FMG to sign with China Gezhouba Group

Fortescue Metals Group plans to partner with Chinese engineering group China Gezhouba Group to lift output at its Pilbara iron ore mines to 95 million tonnes per year.

The companies are expected to sign off on the agreement on Monday.

See announcement below:

Fortescue Metals Group ("Fortescue") will participate in a Co-operation Agreement signing ceremony on Monday with Chinese engineering group China Gezhouba Group Company ("CGGC") to achieve a 95 million tones per annum production rate at the Company's Chichester Hub.

This is consistent with its previously stated position that despite the Federal Government's proposed resources super tax Fortescue will still proceed to expand its production rate from 40mpta to 95mtpa.

The signing ceremony will reinforce Fortescue's May 19th, 2010, statement to the Australian Securities Exchange which committed the Company to the completion of its Chichester Hub from 55mpta to 95mtpa, but announced that its Solomon and Western Hub expansion projects had been placed on-hold due to the impact of the Federal Government's proposed resources super tax.

Fortescue Executive Director Russell Scrimshaw said the fundamental design flaws of the resources super tax were restricting Fortescue from finalising agreements with any parties on the Company's 260mtpa expansion projects - the Solomon and Western Hubs - which remain on hold. These projects alone would have the capacity to increase Fortescue's production rate to 355mpta, which is more than the existing iron ore output from BHP Billiton and Rio Tinto's Pilbara operations.

"We look forward to welcoming China Gezhouba Group Company as a Fortescue partner," Mr Scrimshaw said. "It is most unfortunate that as a result of the resources super tax the Solomon and Western Hub projects remain on hold representing a lost opportunity to create investment and jobs.