Fortescue Expects Port Approval Soon for Iron Ore Expansion
January 25, 2012, 11:16 AM ESTBy Elisabeth Behrmann
(Updates with closing share price in sixth paragraph.)
Jan. 25 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, expects to receive government approval to develop a fifth berth at Port Hedland as soon as next month as the company plans to triple output.
“We think it’s as close as the next month or so, during February,” Peter Meurs, development director, said in a phone interview. A fifth berth will increase efficiency of loading and exporting, he said.
Fortescue, controlled by Australia’s richest man Andrew Forrest, is spending $8.4 billion on building export capacity to 155 million metric tons a year by 2013. The company joins BHP Billiton Ltd. in expanding at the port as iron ore demand is set to remain strong, Malcolm Southwood, a commodities analyst at Goldman Sachs Australia Pty, said in a report last month.
Fortescue already has approval from the port authority to build a fourth shiploader that will be sufficient to move almost all of the expanded iron ore production. It can probably ship all of its planned output from four berths, though an extra berth would be more efficient, Meurs said.
“Having a fifth berth simply allows you to have a ship on a lay-by berth waiting while you’re loading another ship,” he said.
Fortescue fell 1.2 percent to A$4.86 at the close of Sydney trading, compared with a 1.1 percent gain in the benchmark S&P/ASX 200 Index. Fortescue produced iron ore at an annualized rate of 59 million tons during the December quarter.
The port, which exports all of BHP’s Australian-mined ore and is the world’s largest bulk commodity export harbor, shipped 192.5 million tons in total in 2011, according to the port authority’s website. BHP, the world’s largest mining company, this week won environmental approval for a A$14 billion ($14.7 billion) expansion of its assets at the port that will add export capacity of 240 million tons a year.
--Editors: Rebecca Keenan, Keith Gosman
To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net
