The Three Musketeers
May 2019
Over the short-term, Australia holds the three largest upcoming iron ore projects in AME’s base case: Fortescue’s Eliwana, Rio Tinto’s Koodaideri, and BHP’s jointly-owned South Flank project—set to add 50 Mt, 43 Mt, and 80 Mt respectively. Together, these three projects make up the vast majority of expected new-project capacity, and total to almost as much potential new capacity as all possible-or-concept projects that are currently considered speculative and not in AME’s base case.

As these three projects will continue to cement Australia’s position as the world’s largest exporter of iron ore, particularly that of high quality, it’s well worth taking a look at a breakdown of each project in order to anticipate what they will bring to the global market.




Fortescue Metal’s proposed US$1.275bn Eliwana project secured corporate approval in May of 2018 after a positive preliminary feasibility study (PFS). Located in Western Australia’s Pilbara region, the mine is expected to see first production towards the end of 2020, likely in Q4. It will extend Fortescue’s existing iron ore sites of Cloudbreak, Christmas Creek, and Solomon, and is expected to continue production from the Kings and Firetail deposits in the area.

In addition to the establishment of a new mining zone, the Eliwana project will include the construction of a new ore processing facility with a 30Mtpa capacity, communication and accommodation infrastructure, and around 140km of new rail and associated infrastructure which will connect the site to Fortescue’s existing Hamersley line, which runs to Port Hedland.

Once complete, Eliwana is expected to target a 30Mtpa processing rate—replacing ageing and depleted capacity from the company’s other operations in Pilbara—although the company has said that it will be constructing much of the site’s infrastructure to accommodate expected production peaks of up to 50Mtpa across its 24-year lifespan.

Production from the site is expected to be firmly targeted at the Chinese market. Fortescue expects the site to be low-cost, a key factor in maintaining its position as one of the lowest-cost providers of seabourne iron into China—a position it has occupied since 2008. The company is planning to offer 60% Fe West Pilbara Fines product from the latter half of 2019 onwards and sees Eliwana as a key component of this new product’s long-term production. Currently, Fortescue’s iron ore grades stand between 56% and 59%.
Construction at the site is currently underway; preliminary enabling works started late 2018, while February of 2019 saw the commencement of earthworks on site. Once earthworks are complete, construction of the main mining area and processing facility will begin—likely in December of 2019.



Rio Tinto approved US$2.6bn investment in Koodaideri iron ore mine in Western Australia’s Pilbara region last year. The development of its most technologically advanced mine will offer a new production hub in the region for the company, including a processing plant and a 166-kilometre rail line connecting the mine to Rio Tinto’s existing network. Construction is set to start this year with first production expected in the last quarter of 2021. The mine will have an annual capacity of 43 Mt and will support production of the Pilbara Bland, Rio Tinto’s flagship iron ore product.

The new mine is expected to deliver an internal rate of return of 20% and capital intensity of around $60 per tonne of annual capacity. Once operational, the site will feature technology such as autonomous trucks, trains and drills, and implement systems connecting all components of the mining value chain for the first time. Koodaideri includes more than 70 points of technological interest, including:

  • A real time digital replica of the processing plant;
  • Fully integrated mine automation and simulation systems;
  • An automated workshop;
  • Numerous data analytics capabilities and control loops to optimise production and reduce downtime.

A US$44mn pre-feasibility study into the phase 2 of the project has also been approved and would ramp up iron ore production from 43 Mt to 70 Mt and beyond.



South Flank

The BHP Board approved US$2.9bn in capital expenditure for the South Flank project in the Pilbara, Western Australia in June last year. The company’s project–which is on track to be the become its largest iron ore operation–aims to compensate for the 80Mtpa production deficit following the closure of Yandi mine which is reaching the end of its economic life. First ore is targeted in 2021, with the project expected to have a 25-year life span.

Existing infrastructure at Mining Area C will be expanded, with the construction of an 80Mtpa crushing and screening plant, an overland conveyor system, stockyard and train loading facilities, procurement of new mining fleet and substantial mine development and strip work. The South Flank project will also contribute in the creation of around 2,500 construction jobs and more than 600 ongoing operational roles in the Pilbara.

The iron ore produced as part of the South Flank project will contribute to an increase in Western Australia Iron Ore (WAIO)’s – an integrated system of four processing hubs and five mines in the Pilbara Region – grade from 61% to 62%, and the overall proportion of lump from 25% to 35%.