Fortescue (ASX:FMG) Signs Cooperation Agreement with China Gezhouba Group (SHA:600068)
The agreement commits both parties to negotiate and define an engineering and procurement role for Gezhouba Group, which would convert to a formal appointment, if mutually acceptable terms can be agreed.
Fortescue is currently implementing its capital works program to increase production to 55 Mtpa from the Chichester Hub and completion of these works is expected within the March quarter of 2011. The miner's next expansion phase is planned to increase the production to 95 Mtpa. The involvement of Gezhouba Group will bring benefits in areas such as procurement, engineering and overall project management oversight, Fortescue says.
The expansion to 95 Mtpa will proceed despite the proposed Resource Super Profit Tax as the company intends to implement the works program before the commencement of the tax in 2012. The miner says this phase can be financed from internally generated cash flow, but plans beyond a 95 Mtpa capacity will be on hold.
Fortescue Metals Group Ltd
China Gezhouba Group Company Limited