Fortescue Metals Group is becoming increasingly confident it can sweat its existing Port Hedland infrastructure to a 175 million-tonne-a-year export rate by adding a fifth berth to the inner harbour.
It raises the possibility Fortescue could lift its Pilbara production rate above 155mtpa at a relatively small capital cost.
Fortescue’s port operations have until now been seen as the company’s major export constraint.
But chief executive Nev Power said yesterday construction of its AP5 berth was set to begin early next year, at a cost of $200 million to $300 million. Its completion in early 2015 could lift Fortescue’s port capacity by an extra 15mtpa to 20mtpa.
Constraints imposed by limited capacity through Port Hedland’s main shipping channel had been alleviated by recent dredging work by the port authority, Mr Power said, with Fortescue now confident each tide could carry six ships.
That would lift Port Hedland’s notional export rate to at least 600mtpa, arguably leaving enough export room for any iron ore producer with berth space and the means to get product to the port.
Mr Power said lifting the carrying capacity of its rail network would involve some extra costs, with additional passing loops and rolling stock needed. But an expansion would carry a comparatively light capital intensity compared to its recent multibillion- dollar expansion program.
“Our first strategy is to drive what we’ve got as hard as we can, to sweat those assets and get the maximum amount out of them,” Mr Power said. “We think there might be 15 to 20 million tonnes we can squeeze out of them.”
That may not be good news for Atlas Iron and Brockman Mining, partners in the proposed North West Infrastructure berths at Port Hedland’s South West Creek.
The two berths, with a notional capacity of 55mtpa, were seen as one of their major bargaining chips in negotiating rail access with either Fortescue or Gina Rinehart’s Roy Hill project.
Fortescue has previously levied a hefty price for access to its port and rail network, and its talk of sweating its existing infrastructure could spell the end of any hopes Atlas and Brockman may have had to trade the NWI berth space for rail access in the short term.
Source: http://au.news.yahoo.com/thewest/business/a/-/wa/20143250/fmg-eyes-fifth-hedland-berth/