FMG iron ore train, 2008FMG iron ore train on Turner River, 2008
Fortescue Metals Group (ASX: FMG) is an Australianiron ore company. Fortescue is the fourth largest Iron ore producer in the world as of March 2011. The company has holdings of more than 87,000 km² in the Pilbara region of Western Australia making it the largest tenement holder in the state,[2] larger than both BHP Billiton and Rio Tinto.[3]
Mining projects
The group has two main areas of operation in the Pilbara region of Western Australia; the Chichester Hub and Solomon Hub, with plans for the third Western Hub being developed.
Chichester Hub
Located in the heart of the Pilbara, the Chichester Hub is made up of Fortescue’s flagship minesite Cloudbreak and the second minesite Christmas Creek. Together, the two minesites currently produce 55 million tonnes per annum and will ramp up to a combined 155 million tonnes per annum when the planned expansion is completed.
Cloudbreak
Fortescue’s first minesite Cloudbreak currently mines and processes over 110,000 tonnes each day. The horizontal nature of the deposits at Cloudbreak called for a new mining approach to those used at other mines which operate on vertical deposits of ore. Overburden removal is done using conventional blast, truck and shovel methods while specially designed surface miners cut and load the ore into trucks for transport to the run of mine stockpiles.
Screening, crushing and desand plants at the Cloudbreak ore processing facility prepare and refine the product before the ore is stockpiled ahead of transport to port. The train loadout facility at Cloudbreak is capable of feeding 16,000 tonnes of ore per hour on the 2.7 kilometre long trains ready for the journey along the 256 kilometre heavy haul railway to the facilities at Herb Elliott Port.
Christmas Creek
Mining began at Christmas Creek, 50 kilometres (31 mi)* to the east of Cloudbreak, in May 2009. Currently more than two million tonnes of ore is mined at Christmas Creek each quarter and trucked to Cloudbreak for processing.
The operations at Christmas Creek are undergoing expansion and in late 2010 a 50 kilometres (31 mi)* extension to the existing Port Hedland to Cloudbreak rail line was completed to transport the ore to Cloudbreak.
A new ore processing facility was also constructed at Christmas Creek with wet commissioning scheduled for March 2011. Work is also underway on construction of a 800 bed permanent operations village to house the growing Christmas Creek workforce.
Solomon Hub
Centrally located in the middle of Fortescue’s 87,000km² Pilbara tenement area, the Solomon Hub is Fortescue's next major project. It has almost twice the resource and less than half the strip ratio of the Chichester Hub. Fortescue’s Exploration team has already delineated more than 2.86 billion tonnes of resource at the Solomon Hub and there are identified exploration prospects targeting up to five billion tonnes. A detailed feasibility study outlining plans for the Solomon Hub will be delivered late 2011. Developing the Solomon Hub is part of Fortescue's plan to reach a target of 155 million tonnes per annum (mtpa) in 2013 and the "Three Hubs, Two Ports" strategy involving building the new Anketell Port.[4]
BC Iron
BC Iron is a much smaller mining company with iron ore deposits at Nullagine. The two companies have created a "mine gate" joint venture in which Fortescue will take BC's iron by rail to port in exchange for 50% of the deposit. [5]
Infrastructure
Map showing route of the Fortescue railway
The company has built a mine, a 260 kilometres (162 mi)*private railway and a new port at Point Anderson (aka Herb Elliott port)[citation needed] near Port Hedland. The Fortescue rail line has a flyover over the Mt Newman Railway, and a crossing of the BHP Billiton railway. The "first ore on ship" on the line occurred in May 2008, 3.5 years after construction started.[6]
The railway's 220-wagon iron ore trains are amongst the heaviest trains in the world,[6] The 1,435 mm (4 ft 8+1⁄2 in) (standard gauge) heavy haul railway is used by 35,200-tonne (34,644-long-ton; 38,801-short-ton) trains up to 2.5 kilometres (1.6 mi) long carrying 29,000 tonnes (28,542 long tons; 31,967 short tons) of ore at 40-tonne (39-long-ton; 44-short-ton) axleload (the weight of the two 4,000-horsepower (3.0 MW) engines is extra). The railway is available to other miners for a fee. Atlas Exports has signed a commercial agreement to use the line and port.[6]
The railway parallels another iron ore railway, the BHP Billiton railway, for over 100 kilometres (62 mi). Fortescue had sought access to use this line, but BHP declined.[7] The matter remains in litigation. [citation needed]
In 2010, the company deployed the planning and management systems of SolveIT Software to control their production systems, including distribution.[8]
Controversy
Opposition to Solmon Hub mining lease
FMG lodged applications for three mining leases in the Solomon Hub area in 2008, and began negotiations with the native title holders through the Yindjibarndi Aboriginal Corporation (YAC). Negotiations broke down and the YAC lodged its opposition to the grant of the three licenses to the Native Title Tribunal in 2009, initially failing to win orders preventing the grant of the licenses. The YAC also failed in its initial Federal Court appeal of that decision last year, and the State Government issued the mining licenses to FMG in late November 2010. Both FMG and the YAC are now waiting on the results of a new appeal to the Full Bench of the Federal Court.
[9][10] The company estimated the extraction of 2.4bn tons of ore over the next 40 years, worth $280bn, offering less than a deal struck by Rio Tinto that would provide $2bn over 40 years.[11]
On 8 April 2011, Slater & Gordon, representing the Yindjibarndi Aboriginal Corporation in its negotiations with FMG, requested FMG compensate the Yindjibarndi community. In March 2011, FMG was accused of supporting a break-off group[12][13] to divide the local Yindjibarndi community during negotiations for access to traditional Yinjibarndi land for the planned $8.5 billion Solomon Hub project, in the Pilbara region. While the law firm admitted FMG has put compensation money up, it was insufficient in comparison with the profits that will be made from this mine on the client's traditional land, as well as the royalty (tax) amounts that have been paid to non-Aboriginal people.[14]
Misleading and deceptive conduct
Although an initial ruling in 2009 found FMG hadn't acted in a misleading or deceptive manner,[15] the Federal Court of Australia overturned this decision in 2011, finding that FMG and its Chairman and CEO, Andrew Forrest, had engaged in misleading or deceptive conduct and breached the continuous disclosure provisions in the Commonwealth Corporations Act 2001,[16] by claiming to have binding contracts with China.[17] The court found that a Chinese framework agreement does not amount to a binding contract, in the natural meaning of the word.[18] Fortescue is appealing against the decision.[19]
Despite the early announcement, in 2008, the group loaded its first iron ore shipment bound for China. Fortescue have at least 10 Chinese steel mill contracts lasting for around 10 years. Baosteel was the first company to receive their iron ore.[20]
