Fortescue Metals Group Has Kicked off The Federal Government Approval Process

Fortescue Metals Group has kicked off the federal government approval process for an ambitious multi billion dollar magnetite iron ore operation south of Port Hedland that it says can produce 15 million tonnes of product a year for 45 years.

The Perth based miner has filed its plans for the North Star magnetite project with the federal environment department, saying that it can potentially start construction next year and production in 2015. It has previously raised the prospect of a full sale, part sale or float of the project.

Fortescue, which is trying to sell assets to provide cash for its hematite iron ore expansions, has been talking up the potential to raise money from North Star for most of this year.

With the company focused on getting to its target of 155 million tonnes a year of annual hematite ore capacity as quickly as it can to reduce overall costs, any movement in the timetable proposed will need to involve partners or a sale.

Processed magnetite sells for higher prices than the more commonly mined hematite ore, but has much higher costs because of the heavy processing needed to concentrate it. The biggest planned magnetite operation in the country is Citic Pacific's disastrous Sino Iron project, being built on Clive Palmer's land 100 kilometer southwest of Karratha.

Meanwhile, that project is three years late and costs have ballooned from about USD 2.5 billion to USD 8 billion. There are plans to export about 24 million tonnes of magnetite a year. First exports are now slated for 2013, back from a target of early 2010 when the project was approved.