Fortescue Metals Group (ASX:FMG) was reportedly one of the parties missing out on the tender for the Blocks 1 & 2 at Simandou, the famous high grade Guinean iron ore mine now being developed by the Chinese-backed consortium that won the bid.

FMG seems to have found another African option in the Belinga iron ore deposit in Gabon.

The company announced today that it had picked up a 36 month exclusive right to study the 5500km2 Belinga iron ore project. FMG plans to create an 80-20 JV which will include the Abu Dhabi based Africa Transformation and Industrialisation Fund as a minority partner.

“The joint venture will initially focus on exploration works to determine the potential size and grade of the Belinga iron ore deposit and logistics solutions during the 36 month exclusivity period,” the company said.

Belinga was discovered in 1955, with exploration in the 1970s identifying high iron content with low impurities.

According to FMG it has been progressively assess by the company since 2018 and the lithology and structure of the deposit is similar to other banded iron formation deposits in West Africa like Simandou.


FMG on the search for higher grades

Iron ore miners are on the hunt for new sources of iron ore at higher grades, with growing discounts for sub-62% iron ore and rising premiums being offered in the market for products that are above benchmark.

FMG produces a lower grade product than other Pilbara iron ore miners, and has been working to develop a 22Mtpa magnetite project in the Pilbara known as Iron Bridge to compensate. It will deliver a 67% plus iron concentrate.

Developing higher grade iron ore mines is not just a commercial imperative from a sales perspective.

High grade ores will be favoured in low emissions steel making technology like direct reduced iron, meaning miners will need high grade sources of production to stay competitive as steel mills look to reduce their emissions intensity in the years to come.

Given FMG’s new focus on green hydrogen, a potential feedstock for green DRI plants, it makes sense the company would be looking to add high grade ore sources to its portfolio.

West African iron ore deposits tend to have high grades in situ, but the lack of infrastructure and jurisdictional risk have scared investors away for years.

Gabon’s petroleum, gas, hydrocarbons and mines minister Vincent de Paul Massassa drew attention to the high grade nature of the Belinga deposit in FMG’s release.

“This is a highly significant announcement for the future growth and development of our economy. We know that the Belinga deposit is one of the world’s largest high grade iron ore deposits and the opportunity to work with an established mining company with the track record and reputation of Fortescue will allow us to fully explore the potential that we know exists in the project,” he said.

Fortescue chairman Andrew Forrest views Belinga as an opportunity to return to the company’s roots as an iron ore explorer.

“We welcome this important agreement and opportunity to work with the Gabon Government on a project with huge potential for Gabon’s future economic growth and development,” he said.

“Fortescue began as a world-class exploration business and we believe that the Belinga Iron Ore Project is potentially one of the world’s largest undeveloped, high grade hematite deposits.

“The opportunity to assess this project under a period of exclusivity and to partner with local expertise and the Gabon Government has the potential to add a significant iron ore operation to our world class portfolio.”

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