Australian iron ore miner Fortescue has signed a US$2.04 billion loan deal with leading global banks for its ambitious expansion plan for mining operations.
The company said that it is now free to implement its ‘Two Ports, Three Hubs' mining strategy, the Solomon project being the main focus. "(We) will deliver, in terms of the mining industry, unprecedented growth by Fortescue in the direct ship iron ore sector," Fortescue said.
The loan deal with JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc replaces project-based notes and matures in 2015 with an initial interest rate of 7.5 percent linked to the London interbank offered rate.
Fortescue chief executive officer Andrew Forrest said, "While coming at some cost, even though largely mitigated by the strengthening Australian dollar, Fortescue has now secured the pathway to realize our goal of becoming the world's best iron ore producer."
As SteelOrbis previously reported, earlier this year the Perth-based company said during a presentation to stakeholders that the aim in the Solomon project is an expansion of 60 million mt in the first stage and 100 million mt in the second stage, costing $US3.24 billion and $US5.7 billion respectively. The project in the iron ore-rich Pilbara region of Western Australia includes the construction of a new railroad and port.
Currently, the stage I feasibility study for Solomon has been completed for a 60 million mt per annum project with initial development awaiting final board approval. The stage II mine and rail feasibility studies are advancing for a further 100 million mt operation.
As previously disclosed, the company's iron ore operations in the Chichester Ranges, which produced 40 million mt iron ore a year earlier in the year, is soon expected to reach 55 million mt, and with further expansion will reach 95 million mt.
Presently, the Chichester Hub expansion is very advanced with the rail extension from Cloudbreak to Christmas Creek 95 percent completed and the new processing plant at Christmas Creek on schedule and budget for commissioning.
The company is carrying out studies for a 350 million mt per annum port near Cape Lambert, known as the Pilbara port.
A major exploration and pre-feasibility study is underway for the Western hub with a target of supporting a second 100 million mt per annum mine and a rail line with port access through the Pilbara port.
The company has a "medium term" production target of 355 million mt a year.