Downer EDI gets $450m Fortescue contract

Engineering contractor Downer EDI has secured a $450 million contract from Fortescue Metals Group for early mining and maintenance services at the Eliwana iron ore mine in Western Australia.

Fortescue, the world's No. 4 iron ore miner, approved the development of the Eliwana mine and rail project in May 2018, in a bid to boost the price for its iron ore.

Production from the mine is set to start in December 2020 and is expected to yield higher quality ore, which will help Fortescue maintain a 170 million tonnes per annum production rate for over 20 years.

Downer said this is the second Eliwana project package it would execute, the first being the bulk earthworks contract that commenced in late 2019.

Under the new agreement, Downer will complete early mining operations over two years as the mine site is established and then stay on for a further three years to provide maintenance services as operations transition to Fortescue's autonomous mining fleets.

The contract brings some relief to Downer, which withdrew its fiscal 2020 earnings forecast and deferred payment of interim dividend in March in the wake of uncertainty surrounding the coronavirus outbreak.