The Fortescue Metals Group Limited (ASX: FMG) share price is up by around 1% after giving a production update for its Iron Bridge Magnetite Project.
Fortescue is one of the largest iron ore miners in the world. It’s planned that Iron Bridge will produce 22 million tonnes per annum of high grade iron (67% Fe magnetite concentrate). Iron Bridge is a joint venture between Fortescue (which owns 69%) and Formosa Steel (which owns 31%).
Iron Bridge production update
Fortescue told the market that its first production for its Iron Bridge project has been changed to the second half of April 2023.
The iron ore ASX share said that it continues to make significant progress, while managing the impacts of weather on activity at the site and associated infrastructure. Once it’s up and running, this could be a positive for the Fortescue share price.
Fortescue revealed that commissioning activities are well progressed on ‘dry processing line A’ and water commissioning of the wet plant is near completion. The entire steel concentrate and return water pipelines have been welded and buried, and the canning basin raw water pipeline is complete and undergoing final testing. Finally, Fortescue said that water commissioning has started on line A at the concentrate handling facility at Port Hedland.
The miner said that the project capital estimate is unchanged at US$3.9 billion, with Fortescue’s share is approximately US$3 billion.
Is the Fortescue share price a buy?
I think the start of mining by Fortescue at Iron Bridge could open up a lot of potential earnings for the business. Higher quality iron could deliver more resilient earnings in the coming years.
However, the iron ore price is still heavily dictated by the demand coming from China. I wouldn’t call Fortescue a great buy at this stage, though if the iron ore price and the Fortescue share price were to fall 20% then it’d look much more attractive.
I’m still a Fortescue shareholder, but that’s based on its green energy efforts, which are still progressing. If Fortescue can get this right, then I think it would diversify its earnings enormously, and it would be less reliant on China.
