FMG keen to mine 'Solomon'

Fortescue Metals Group Ltd will shift its attention from mining its Christmas Creek deposit in favour of developing a 100 kilometre strip of potentially rich iron ore dubbed ‘Solomon’, even though the area is located much further from its core operation, the Cloud Break mine site.

Fortescue’s 240km railway, currently under construction, stretches from Port Hedland to its Cloud Break mine, which is also being developed in anticipation of shipping ore to China by May next year.

About 60km away sits the already defined Christmas Creek resource, and to a layman it would appear a relatively simple task for the iron ore developer to extend its railway to Christmas Creek and progress later to develop land further afield.

But Fortescue chief executive Andrew Forrest told WA Business News he did not want his company to opt for the “easy option” and intended to build a spur line, about 125km in length, from its railway to the Solomon deposit before it extended the line to Christmas Creek.

“Going after the low-hanging fruit is a good way to make sure that your organisation becomes blissfully comfortable,” Mr Forrest said.

“Christmas Creek is a huge bowl of low-hanging fruit and they could pick it up and take it, but if they take Solomon they take the whole organisation with them.

“My view is to concentrate the phenomenal exploration and project development team we have at Solomon.”

Fortescue’s head of geology and exploration, Eamon Hannon, has dubbed the Solomon zone as the company’s “sleeping giant”.

Mr Hannon said developing Solomon would help Fortescue double its production target to 200 million tonnes of ore per annum. The developer would need to raise additional cash to fund the Solomon project as well as gaining government approvals.

Five rigs are currently drilling away along the Solomon deposit as the exploration team looks to firm up the resource.

Mr Hannon said it was still very much “early days” in terms of exploration, but he hoped to deliver to the market a JORC-compliant resource of about one billion tonnes by the end of the year.

He said Solomon showed high-quality channel iron ore deposits, which account for about 40 per cent of iron ore exported from the Pilbara.

“The entire 100 kilometres is mineralised, but we don’t know what grade,” Mr Hannon said.

To date, Fortescue has uncovered a resource of 2.4 billion tonnes, but Mr Hannon is optimistic that the group would, over a period of time, be able to deliver a resource to the market of about eight billion tonnes.

Mr Forrest said going after the Solomon deposit created a stretch target for FMG that would energise his employees and help retain the skills Fortescue brought in to develop the Cloud Break mine.

He said the company’s turnover of its top 100 staff was just 3 per cent.

“No-one is surprised that the high bar gets set,” he said.

Earlier this year Fortescue revealed it had appointed Citi (formerly Citigroup) and JP Morgan to explore funding options to increase its production to 200mt/year following strong encouragement from international steel mills.

Fortescue also said it could source capital by creating an infrastructure leasing fund for its port and rail assets, and was in discussions with major infrastructure investors and international banks.

Twiggy looks to more relaxed role

As the once impossible iron ore dream starts to become a reality for Fortescue Metals Group Ltd founder Andrew Forrest, there are signs that the mining entrepreneur is considering pulling back from his immense workload.

Mr Forrest, 46, has been working tirelessly building the company for more than four years, audaciously raising $3.7 billion from offshore investors to fund an iron ore mine, construct a railway and build port facilities.

But last week he told a gathering of journalists on a trip to Fortescue’s Cloud Break mine development that he was taking a step back from the public spotlight.

Mr Forrest said he would be the “spirit” behind the company, but no longer the public face.

He told WA Business News that, while he had no immediate plans to leave the top job, he would be comfortable leaving the company in the hands of three of its current executives – commercial executive director Russell Scrimshaw, 58, chief operating officer Alan Watling, 53, and executive director of operations Graeme Rowley, 67.

All three men joined Fortescue as it began its journey to develop ore in the Pilbara in 2003.’

•The reporter visited the Cloud Break mine site development as a guest of Fortescue Metals Group.