Twiggys iron ore export dream closer

Twiggys iron ore export dream closer

It’s taken almost four years and $3 billion, but Australia’s wealthiest individual Andrew “Twiggy” Forrest is about to turn his iron ore dream into reality.

The first commercial export shipment of his Fortescue Metals Group Ltd is due to commence loading on Thursday at Port Hedland in Western Australia’s remote Pilbara region.

The iron ore is from Fortescue’s Pilbara project – namely from its Cloud Break mine about 260km east of Port Hedland.

The company’s first official shipment, of 170,000 tonnes, will use offtake partner Baosteel’s MV Hengshan to transport the $11 million load to iron ore-hungry mills in China.

But the company says it is making a `test run’ iron ore shipment that will leave Port Hedland as early as midnight Tuesday aboard the 70,000-tonne Blumenau bulk carrier.

A second commissioning shipment – another 70,000-tonne Panamax vessel, the Nord Navigator – will immediately replace the Blumenau at the berth and is expected to set sail this week.

That shipment is bound for the port city of Qingdao in China’s Shandong Province.

Fortescue has been transformed under Mr Forrest’s stewardship from a junior explorer into $26 billion iron ore producer that aims to become a world class exporter of the sought-after bulk commodity.

Fortescue chief operating officer Graeme Rowley told AAP on Monday that the first commercial shipment would arrive in China no later than May 31.

He said both commissioning shipments had been bought at “commercial prices” by an as yet unnamed Chinese customer.

Mr Rowley said Fortescue memorandums of understanding (MoUs) with smaller Pilbara iron ore miners Atlas Iron Ltd and BC Iron Ltd to use Fortescue’s facilities at Port Hedland would soon be turned into binding agreements.

Atlas Iron is the only other Australian iron ore miner scheduled to commence exports this year.

BC Iron is not as advanced and is conducting a scoping study to examine a potential start-up operation in the Pilbara.

“The port itself (Port Hedland) has options through the new public berth that is being constructed right next to ours.

“It will be not too difficult an issue to have our rail used and leave our rail at the port end to deposit the product at the public port,” Mr Rowley said.

“These are various things that will have to be resolved as time progresses but the fundamentals are there.”

Mr Rowley said Fortescue had been in “relatively close discussions” with Atlas Iron, which had the option to haul its ore by road, given the closeness of its Pardoo direct shipping ore operation to major highways and Port Hedland.

“We’re looking to ship out in October and we’re expecting that to be advanced pretty quickly,” Atlas Iron managing director David Flanagan told AAP.

“We have received commercial terms from them (Fortescue) and have provided feedback on those commercial terms, and we’re awaiting a response from them at the moment.”

Atlas Iron and BC Iron recently threw their weight behind a new lobby group, the North West Iron Ore Alliance, which is pressing mining giants BHP Billiton Ltd and Rio Tinto Ltd to share their Pilbara rail lines.

Mr Flanagan said the Association of Mining & Exploration Companies also supported the lobby group.

“No-one has actually picked up the fact there are now over 100 companies involved in this,” he said.

The lobby group is also calling on the WA government to build new infrastructure in the Pilbara.

The WA government last week pledged to spend $155 million on construction at Port Hedland’s multi-user Panamax berth, noting that tonnage at the port is expected to increase by 133 per cent in the next five years.

Fortescue closed down 13 cents to $9.40, while Atlas Iron’s shares closed down five cents to $3.95 and BC Iron’s shares finished 8.5 cents weaker at $1.50.

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