PERTH (miningweekly.com) – Iron-ore major Fortescue Metals has secured a $1.5-billion investment from Taiwan’s Formosa Plastics Group to build the Iron Bridge joint venture (JV) project, south of Port Hedland.

Fortescue owns the JV, which incorporates the North Star and Glacier Valley iron deposits, with China’s Shanghai Boasteel Group Corporation, which has a 12% stake in the project.

North Star and Glacier Valley have a combined resource of 5.2-billion tonnes.

Under the latest agreement, Formosa would acquire a 31% unincorporated interest in the Iron Bridge JV for $123-million. The company would also fund the first $527-million required to develop the project, with the funding covering construction of the Stage 1 operation at a capital cost of $340-million.

Construction of Stage 1 was expected to take some 12 months, with first production of 1.5-million tonnes a year, of 66% iron product, starting in early 2015.

Formosa would also participate in the Stage 2 development, subject to relevant government approvals and JV sanction. If approved, Stage 2 would by funded by the balance of Formosa’s initial funding, a contribution of $1.05-billion from the JV, followed by proportional contributions.

The 9.5-million tonnes a year, Stage 2 development of a 68% iron magnetite concentrate was subject to JV approval and construction was expected to start in 2015.

Further, Formosa has also agreed to purchase up to three-million tonnes a year of iron-ore at market place, to supply its 22-million tonne a year Ha Tinh steel mill, in Vietnam.

Formosa could elect to prepay $500-million upfront to Fortescue subsidiary The Pilbara Infrastructure Group to access the port facilities at Herb Elliott under separate infrastructure access arrangements.

Fortescue CEO Nev Power welcomed the agreement, saying the $1.5-billion investment presented a pivotal step in the development of the Iron Bridge project.

“Importantly, the transaction also delivers a further strengthening of Fortescue’s balance sheet.”

Formosa president Hung-Chi Yang, meanwhile, has said that the development of the Iron Bridge project was of strategic importance to the company.

“We believe that this investment will secure a substantial long-term resource to complement the group’s manufacturing activities.”