Fortescue’s $ 900m cost hike underscores the lack of mining work

Fortescue Metals Group has unveiled a $ 900m jump in its iron ironship development costs, highlighting how labor shortages and rising material production costs have plagued Australia’s mining sector.

The company, one of the largest producers of iron ore in the world, said on Friday the Iron Bridge mine now worth between $ 3.3-3.5bn to develop, due to factors including job restrictions, was higher. material costs and a strong Australian dollar six months delay.

The disclosure, part of a review of the project in the Pilbara region of Western Australia, follows ABANDON of three senior executives at Fortescue in February. This is the second time Iron Bridge costs have exploded, with Fortescue saying in February that the project is worth up to $ 3bn, up from the original estimate of $ 2.6bn in 2019. Fortescue is leading December 2022 for the first. making iron ore in the mine.

Demand for workers in Western Australia is red hot due to the surge in iron ore prices, which has prompted groups from Rio Tinto, BHP, Fortescue and small producers to invest in new mines.

Elizabeth Gains, chief executive at Fortescue, said work restrictions are particularly an issue for the group’s contractors working on the Iron Bridge expansion. Some of the contractors have been affected by the difficulties of moving to work around Australia due to coronavirus restrictions, he added.

Fortescue’s cost jump marks the latest in a series of warnings by miners about labor shortages due to the iron boom and rising costs associated with closing Australia’s international and state borders due to Covid -19.

This week, the BHP warns about a “lack of skill set” among train drivers in Pilbara, a remote region that produces most of Australia’s iron ore. The world’s largest miner says it recruited 200 new train drivers and quickly tracked the training of staff in maintenance-focused trades and qualifications.

Last month, miner Mineral Resources lowered its annual iron production estimates by 13 percent due to a shortage of truck drivers that caused the state border to close.

Industrial employment of Western Australian origins increased at 5 per cent to a record 135,001 last year, with an investment of A $ 19bn in the sector. This represents the first year of upward growth in investment and the petroleum industry since the end of the previous peak 2012-2013, according to Western Australian government statistics.

The unemployment rate is 4.8 per cent in Western Australia.

“Pilbara is Australia’s power plant today, in large part because of the world’s unsatisfactory demand for our iron ore,” said Michael Stutley, an associate at Kingston Reid, a firm specializing in work. “The lack of skill has reached a critical level. If nothing has been done, then [it] could be a negative drag on the economy. ”

Stutley said Canberra needed to introduce “targeted job openings” in other countries to enable skilled workers to enter Australia and support the industry of origin.

The conservative Australian government says the country’s international border will also not open until mid -2022.

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