Australian iron ore producer Fortescue Metals is set to scrap its contract with Downer at Christmas Creek mine in the Pilbara region of Western Australia as it plans to move to a full owner-operator model.
The latest decision comes as the company’s existing mining services contract with Downer will expire on 30 September 2016.
Fortescue said that it will transition to a full owner-operator model at the mine, and a comprehensive change management plan has been developed which will allow for the safe transition of operations.
The transition is not expected to impact production from the mine.
Fortescue Metals CEO Nev Power said: “The Downer team have been involved with mining at Christmas Creek since the outset and have played an important role in Fortescue’s development of our world class facilities in the Chichester Hub.
“Adoption of an owner operator model will further reduce Fortescue’s costs through ongoing improvement of the efficiency and productivity of our Christmas Creek mining operations.
“Our ability to generate strong earnings and cash flow will enable further improvement in our balance sheet and return to our shareholders.”
Over the course of the next six months, Downer intends to hand over operations at the Christmas Creek mine operation to Fortescue.
In February 2015, Downer secured the $720m expanded contract to perform mining services at the Christmas Creek open cut mine.
The contract included drill and blast, and load and haul of overburden and iron ore.
The company has provided mining services to Fortescue since September 2010.