Fortescue Metals Group (FMG) has inked a long-term gas transportation agreement for the delivery of gas at its Pilbara operations, with Monadelphous Group (MND) set to construct the pipeline.
In a statement to the Australian Securities Exchange, Fortescue said converting the 125 megawatt Solomon Power Station from diesel to gas is set to save approximately $US20 million per year.
The 270km Fortescue River Gas Pipeline will be built, owned and operated by the FRGP joint venture, owned by Duet Group's subsidiary DBP Development Group and TransAlta Corporation's subsidiary TEC Pilbara Pty Ltd.
In a separate statement, Monadelphous Group said it had signed a $100 million construction contract for the gas pipeline, expected to be completed in late 2014.
Monadelphous said it inked a deal with the FRGP joint venture to build the gas pipeline from Compressor Station 1 on the Dampier to Bunbury Natural Gas Pipeline to Fortescue's Solomon Hub in the Pilbara.
Fortescue said the deal would reduce carbon emissions as well as energy costs.
The miner said it has secured foundation shipper rights under the gas transportation agreement, providing flexibility to increase gas volumes.
The pipeline is set to be operational in early 2015 and Fortescue said it has the potential to open up long-term growth across the Pilbara, with extension and expansion opportunities.
Fortescue chief executive officer Nev Power said the pipeline is a "significant step in the gasification of the East Pilbara to the lasting benefit of the state of Western Australia".
Duet Group launches capital raising
Duet Group has launched a fully underwritten placement to eligible institutional investors to raise $100 million and fund its subsidiary's participation in the project.
In a separate statement, Duet said the placement would be conducted through a variable price bookbuild with an underwritten floor price of $2.01 per new stapled security.
The underwritten price is a 2.4% discount to its last close of $2.06 yesterday.
Duet's shares have been placed in a trading halt while the capital raising is conducted.