UPDATE: Fortescue Metals' Western Hub Pushes Resources Over 10 Billion Tons

Fortescue Metals Group Ltd. (FMG.AU) said Wednesday its total resources of iron ore in the Pilbara region of Western Australia had pushed over 10 billion tons after announcing a maiden resource estimate of 624 million tons for its Western Hub project.

Fortescue, which has grown rapidly to become one of the world's top five iron ore miners since shipping its first cargo in 2008, said the estimate for the site reinforced its determination to build a new port at Anketell Point in the western Pilbara, close to Rio Tinto Ltd.'s (RIO) Dampier and Cape Lambert ports.

Iron ore miners expect several years of strong demand for their products as emerging economies in Asia suck in global supplies of the steelmaking commodity to feed booming manufacturing and construction industries.

Earlier Wednesday, Fortescue chief executive Andrew Forrest told an industry conference in Hong Kong he expects iron ore prices to remain high until at least 2012.

China's latest five-year economic plan in particular represents "fantastic" news for commodities, Forrest said, as the government is planning to build 36 million more homes for people on lower incomes by 2016.

The Pilbara supplies around a third of the world's seaborne trade in iron ore, with all but a handful of that total mined by Rio Tinto, BHP Billiton Ltd. (BHP) and Fortescue, who each operate their own rail lines and port terminals to get around 430 million tons a year of ore to international markets.

Fortescue's support for the deepwater port at Anketell has been a subject of some uncertainty. The company has submitted plans to the Western Australian state government to jointly develop the port alongside Chinese state-owned conglomerate Metallurgical Corp. of China Ltd. (601618.SH) and Aquila Resources Ltd. (AQA.AU).

Aquila has iron ore tenements in the Pilbara as well as a coking coal joint venture with Vale SA (VALE), the world's biggest coking coal miner, in Australia's Bowen Basin.

Fortescue said the resource estimate for the Flying Fish and Eliwana deposits at the Western Hub were in the 'inferred' category, the least reliable estimate of mineral resources.

The estimate suggested that the ore has a grade of 58.7% iron and covered a deposit 35 kilometers long starting a few kilometers southwest of Rio Tinto's Brockman 2 mine.

Mineral resources describe only ore deposits in the ground, and are normally later upgraded to reserve estimates, which represent the portion of resources that can be economically mined.

Roughly 2.8% of Fortescue's total resource is in the most-reliable 'measured' category, with 29.1% in the less-reliable 'indicated' category and the balance 'inferred'.

Fortescue also announced a resource estimate of 229 million tons inferred for three sites in the vicinity of its Solomon Hub project.

Fortescue plans to mine 55 million tons of iron ore during the year to the end of June and is planning an US$8.4 billion expansion to 155 million tons a year of production in 2014, which would put it on a par with the current attributable output of Rio Tinto and BHP Billiton, the world's second- and third-biggest iron ore miners respectively behind Brazil's Vale.

As part of those plans, the miner is aiming to move beyond its single mining and processing hub at Christmas Creek in the eastern Pilbara to a second operation at Solomon in the west of the region. An expansion to Western Hub, and the building of a railway and port at Anketell, would form a third stage that the miner believes could lift production as high as 355 million tons a year.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]

--Alexander Kolyandr in Hong Kong contributed to this report