May 26 (Reuters) - Australia's Downer EDI DOW.AX has secured a A$450 million ($295.70 million) contract from Fortescue Metals Group FMG.AX for early mining and maintenance services at Eliwana iron ore mine in the Pilbara region of Western Australia, the engineering contractor said on Tuesday.
Fortescue, the world's No. 4 iron ore miner, approved the development of the $1.28 billion 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. = 1.5218 Australian dollars)