fmg keen to expedite nyidinghu

FMG keen to expedite Nyidinghu: FMG option exercise may come sooner than later...

Kate Emery, The West Australian
April 20, 2012,

Fortescue Metals Group has given the strongest indication yet it wants to fast-track development of its Nyidinghu project, adding more weight to suggestions it will pursue an outer harbour expansion at Port Hedland instead of a new port in the West Pilbara.

Flagging a potential first half of 2015 start-up date at Nyidinghu, Fortescue chief executive Nev Power conceded the two billion tonne deposit "has drawn our attention away somewhat" from its so-called western hub, development of which has long been talked about as a key plank to take it beyond 155 million tonnes a year.

Until last month, when Fortescue publicly raised the prospect of an outer harbour, its growth plan required a new port at Anketell Point to handle western hub ore. Nyidinghu is closer to Port Hedland.

Mr Power said Fortescue was considering two options for Nyidinghu: a 30mtpa to 45mtpa operation or a smaller start-up.

"We have flagged the development of the Nyidinghu deposit. I guess as our work continues there. We continue to be impressed at how that resource and project is stacking up," Mr Power told reporters yesterday as the miner took the wrappers off its March-quarter production figures.

"So we're currently looking at all options around mining infrastructure options and development and production rates for that.

"And yes it has drawn our attention away somewhat from the western hub because we think it would be a lower cost infrastructure solution at Nyidinghu. It does all depend on port capacity, so there's still a lot of work to do to work out what the options are there."

Pressed for details on what a Fortescue-built outer harbour could look like Mr Power suggested it would not be near the scale of what its much bigger rival BHP Billiton is considering, the cost of which analysts say could top $20 billion.

"We're looking at a number of different options at the outer harbour, which might include some relatively low production options, so it would not necessarily have to be a significant increment of, say, 100 million tonnes (a year) or so," he said.

"So we are looking at a number of options which would allow us to export smaller amounts of tonnage through the outer harbour."

Fortescue shares were 1.5 per cent higher yesterday as its March quarterly production figures revealed a 16 per cent dip in tonnes shipped from the December quarter to 12.6mt, thanks largely to the cyclones that also trimmed Pilbara production for BHP and Rio Tinto. Fortescue closed 9¢ up at $6.02.

Despite the weak quarter, Fortescue is sticking to its full-year target of 55mt, 1.5mt of which will be third-party ore, saying it would make up the lost shipments this quarter.

Costs were also higher, up from $US46.4/t to $US52.6/t, which Fortescue attributed to lower shipped volumes, the exchange rate and a slightly higher strip ratio.