hits five-week low as traders fret about Chinese demand
Iron ore has slumped 29% this year, hurt by the prolonged slowdown of China’s economy.
Fortescue Metals Group (ASX: FMG), the world’s no. 4 iron ore miner, has achieved first production at its $3.9 billion Iron Bridge Magnetite operation in Pilbara, Western Australia, 20 years after the project was first conceived.
Considered key to Fortescue’s growth strategy, Iron Bridge faced several challenges over the years, including the exit of its chief operating officer Greg Lilleyman and two other executives due to delays and cost overruns in 2021.
The company had said in January the project would begin production at the end of the March quarter, but revised it later to the second half of April.
Iron Bridge finally achieved first magnetite production on Monday, delivering a 68% iron grade over a target of 67%, a year later than planned and at $1.3 billion over the original budget.
The wet concentrate has been transported from the mine through 135km slurry pipeline to Port Hedland. There it will be dewatered, transforming it into a high-grade magnetite product ready for shipping.
Magnetite projects are typically lengthy and complicated, sometimes failing to meet a certain grade, but the founder and largest shareholder of Fortescue Andrew Forrest said the end result was worth the wait.
“Iron Bridge will lead the way for a successful magnetite industry in Western Australia and is a game changer for not only Fortescue, but the wider iron ore industry,” he said in a statement.
Chief executive officer Fiona Hick noted that construction of the mine was complex particularly due the added challenges resulting from covid-19 border closures.
Iron Bridge marks Fortescue’s entry into the highest grade segment of the iron ore market, increases product range and boosts annual production and shipping capacity, the company said.
The miner believes the operation’s high-iron-content magnetite is set to fetch premium prices and help reduce carbon emissions in Chinese steelmaking.
Iron Bridge will produce 22 million tonnes per annum of high-grade magnetite concentrate, suitable for steel making.
The use of magnetite in steelmaking makes the end product have a lower overall carbon emissions than alternatives.
