Fortescue's first magnetite sales on the horizon

Yesterday's event at Port Hedland marked another milestone for the US$3.9 billion Iron Bridge project, a 61:31 joint venture between Fortescue and Taiwan's Formosa Steel.The company reported first production from the project in April, about nine months after the original deadline, with the first ore run grading over the targeted 67% iron.Concentrate is transported via a 135km slurry pipe to Fortescue's Herb Elliott port facilities.It is expected to take 12-18 months to ramp up to full capacity of 22 million tonnes per annum.During a ceremony in Port Hedland to mark the occasion, Fortescue Metals CEO Fiona Hick described it as a proud day for the company."Last week Fortescue celebrated its 20th anniversary and here we are today celebrating the first shipment of magnetite from our most complex and our most innovative project yet," she said."Iron Bridge really represents a step forward. It's a step forward for our world-leading and integrated operations."And in my view, it's going to lead the way for magnetite development in Western Australia." First ore from Iron Bridge being loaded onto a ship ‘Long road'Next month will mark 10 years since the JV with Formosa was signed.The project was originally approved in April 2019 with capital costs of $2.6 billion and forecast first production expected in the first half of 2022.The COVID-19 pandemic and labour constraints impacted the timeline and budget.Despite only starting at Fortescue in February, Hick acknowledged it had been a long road for the project."I've only arrived recently, but I know that there's been a lot of people and a lot of years behind this development," she said."And when you look across all of those years, it actually shows everything that we prize at Fortescue: safety, innovation, empowerment, integrity, and also courage and determination not just to necessarily do what others have done, but to lead the way." Fortescue executive director Elizabeth Gaines leads a 'blessing of the water' New lookFortescue was founded in 2003 at the kitchen table of executive chairman Andrew Forrest, who was dubbed the "famous Mr Magic" by Kariyarra elder Alfred Barker yesterday.To coincide with the 20th anniversary of the founding of the company, Fortescue has rebranded.The company has brought its metals and Fortescue Future Industries brands under one banner, to be known as Fortescue, rather than Fortescue Metals Group.One of the most recognisable logos in mining is no more, with the navy blue map of Australia logo being replaced with FFI's neon green circle logo.Fortescue has shipped 1.9 billion tonnes of iron ore in its life and has paid more than A$32.6 billion in dividends.Diversification Fortescue started its life as a lower-grade producer with iron ore grading around the 57% mark.The addition of the higher-grade West Pilbara Fines product at 60.1% saw the company level up from 2019, while Iron Bridge will see it sell its highest-grade product yet, attracting a premium. Magnetitie concentrate from Iron Bridge Hick said the production of a higher-grade, higher-purity product would help Fortescue achieve its goals.She said Iron Bridge set Fortescue apart in terms of value-adding.We are also looking at technologies to support green steel and green iron. And our ultimate goal is that we can be able to do that and step further down that value chain with this as an important step. And it does differentiate us from our peers.On the green steel front, Hick said the company was evaluating various technologies with more details to be provided at FMG's full-year results next month."But suffice to say, we're not necessarily just betting on one horse. We're looking at a range of possible technologies to allow us to produce green steel and green iron at scale," she said.Iron ore marketHick said the iron ore market fundamentals were still strong.Sentiment in the iron ore market has softened due to China's slower-than-expected recovery following its strict COVID zero policy.Hick said the country was still transitioning out of pandemic controls."I did hear a quote the other day that said, if you're ill, then you don't run a marathon straightaway, and I think you could use the same analogy for China," she said."I guess there's some differing views [on China's reopening] but really, we try and look through that to the fundamentals of supply and demand, and as we look to the near term and think more about the medium and longer term, we still remain confident around the strength of the iron ore market."So far this month, Citi has cut Fortescue to sell, while JP Morgan upgraded it from underperform to neutral.JP Morgan sees iron ore averaging US$103/t in the current half, below the current price of around $115/t but above the May low of $98/t."Overall, we acknowledge near-term price risks on higher shipments and a seasonal downshift in Chinese steel production," analysts said."However, we believe this has become a consensus view, and, should further policy support be announced in China, another sentiment-driven rally may occur."Morgan Stanley is more bearish and sees iron ore falling to $90/t by the December quarter."While any headlines around China stimulus could provide temporary iron ore price support, we are seeing signs that the usual asymmetry could be returning once again, and expect iron ore price downside by Q4," it said.

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