While Andrew Forrest has influenced rare earths, nickel and gold markets with his investment vehicle Wyloo Metals in recent years, Fortescue has been principally focused on iron ore and decarbonisation.
The major mining company, which Forrest founded in 2003, has continued to pump out millions upon millions of tonnes of iron ore from its Pilbara operations, while Forrest has eagerly invested in various sustainability endeavours including green hydrogen and green iron.
Red Hawk Mining, on the other hand, has been quietly going about its business in developing its Blacksmith iron ore project.
While one company has a market capitalisation of more than $58 billion and the other is capitalised at just under $250 million, sometimes circumstances can bring two unlikely partners together.
This is what occurred this week when Fortescue announced an off-market takeover of Red Hawk for $254 million, with the Blacksmith project central to the deal.
We’ve seen Rio face depleting grades and deposits in the Pilbara, with the company relying on the development of the Rhodes Ridge and Western Range iron ore mines to help prop it up.
For Fortescue, it appears Blacksmith will be a bolt-on for its existing Pilbara mines and ties in well with existing infrastructure. However, Fortescue will have to contend with lower grades, with Blacksmith boasting an average grade of 60.5 per cent compared with the Pilbara benchmark of 62 per cent.
All in all, the Blacksmith project is one of the last remaining iron ore tenements in the Pilbara region that isn’t owned by one of BHP, Rio Tinto and Fortescue, which could’ve been all Fortescue needed to jump on the project.
Red Hawk chief executive Steven Michael told The Australian Financial Review that Fortescue was a logical suitor for the Blacksmith project.
“Fortescue has billions of dollars invested in infrastructure only 30 kilometres from our project,” he said. “For them, this is an attractive bolt-on transaction. They can realise value that Red Hawk could never have realised.”
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