The Fortescue Metals Group Limited (ASX: FMG) share price has climbed 1.37% higher in early trade today despite reports of cost blowouts at its Iron Bridge Magnetite Project.
Why is the Fortescue share price under pressure?
According to a report in The Australian, Fortescue is looking at revising its project costs. Industry sources quoted by the paper say the US$2.6 billion project could see costs increased by 25%.
The report noted that Fortescue has not yet agreed to a revised budget with its project partner, Formosa Plastics. The Taiwanese plastics company owns a 31% stake in the project.
However, it’s worth noting Fortescue said in October that the project was on budget and scheduled to deliver its first shipment in 2022.
The Fortescue share price has had a good run over the past 12 months. Shares in the Aussie iron ore miner have surged 128.2% higher as at Thursday’s close.
News of the cost blowouts haven’t affected the ASX 200 share in early trade even as the S&P/ASX 200 Index (ASX: XJO) trends lower.
According to the article, industry sources have said that all major projects in Western Australia could be facing budget pressures.
A rising Aussie dollar as well as higher input costs were cited as key factors behind the budget stress.
The Aussie dollar has been climbing higher as iron ore prices soar and foreign countries continue to purchase our key exports.
What is the Iron Bridge project?
The Iron Bridge project is a magnetite mine in Western Australia setup as a joint venture between Fortescue and Formosa.
The Project is located 145km south of Port Hedland and is one of the biggest magnetite resources in Australia.
The Fortescue share price has climbed higher in early trade despite broad market weakness and the overnight report. It’s worth noting that the reported cost blowouts remain unconfirmed by the iron ore giant.