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Fortescue Metals Group revealed that the cost of its flagship iron ore development project has risen by US$900 million, highlighting how labor shortages and rising material costs have impacted Australia’s mining industry.
The company is one of the world’s largest iron ore producers, and said on Friday that due to labor constraints, rising material costs and a strong Australian dollar, the development cost of its iron bridge mine will now be between US$33-3.5 million. Six months of delay.
This disclosure is part of the review of the Pilbara area project in Western Australia, following the go away Three Fortescu executives in February. This marks the second time that the cost of Iron Bridge has exploded. Fortescue said in February that the project will cost up to 3 billion U.S. dollars, higher than the initial estimate of 2.6 billion U.S. dollars in 2019. Fortescue expects that the first iron ore production will be in the mine in December 2022.
With iron ore prices hitting record highs, Western Australia’s demand for workers is hot, prompting resource groups Rio Tinto, BHP Billiton, Fortescue and smaller producers to invest in new mines.
Fortescue CEO Elizabeth Gains said that labor restrictions are mainly a problem faced by the group’s contractors engaged in the Iron Bridge expansion project. She added that due to coronavirus restrictions, some of these contractors have encountered difficulties in transporting labor across Australia.
Fortescue’s cost increase marks the latest in a series of warnings issued by miners, which are due to labor shortages due to the iron ore boom and rising costs due to the closure of Australia’s international and state borders due to Covid-19.
This week, BHP Billiton caveat Regarding the “severe skills shortage” of train drivers in the Pilbara, a remote area that produces most of Australia’s iron ore. The world’s largest miner said it is hiring 200 new train drivers and speeding up the training of personnel in maintenance-focused industries and qualifications.
Last month, mining company Mineral Resources lowered its annual iron ore production forecast by 13% due to a shortage of truck drivers due to state border closures.
Western Australia Resources Industry Employment increase Last year it increased by 5% to a record 135,001 people, and A$19 billion was invested in the field. According to statistics from the Western Australian State Government, this is the first year-on-year increase in investment in the mining and petroleum industries since the end of the last boom in 2012-2013.
The unemployment rate in Western Australia is 4.8%.
“The Pilbara is currently a powerhouse in Australia. This is in large part due to the never-ending demand for our iron ore in the world,” said the partnership of Kingston Reid, a law firm specializing in employment. Said Michael Stutley. “The skills shortage is reaching a critical level. If nothing is done, then [it] Will cause a negative drag on the economy. “
Stutley said Canberra needs to introduce “targeted job bubbles” with other countries to enable skilled workers to enter Australia and support the resource industry.
The conservative government of Australia stated that the country’s international borders will not be reopened until mid-2022.
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