Andrew Forrest's Fortescue Metals Group (FMG) has given the green light to its second major iron ore mine development in just 12 months, promising to deliver 3,000 jobs during construction.
The world's fourth-largest iron ore miner approved stage two of its Iron Bridge magnetite project south of Port Hedland, which follows its commitment to build the $1.7 billion Eliwana mine last year — taking the total investment to well over $5 billion.
FMG chief executive officer Elizabeth Gaines said the $3.6 billion project would create thousands of jobs.
"Iron Bridge will [create] approximately 3,000 jobs during construction and create 900 full-time positions once operations commence," she said.
"Add to that our Eliwana project, and Fortescue is responsible for creating more than 5,000 jobs here in WA over the coming years.
"We've already highlighted that we've got 5.3 million tonnes per annum secured with five customers, so I think that alone demonstrates there will be strong demand.
"Now that we've made this announcement, we anticipate there will be demand not only from China but also more globally as well."
FMG confident it has 'de-risked' project
Magnetite iron ore projects have had a chequered history both in Western Australia and globally, struggling to compete with higher grade hematite exports due to the high cost of processing the product.
WA's Mid West region, which is home to vast magnetite iron ore reserves, was pitched to become the next iron ore province, but weakening prices made most projects unprofitable.
Despite the challenges facing magnetite developments, Ms Gaines said the company had spent the past nine years "de-risking" the project.
"It can be a challenging ore body to process so we've invested significantly to de-risk the project," she said.
"We've invested over $700 million in stage one, and that's been over a period since 2013."
'Another positive sign for WA economy'
Katana Asset Management analyst Romano Sala Tenna said Iron Bridge had the potential to provide significant rewards for both FMG and Western Australia.
But he agreed magnetite projects like Iron Bridge also faced higher risks.
"Magnetite is much more capital intensive, even a much more person-intensive operation," he said.
But Mr Tenna also said on the plus side magnetite projects produced higher-grade iron ore [once processed] also employed 40–50 per cent more full-time employees than traditional hematite operations.
"They are producing a higher-grade product, [but] it's less tonnes they're producing," he said.
"Once this is up and running it will mean that the majority of the product that FMG produces will be north of 60 per cent iron content.
"As we move forward, customers are looking for a higher-grade product to produce steel more efficiently with less pollution. I think that's a net positive for FMG."
Mr Tenna said the Iron Bridge announcement came on the heels of confirmation over the past six months that three other mining projects would be proceeding.
The latest approval follows Fortescue's decision to proceed with the Eliwana project, while BHP announced it was going ahead with the South Flank project and Rio Tinto gave the green light to its Koodaideri project.
Mr Tenna said Iron Bridge was another positive sign for the WA economy and showed capital expenditure was returning to the resources sector.
He said with the four projects all getting the go-ahead, there would be a shortage of workers with the right skills.
"What we're going to see is a squeeze in the demand for certain skill sets, and I don't think we have the capacity in WA to meet those specific skill sets," he said.
"[But] I also think the flow-on to support the wider community is going to be positive."
But it has not been smooth sailing for all magnetite projects in the region.
Citic Pacific's Sino Iron project in the Pilbara is also a magnetite mine and is of a similar size to Iron Bridge.
Technical problems with that project meant it ended up costing more than $12 billion, a figure several times higher than the original budget.
