Since Fortescue was formed in 2003, its extraordinary growth has been unparalleled. Listed in the S&P/ASX 50 share index, Fortescue has firmly established itself as one of the world’s largest producers and sea-borne traders of iron ore. With a tenement land holding spread across the length and breadth of the resource rich Pilbara region of Western Australia, the company continues to aggressively pursue growth strategies. The close proximity to the world’s major growth markets of China and Asia more generally, makes the Pilbara widely regarded as the world’s best address for iron ore.
Fortescue has achieved these goals through engagement and partnership with key stakeholders including our people, local communities together with the traditional land owners, governments, suppliers, customers, non-government organisations and the financial markets. By aspiring to be the corporate citizen of choice welcomed by the communities that host our activities, Fortescue, together with our stakeholders, will continue to align to positively manage change and secure opportunities for people, economies, the environment and society.
Construction of Fortescue’s first port, rail and mine project commenced in early 2006 with the turning of the first sod at our port site at Anderson Point in Port Hedland. Just two years later in 2008, the open-access rail infrastructure was complete and operations were underway at the Fortescue Herb Elliott Port and at our first minesite, Cloudbreak.
In the first full year of operations, Fortescue mined, railed and shipped more than 27 million tonnes of iron ore to customers in China. This rose to 40 million tonnes over the 2011 financial year and the expansion plan is targeting a run rate of 155 million tonnes per annum over 2013/14.
Many milestones have been achieved since then including the establishment of Fortescue’s second minesite at Christmas Creek to create the Chichester Hub. Fortescue’s heavy haul railway has been extended to the Christmas Creek mine and the first of two new ore processing facilities has been constructed and was commissioned in early 2011. Construction is well underway at Fortescue’s new mine in the Solomon Hub with a rail spur being constructed to link this operation into the existing rail and port infrastructure system. There are extensive expansion work programs being undertaken at the Herb Elliott Port including additional berths and train unloaders to ensure the integrated supply network can handle the expanded production base.
As an integral part of Fortescue’s development model there has also been extensive investment in the local communities with our Vocational Training and Employment (VTEC) program, residential workforce and housing construction. Fortescue successfully achieved its Summit 300 target to train and employ 300 Aboriginal people by 30 June 2011. Summit 300 was Fortescue’s commitment to the Australian Employment Covenant, the ambitious nation-wide initiative to secure commitments for 50,000 real, sustainable jobs for Aboriginal Australians.
Since inception, Fortescue has spent or committed almost $15 billion on resource projects in the Pilbara region of Western Australia. In its early years Fortescue was recognised as the highest investing exploration company in Australia. Having discovered a resource base of over two billion tonnes of iron ore, Fortescue then established the company’s original mine, first rail line and open access port, investing over $4 billion on infrastructure, mining fleet and rolling stock. Fortescue has now commenced an $8.4bn expansion program with work programs well advanced for a scheduled completion date of end December 2012.
Funding for the initial construction came largely from a ground breaking US$2bn project financing that was completed in August 2006. This served the company well through its construction and early operations phase however once Fortescue was well into cashflow, the business needs had transitioned beyond a project style facility. Accordingly in October 2010 a major refinancing of the debt was launched into the international corporate bond market. The $2bn issue was six times oversubscribed and enabled Fortescue to extract very favourable pricing terms and remove the security arrangements that had been a feature of the original bonds. Also the refinancing removed covenants in place under the original secured project bonds including restrictions on expansion beyond the Chichester Hub.