Andrew Forrest's Fortescue Metal Group Ltd has increased the cost of its Pilbara iron ore project by $31 million, taking the final forecast cost up to $2.796 billion and leaving the company with no formal contingency.
Fortescue Metal Group Ltd has increased the cost of its Pilbara iron ore project by $31 million, taking the final forecast cost up to $2.796 billion and leaving the company with no formal contingency.
It is the latest in a string of cost increases for the company where for this year alone, the total final forecast cost rises have escalated to $97 million, with the January monthly construction report recording a boost of $66 million.
Fortescue said the breakdown of the overall cost increase for the month of February was from a net rise of $11.7 million for rail, a climb of $22.2 million for mine works and a gain of $1.8 million for the port.
A decrease of $4.6 million from a reduction in engineering, procurement, construction and management expenses was also recorded in the monthly report.
"While there is no formal contingency left within the final forecast cost, Fortescue's capital management program will provide sufficient funding to ensure completion," the iron ore company said.
While costs were on the rise, Fortescue did report an improved performance rate in different construction sectors within the project.
Port works are so far 93 per cent completed, the mine site is 84 per cent finished and rail works were now 91 per cent complete, with the value of work achieved in the latter area at 6 per cent over the month of February against a target of 3.3 per cent.
"Significant progress was made within the rail works program to the extent now that management does not see rail on the critical path of FOOS [first ore on ship] in mid May," Fortescue said.
In its June quarterly report last year, Fortescue announced its rail program was behind schedule due to cyclonic activity that devastated the project in March.
Shares in Fortescue closed up 22c today at $6.72.