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BUSINESS
FORTESCUE’S AFRICA IRON ORE AMBITIONS CHALLENGED BY GNARLY TERRAIN
The company is in the final stage of legally ratifying an agreement signed with Gabon’s previous government
By Rhiannon Hoyle
Oct. 31, 2024 2:12 am ET
SYDNEY—When Fortescue shipped a cargo of iron ore from a project in the African nation of Gabon last December, the miner cheered what was its first export from outside Australia. It has yet to ship another.
The chief executive of Fortescue’s mining business, Dino Otranto, says the shipment was essentially a proof of concept, to demonstrate to the government and local community that the miner was serious about the project.
“And, look, if the concept worked and it was economic, we would continue to do it, right,” Otranto said.
But getting the ore from the project, called Belinga, to the port was challenging. It had to be trucked over more than a hundred miles on an unsealed road to be transferred to a rail line—an inefficient method incapable of handling the sort of volumes Fortescue envisages shipping from the site, he said.
“Was it a little bit ugly? Was it profitable? It was just—but probably not to the margins that our shareholders would expect,” Otranto said.
Mining has stopped and Fortescue is focused on exploration-related drilling to get a better estimate of the size of the deposit. It will take time to work out a plan for the infrastructure, such as a railway, that would be needed for an ongoing mine, said Otranto.
“It’s through some pretty gnarly countryside,” he said. “But what we’re knowing so far about the deposit, it’s as big and as exciting as we thought it was going to be.”
Otranto said the company is in the final stage of legally ratifying an agreement signed with Gabon’s previous government, ousted last year in a military coup.
Fortescue estimated the cost of early stage development at the site around $200 million. It hasn’t yet projected how much a full-scale development could cost, but has said Belinga has the potential to revolutionize its portfolio.
If the project goes ahead, it could have a capacity of between 50 million metric tons and 100 million tons a year, said Otranto. The company shipped a total of nearly 192 million tons of iron ore last fiscal year.
Fortescue, which makes its money mining iron ore in remote northwest Australia, last week reported record-high first-quarter iron ore shipments. However, it also reported a jump in costs, and prices that missed analysts’ expectations.
//www.wsj.com/business/fortescues-africa-iron-ore-ambitions-challenged-by-gnarly-terrain-fd76373d
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