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Project expenses tipped to blowout $1.7B due to pandemic

Fortescue Metals Group iron ore
Fortescue Metals Group workers

A mineral producer predicts at least one new mining development will cost significantly more due to a highly contagious disease.

Fortescue Metals Group (FMG) recently blamed coronavirus (COVID-19) for dramatically lifting costs associated with its Iron Bridge Magnetite Project, 145km south of Port Hedland.

FMG flagged a potential US$1.2 billion (A$1.68B) blowout in construction expenditure up to US$3.8B (A$5.3B). The figure is 46 per cent higher than the original US$2.6B (A$3.6B) budget.

“COVID-19 related labour constraints including isolation and absenteeism together with a tight labour market have contributed to workforce levels being significantly below the project workforce plan for the March [2022] quarter,” the employer said in its latest quarterly production report.

“Other factors include ongoing supply chain issues, higher installation and construction costs as well as escalation in logistics and shipping costs – which have been further exacerbated by the recent lockdowns in China.”

The remarks came months after the proponent earlier lifted project capital expenditure to as much as US$3.5B (A$4.9B).

The project lately unloaded five module ships at Port Hedland, bringing a total of 14 vessels. A further seven module ships are on the way. Earthworks at the nearby concentrate handling facility are also complete.

Mechanically installing primary crusher A is well underway, while work is continuing on the concentrate, return and raw water pipelines.

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