In an effort to further beef up its Western Australian operations, Fortescue has approved the development of the Queens Valley mining area.
Further beefing up its iron ore operations in Western Australia’s Pilbara region is Fortescue Metals Group (ASX:FMG,OTCQX:FSUGY), which approved the development of the Queens Valley mining area on Tuesday (May 22).
Queens Valley will be part of the company’s pre-existing Solomon hub, which currently includes the Firetail and Kings Valley mines; the two mines have a cumulative production capacity of 70 million tonnes per year. The addition and development of Queens Valley will see the continued production of Fortescue’s low-alumina Kings Fines product.
“Fortescue’s integrated operations and marketing strategy defines a product portfolio that maximizes value from the Fortescue orebodies over the long term, ensuring the continued delivery of returns to shareholders,” Fortescue CEO Elizabeth Gaines said in a statement.
“The Queens mining area development will maintain our highly valued Kings Fines low-alumina sinter fines product, which supplies Fortescue’s key customers in China as well as in Japan and Korea.”
The new development is expected to have a 10 to 15 year lifespan and is set to cost Fortescue US$287 million in total capital expenditure. Payment is currently spread out over a four year plan, which is docketed to see Fortescue spend US$10 million in the 2019 financial year (FY19), US$151 million in FY20, US$98 million in FY21 and US$28 million in FY22.
Construction at Queens Valley is set to include a hydraulic barrier wall, which the company says will be in accordance with environmental approvals. Additionally, mobile maintenance facilities from Solomon will be moved closer to the new operation to lower operating costs and minimize travel distances.
According to Fortescue, environmental and heritage approvals are already in place to begin development at Queens Valley.
The move comes less than two months after the company approved the second stage of its Iron Bridge magnetite project, also located in Western Australia; it came with a US$2.6 billion price tag. The asset is said to host Australia’s largest JORC-compliant magnetite resource, with the project being expected to produce 22 million wet metric tonnes annually upon reaching full operational capacity.
Despite the development news, Fortescue’s share price closed in the red on Tuesday, ending the day of trading on the ASX down 8.11 percent at AU$8.27.
As of 3:29 a.m. EDT on Tuesday, iron ore was down 0.8 percent and trading at US$95.79 per tonne.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.