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Iron ore producer Fortescue Metals Group has increased its production targets and put a $6.24 billion price tag on a two-stage mining operation.
The company said it sees a strengthening outlook for iron ore prices with China's ability to meet its own requirements declining fast.
The company was initially targeting a 60 million tonne per annum (Mtpa) operation, at Solomon in the Pilbara region, with expansion to 100Mtpa.
But in a presentation today to an investment forum, it flagged an expansion to 160Mtpa after a 60Mtpa first stage.
Capital expenditure for both stages is expected to comprise $3.94 billion in port facilities, $1.28 billion in rail facilities and $984.5 million in mine development costs.
Fortescue has current reserves of 1.6 billion tonnes and resources of 5.1 billion tonnes. It has an additional 1.2 billion tonnes of magnetite resource.
Its first-half 2009-10 revenues are up 17 pr cent on the previous period despite a 20% price reduction.
Good news also for costs which despite the Australian currency's appreciation to the US dollar of 22%, Fortescue's cost per tonne hs been held at $US27.
Fortescue also indicated it envisaged a third rail hub, dubbed the 'Western Hub', which would take in the company's planned magnetite mining operations to the proposed new Anketell Point port south west of Port Hedland.
Fortescue and coal and iron ore miner Aquila Resources Ltd are driving plans for the new port, just 10km from a major Rio Tinto Ltd export facility.
The State Government gave the port proposal the nod last week and offered to contribute $3.5 million for its construction, which is expected to cost several billion dollars.
Fortescue executive director Russell Scrimshaw said last week the miner would consider building a railway line to Anketell Point if it did not succeed in gaining access to an existing rail network in the region owned by Rio Tinto.