The state government of Western Australia (WA) has helped turn the first sod on Fortescue Metals’ new 1.7 billion Australian (1.19 billion U.S.) dollar mine and rail project on Friday, with the development set to deliver a bonanza of much-needed jobs to the remote Pilbara region.
Expected to produce over 30 million tons of haematite iron ore per year, the Eliwana site will also include the development of 143 km of industrial rail line.
Speaking at a WA Mining Club lunch event on Thursday, Elizabeth Gaines, the chief executive of the China-focused group believes “the fundamentals of the iron ore market remain robust,” despite recent concerns from some analysts that the price of the commodity is headed for a downturn, according to the West Australian Newspaper.
Due to supply disruption in Brazil and a series of cyclone-related outages across WA ports, the value of iron ore has more than doubled over the past year, and currently sits at around 127 U.S. dollar per ton.
Although it appears a price correction could be on the way, Gaines said that as steel production in China is still growing, it will help drive solid demand for the commodity.
“Stockpiles at ports in China are down to around 115 million tons. There is a bit of a view that below 100 million tons, that’s when they’ll be concern in terms of the number of days of supply available,” she said.
“I think that really underpins, for now, the strength of the iron ore price.”
“I’m sure the people who are saying it is going to taper off next quarter are the same people who said it was going to taper off for the quarter we’ve just had.”
With China expected to produce a record 1 billion tons of steel this year, Premier of WA Mark McGowan thinks the Eliwana project is a sound investment for job growth.
“The Eliwana mine and rail project will deliver a significant boost to WA’s economy, with around 2,400 jobs in total created for WA workers,” he said.
“It’s great to see a strong local content component, with many Western Australian companies awarded contracts to carry out important works, including steel fabrication.”
“Eliwana is one of a number of large projects we expect will come online in the next few years, which points to confidence returning to our state’s economy.”
Source: Xinhua, 5 July 2019