Fortescue to start African iron ore mining in 2H 2023

West Australian (WA) producer Fortescue plans to start small-scale mining of iron ore in Gabon by the end of this year, as it looks to get in ahead of the rival west African project of Simandou.

Fortescue has signed a mining convention with the Gabon government that aims for first mining in the second half of 2023 at the 2mn t/yr early development stage of its Belinga project in the east of the country. Fortescue compares Belinga favourably to the up-to-150mn t/yr Simandou iron ore project in Guinea, which has been plagued by complex ownership structures and disagreements over infrastructure.

Fortescue hopes to beat its WA iron ore rival Rio Tinto by producing iron ore from Belinga ahead of Simandou, which has been on pause since Guinea's interim military government ordered work to stop in July 2022. The military regime expects work to restart on Simandou in March, after the final terms of a joint venture to build infrastructure are finalised.

As for the ownership structure of Belinga, Ivindo Iron — a joint venture 80pc owned by Fortescue and 20pc owned by Abu Dhabi investment fund Africa Transformation and Industrialization Fund — is the operator and owns 90pc, and the Gabon government has a free-carry interest of 10pc.

There are also fewer infrastructure challenges for at least the first 2mn t/yr stage of Belinga, with the mine around 150km from the existing trans-Gabon railway that can deliver ore to the port at Liberville. By comparison, the Simandou joint venture partners must build a 650km railway and a deepwater port. To reach the scale of Simandou, Fortescue would have to build additional rail and port infrastructure, but the initial outlay to get to 2mn t/yr will be around $200mn over 2023-24.

It is unclear if Belinga is of similar grade to Simandou, where the joint venture partners hope to export 65pc Fe ore to customers in Asia that are interested in high-grade hematite to reduce emissions. Fortescue, which produces lower grade iron ore than Rio Tinto in WA, could also use high-grade African ore to blend with its Australian ores.

"If [Belinga] fulfils its promise, it will complement our Australian operations through enhancing our blended products, extending our mine lives and opening new global markets," Fortescue executive chairman Andrew Forrest said.

Argus ICX iron ore was last assessed at $122.60/dry metric tonne (dmt) cfr Qingdao on a 62pc Fe basis on 7 February, up from $86.80/dmt on 7 November.

By Jo Clarke