Nimble FMG puts pressure on larger rivals in iron ore race

Tuesday, 25 Oct 2011

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.

sourced TheAustralian

Australian iron ore production and export to surge by 2012

Monday,4July,2011

Reuters reported that iron ore production in Australia, the world largest exporter of the steelmaking raw material is rising rapidly to keep pace with projected increases in China led demand.

According to government trade data iron ore exports should rise 3% to 414 million tonnes this year before climbing to 459 million tonnes in 2012.

Below is a list of production schedules for the country major suppliers driving future output?

1. Rio Tinto
Rio Tinto is targeting an increase in production to 333 million tonnes a year by the first half of 2015 from around 230 million tonnes currently.

2. BHP Billiton
BHP mines about 155 million tonnes of iron ore a year and is developing new mines and port facilities to lift output to 240 million tonnes in 2015.

3. Forescue Metals Group
Production is scheduled to rise to 155 million tonnes a year by June 2013 from 55 million tonnes currently.

4. Cliffs Natural Resources
The company's Cockatoo Island project resumed production in the third quarter of 2010 following construction of a seawall and is forecast to produce 700,000 tonnes through 2012.

5. Mount Gibson
The company Tallering Peak mine is operating at a production rate of 3 million tonnes per year. A second deposit, Koolan Island is ramping up to a rate of 4 million tonnes a year by December 2011 from 3 million tonnes currently.

6. Murchison Metals
Production of up to 25 million tonnes per year is being targeted from the Jack Hills mine to coincide with the commissioning of a new 560 kilometers rail line to a new port at Oakajee. Development of the port has been delayed by at least three years to 2015.

Murchison is a 50% shareholder in Crosslands Resources Ltd which is the owner of the Jack Hills mine. The remaining 50% of Crosslands is held by a subsidiary of Mitsubishi Corp.

7. Sinosteel
The company Koolanooka/Blue Hills project commenced operations in early 2010 at a production rate of about 1.5 million tonnes a year and is scheduled to run for five years. Sinosteel has suspended development work on its 15 million tonnes per year Weld Range mine pending a definitive time schedule for construction of the Oakajee port and rail project.

8. Atlas Iron
The current production rate of 7 million tonnes per year from Atlas' Wodgina mine is scheduled to rise to 12 million tonnes in 2013 and 22 million tonnes in 2015.

9. Gindalbie Metals
The Karara Project is scheduled to yield 3 million tonnes of hematite ore from mid 2011 and 8 million tonnes annually of magnetite concentrates from late 2011.

10. BC Iron
The firm's Nullagine deposit is forecast to yield 300,000 tonnes of iron ore in the half year to June 30 with full year output estimated at 2.3 million tonnes. Total product shipped for the year ending December 2011 is expected to be approximately 2.3 million tonnes rising to 3.5 million tonnes to 3.7 million tonnes in 2012.

11. Grange Resources
The company Savage River mine project is yielding 2 million tonnes of iron ore annually with potential to increase output to 2.6 million tonnes during its remaining 16 year mine life.

(Sourced from Reuters)

Territory Resources profit slides on wet weather

Thursday, 03 Mar 2011

Australian iron ore producer Territory Resources Limited has delivered a solid H1 earnings performance, today announcing a AUD 9.93 million net profit after tax for the first half despite the impact of a particularly severe wet season in northern Australia on its production.

The result, which compares with the AUD 13.67 million net profit earned in the previous corresponding period, reflects strong iron ore sales prior to the commencement of the wet season, underpinned by continued buoyant iron ore spot prices.

The first half profit was struck on sales revenue of AUD 88.54 million (1H FY10: AUD 82.0 million) based on the production of 860,396 tonnes (1H FY 10: 1.066 million tonnes) of high grade lump and fines ore from Territory’s 100%-owned Frances Creek iron ore operation in the Northern Territory. Territory completed 12 shipments of iron ore to China during the period and continues to maintain its fully sold position through its strong association with Noble Resources Ltd (“Noble”) in Hong Kong, with ore production sourced from the Thelma Rosemary, Ochre Hill, Jasmine, Helene 6/7 and the newly opened Helene 3 and Helene 5 pits.

The strong cash generation of the operation underpinned a gross profit of $17.5 million for the first half (1H FY 10: AUD 11.2 million). The bottom line profit translated to earnings per share of 3.8 cents (1H FY 10: 5.2 cents).

The net earnings of the Company for the period have been applied to the repayment of the Noble debt, which had been reduced to USD 20.9 million as at December 31st 2010.

Commenting on the interim result, Mr Andy Haslam MD of Territory said that financial performance was a creditable achievement in what had been an exceptionally rain-affected period. He said that “This is a very pleasing result, reflecting a nimble operating approach at Frances Creek. Territory introduced a modified shipping program in late 2010, including lower-specification shipments, to maintain a consistent shipping performance during the start of the wet season and this has enabled us to deliver a solid financial result despite the heavy rains.”

He added that “We are pleased we were able to start the first half positively, as this has been a particularly big wet season. The rain that hit Queensland and the Northern Territory generated extremely difficult operating conditions which impacted our production and rail capabilities from late 2010. Consequently, we do not expect the second half results to be as strong as the first half.”

Tags : Iron ore spot prices, raw material, steel mills,

BC Iron sends first Nullagine iron-ore shipment to China

Feb24, 2011
By Esmarie Swanepoel

PERTH (MiningWeekly)− ASX-listed BC Iron on Thursday joined the ranks of Australian iron-ore producers and exporters when it loaded 20 000 t of iron-ore from the Nullagine joint venture (JV) onto a ship in Port Hedland, for export to China.

The overland transport of the Nullagine iron-ore to port on partner Fortescue Metal’s rail line, marked the first time in Pilbara history that a junior miner had been able to transport iron-ore on a third party’s rail infrastructure.

“This loading today marks the newfound ability by smaller mining companies to use third-party rail and port access to develop otherwise stranded assets into revenue generators and job creators for the Australian economy,” said Fortescue Metals CEO Andrew Forrest.

BC Iron MD Mike Young said that the first ore ship from the Nullagine JV represented not only a significant milestone for the JV and its respective stakeholders, but also a wider significance to the iron-ore industry in the Pilbara region.

“First and foremost, we are pleased and excited that BC Iron has successfully transitioned from an explorer to producer, and we would like to acknowledge everyone that has played a role in making this milestone possible.

“The fact that we have the flexibility to put out a partial shipment is a testament to the close working relationship we have with Fortescue,” Young added.

The Nullagine project hosts a direct shipping ore (DSO) reserve of 36-million tons at 56,9% iron within a DSO resource of 50,7-million tons at 57% iron and an overall channel iron deposit resource of 89,1-million tons at 54,1% iron.

The project would have an initial production capacity of three-million tons a year, which would increase to five-million tons once Fortescue increased its infrastructure capacity.

The project remained on track to have shipped one-million tons of iron-ore by the end of June.

BC Iron is the third company to use Fortescue's Herb Elliott port to start iron-ore exports from Port Hedland.

The ship carrying the Nullagine JV ore was expected to set sail over the weekend.

Edited by:Mariaan Webb Tags: third party rail and port access, Direct Shipping Iron Ore DSO,