FMG 4.51% $17.37 fortescue metals group ltd

commissioning shut down

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    Dear Sir
    Opportunity for Wharf and Mine Process Plant Shut Down
    Fortescue Metals Group ("Fortescue") advises that it is taking the opportunity
    to bring forward a planned shut down of the port and mine processing plant as
    part of its optimization program to increase infrastructure capacity to 55 million
    tonnes per annum “Mta” and also to refine the Company’s product offering to
    best meet Chinese demand for “value in use” material.
    The schedule is for an approximate 10 day shut of the wharf and processing
    plant to commence from November 17. During this time mining and
    stockpiling will continue at full production capability.
    The key objectives for the shut down are:
    �� To upgrade the wharf to commission the 2nd loading deck. This will
    enable the ship loader to traverse the two decks thereby optimizing the
    load out capacity;
    �� To upgrade the mine processing plant to prepare for the commissioning
    of the de-sand plant which will beneficiate the ultra fine portion of the run
    of mine “ROM” fines; and
    �� To commission the lump circuit which will come on stream progressively
    over the following months.
    The short term impact of the shut will be for lower tonnages over the
    immediate term which will impact the overall performance for calendar year
    2008. Going forward the medium term outcome will be higher production and
    loading volumes and efficiencies to be timed for a return to more normal
    market demand conditions expected for 2009 and beyond.
    The current market conditions in China are highlighting the increasing focus
    steel mills are making on the “value in use” proposition for different product
    types. Fortescue’s Rocket fines product is recognized as high value in use
    material given its attractive chemical and metallurgical properties and its high
    calcined (*1) iron “Fe” content.
    Page: 2
    *1- The measure of calcined Fe is the iron content of the ore after it has been
    processed through the sinter plant and the molecular moisture “LOI” has
    been subjected to intense heat and burnt off.
    The commissioning of the de-sand plant will further enhance Fortescue’s
    product offering as in-pit sections of material containing higher than normal
    impurities such as Alumina can now be mined and beneficiated into product
    by the de-sand plant. To date the Company’s mining and processing activities
    have been constrained in some sections of the ore body by the inability to
    mine certain areas due to above specification alumina levels.
    In addition, the absence of a lump circuit has placed an abnormally high
    throughput load on the ore processing facility “OPF”. These constraints have
    challenged Fortescue’s target to mine 22 million tonnes “Mt” to end December
    2008 with a ~ 10% reduction now likely, noting that some of the mined
    material will be stockpiled at the OPF and not processed into product until
    2009.
    As advised in the September report, Fortescue remains in ramp up mode and
    expects to hit the initial targeted run rate of 45 Mta by the end of 2008. The
    step up to the optimized rate of 55 Mta is then scheduled for the end of Q1
    2009, subject to market conditions, as the lump circuit and de-sand plant
    come into full operation.
    As at end October, Fortescue had shipped 10.416 Mt across a customer base
    of 27 Chinese mills. Once the second berth becomes active following the
    shut down, the loading rate capacity out to the end of the calendar year and
    beyond will be increased to accommodate the 45 Mta production rate.
    Yours sincerely
    Fortescue Metals Group Ltd
    Rod Campbell
    Company Secretary
 
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