FMG pursues its own Simandou

Fortescue Metals Group has inked a mining agreement with the Republic of Gabon for the Belinga iron ore project with ambitions to break first ground by the second half of 2023.

It comes just over a year after Fortescue told the market it had first started negotiating with the Republic of Gabon to establish a mining convention to develop the project , located in the country’s northeast.

Updating the ASX this morning Fortescue said the new mining convention would govern all the legal, fiscal and regulatory regimes for the 4,500 square kilometres proposed mine site, laying an initial production target of up to 2 million tonnes per annum.

Early-stage mining is expected to cost approximately $US200 million (A$287 million) over the 2023 to 2024 calendar year.

Fortescue has said it plans to use open pit mining methods to truck and rail ore using existing roads and rail infrastructure to be shipped from a port near Gabon’s capital city of Libreville.

The project will be held in an operating entity named Ivindo Iron, owned 90 per cent by the Belinga joint venture company of which FMG has 80 per cent.

The remaining 20 per cent is owned by join venture partner Africa Transformation and Industrialization Fund, an Abu Dhabi-based investment fund founded in 2021 targeting sustainable development in Africa.

The Gabon government will have a 10 per cent free carry interest in Ivindo Iron. 

Chairman Andrew Forrest said geological mapping and sampling indicated Belinga could prove to be one of the largest iron ore deposits in the world.

"This emerging iron region is potentially massive,” he said.

“The key aspect of this particular geology is its potential to dovetail with Fortescue Pilbara ore blends. In doing so it will preserve and enhance the iron ore industry of both Australia and Gabon,” he said.

In August 2022, Fortescue confirmed it had been completing analysis on the site’s orebody, which it has frequently likened to the Simandou iron ore project in Guinea.

“The Belinga geology and iron ore potential is similar in scale as Simandou in its early stages of exploration, with its multi-billion tonne potential and high grades,” the company said.

Fortescue was unsuccessful in its bids for two blocks at the deposit back in 2019 and is now being developed jointly by Rio Tinto and Winning Consortium Simandou.

Simandou is widely considered one of the largest untapped iron ore resources in the world, though ambitions to develop the project have been hindered by a lack of infrastructure, costs and ongoing negotiations between owners.

At 10:47 am AEDT, Fortescue shares were up 1.13 per cent to trade at $22.30.