Fortescue Metals Group’s clampdown at Iron Bridge threatens nearly 400 jobs

Nearly 400 jobs are threatened by Fortescue Metals Group’s termination of construction contracts at the Iron Bridge magnetite project as it reviews the scope of the venture after a $500 million cost blowout. The iron ore miner yesterday confirmed that various contracts at Iron Bridge had been cancelled, with contracting firms told their remaining work had been pulled and directed to demobilise staff and equipment. The terminations are in line with FMG’s warning last month that it would look at “contractor strategy and selection” as part of a three-month technical and commercial review of the troubled project, south of Port Hedland. Work on major earthworks contracts at Iron Bridge’s processing plant and tailings dams is believed to have been halted. Contracts for new facilities at FMG’s Port Hedland operations are also said to be on hold. There have been suggestions that at least some of the work will be reinstated once there is more certainty about costs and potential changes to the Iron Bridge infrastructure, but the affected contracting firms fear the worst. FMG, controlled by Andrew Forrest, pictured, reiterated yesterday that work on critical preparatory work continued as it laid bare the potential job losses flowing from its review. “Works on site continue on critical path items, including engineering, off-site fabrication, procurement activities and site-based civil works,” it said. “We are working closely with our contracting partners to support redeployment to other Fortescue sites where possible with around 380 contractor positions impacted while we complete the review.” About 2100 FMG staff and contractors had previously been employed on the project. Dozens of overseas and Australian contracting firms have been deployed on Iron Bridge, with many having completed most or all of their work. Some contracts had only been awarded in the past few months. Companies to have trumpeted contract wins at Iron Bridge include NRW Holdings, CIMIC’s CPB Contractors, Civmec and Decmil. While some firms are still waiting on the confirmation of contract cancellations, Civmec said it had not lost any contracts. Most of CPB’s $60m-plus of work is believed to have been completed and NRW did not respond to queries about the status of its contracts. Decmil said it was “presently in discussions with Fortescue about its contract to build fuel and vehicle maintenance infrastructure, which is part completed”. FMG confirmed last month that the cost of Iron Bridge, a joint venture with Formosa Steel, had blown out by $US400m ($516m) to $US3 billion. The 22-million-tonnes-a-year project is also running late, with first production now delayed into the second half of 2022 from the middle of next year as previously expected. The over-runs have triggered a major shake-up in FMG’s project management, led by the sudden departure of chief operating officer Greg Lilleyman, and cost chief executive Elizabeth Gaines and chief financial officer Ian Wells millions of dollars in annual bonuses. FMG shares yesterday closed 11¢ better at $22.21.