It is reported that the push to quickly ramp up iron ore production in Western Australia vast Pilbara region is very much a race between the nation three big iron ore miners Rio Tinto, BHP Billiton and Fortescue Metals Group.
The prize for faster expansion is longer access to windfall prices, which will probably fall as new supply emerges. Tonnes brought to market later will get lower prices.
Mr Nev Power CEO of Fortescue said "The sooner you can bring more volume into the market, the sooner you enjoy the high prices and high returns. He said that but every tonne that comes into the market will start to ease the supply bottleneck and therefore bring the price down."
Mr Power who took the chief executive job from Fortescue founder and major shareholder Andrew Forrest in July is continuing a strategy already in place when he joined. He said that "Our current strategy is very much about taking the opportunity of this strong demand out of China and responding to that with very rapid development and ramp-up of our projects.”
He added that "We recognize that these opportunities don't last forever and we recognize that the strong growth of China needs to be satisfied. Therefore the primary plank of our strategy has been to get in very quickly and meet that demand and to fuel that growth."
Fortescue has approved plans to triple its production to 155 million tonnes a year by June 2013 and if markets remain strong and it plans to move to 350 million tonnes four years after that.
Fortescue ambition to increase annual production capacity by 300 million tonnes in six years compares with BHP's plan to grow by 200 million tonnes to 350 million tonnes a year in eight years and Rio plan to add 100 million tonnes to 333 million tonnes in four years.