Andrew Forrest’s Fortescue flags $1.1b pre-tax impairment charge over slow ramp-up of troubled Iron Bridge

Andrew Forrest’s Fortescue is bracing for a $1.1 billion value wipeout after flagging yet another delay at its long-troubled Iron Bridge magnetite operation in the Pilbara.

Iron Bridge, south of Port Hedland, has long been a thorn in the miner’s side even before it started production of high-grade concentrate three years ago, suffering a series of cost blowouts and delays before it was switched on.

The slow ramp-up will see Fortescue ship between 11 million tonnes and 14mt this financial year, only rising to 16mt during the 2028 financial year.

Fortescue last May said Iron Bridge would reach its 22mt nameplate capacity during FY2028, which was already a major delay from its original schedule.

Fortescue revealed on Friday it had undertaken a review of the carrying value of its assets that took into account the “revised ramp-up schedule and a range of production scenarios”.

“As a result, Fortescue expects to recognise a non-cash impairment charge relating to Iron Bridge of approximately $US750 million ($1.07 billion) before tax and approximately $US525 million ($747m) after tax in its FY26 financial results,” it said.

Fortescue holds a 69 per cent stake in the Iron Bridge joint venture, with Formosa Steel holding the remainder.

First concentrate from Iron Bridge was shipped in April 2023 following numerous delays and the mine’s construction bill blowing out by more than $2b.

The problems kept piling up, including a leaky pipeline that pumps water 240km from the Canning Basin into Iron Bridge. The broken pipeline cost Fortescue hundreds of millions, if not billions, in repairs and foregone revenue.

Mr Forrest reportedly described Iron Bridge finally reaching first production in August 2023, at an eye-watering cost of more than $6b, as “the biggest relief of my career”.

Iron ore projects in WA typically involve mining hematite ore instead of lower-grade magnetite ore, which requires additional processing.

Fortescue is not alone in its magnetite issues and the State has proven to be a graveyard for this type of iron ore mine.

The latest Iron Bridge blow was disclosed in Fortescue’s June quarter update, which showed total shipments for the three-month period hit 52.7mt, confirming earlier reports by The West Australian that the miner had shipped more than 200mt in year.

The final tally was a record 201.3mt, with Fortescue setting a FY2027 target of between 197mt and 207mt.

Fortescue metals chief executive Dino Otranto said breaking the 200mt barrier was a significant achievement.

“Results like this don’t happen by accident,” Mr Otranto said.

“They reflect our values in action and an unwavering focus on safer, more efficient operations. That discipline delivered unit costs within market guidance despite ongoing inflationary pressures.

“At the same time, we continue to rapidly roll out our green grid in the Pilbara. Ongoing volatility in global diesel prices only reinforces the commercial case for eliminating fossil fuels from our operations.”