Sydney — Australian iron ore miner Fortescue Metals Group reiterated Wednesday it was pinning its hopes of increasing the grade of the majority of its products to more than 60%-Fe on the development of its Eliwana mine.
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Newly appointed CEO Elizabeth Gains reiterated the company's target of increasing its ore grade, which it announced last November, was linked to the replacement of its Solomon Hub Firetail operation.
"We are in the final feasibility around Eliwana in the Western Hub as the replacement for Firetail," Gains, who replaced Nev Power as CEO, said.
"So, as we work through that, that provides us with the option to consider how we achieve that target of greater than 60%-Fe," she added.
The majority of FMG's current exports are 55%-Fe and 58%-Fe products.
The company is expected to make a decision on Eliwana by June and anticipates the construction time frame for the mine in the Pilbara region of Western Australia spanning the fiscal years 2018-19 and 2019-20 (July-June), she said.
Planning documents published by the state of Western Australia's Environmental Projection Authority last July showed Eliwana's average production rate was estimated at 30 million mt/year, but infrastructure will be built to reflect peaks in the annual rate of up to 50 million mt/year, for an estimated mine life of 24 years.
FMG Wednesday posted a net profit after tax for July-December 2017 of $681 million, down 44% year on year.
"Revenue of $3,679 million decreased by 18% as high steel mill profitability incentivised blast furnaces to maximise production by user higher iron content ores," the company said in a half year report.
FMG director of operations Greg Lilleyman said Wednesday: "I can't believe that the steel mill profitability will stay so high in the long term. On the back of the Chinese winter restrictions, as they come off, I do expect there will be a return to the high value-in-use ores.
"Our focus is on overall chasing margins through improving our C1 costs, number one, and making sure we're matching the market. We're looking at those changes to product strategy into the future that will see us be resilient throughout no matter what the cycle is," he added.
FMG in late January said it shipped 40.5 million wet mt of iron ore over October-December 2017, down 4% year on year and down 8% from the September quarter. However, it said production guidance of 170 million wmt for the July 2017-June 2018 fiscal year remained unchanged.