Iron ore producer Fortescue Metals Group has increased the production target at its planned third mine and put a $US8.9bn price tag on a two-stage operation.

The company was initially targeting a 60Mt/y operation, at Solomon in Western Australia’s Pilbara region, expanding to 100Mt/y thereafter.

But in a presentation to an investment forum on Friday it flagged an expansion to 160Mt/y after a 60Mt/y first stage. Capital expenditure for the first stage is expected to be $3.24bn and the second-stage expansion to 160Mt/y is tipped to cost $5.7bn.

Fortescue also indicated it envisaged a third rail hub, dubbed the ‘Western Hub’, which would take in the company’s planned magnetite mining operations to the proposed new Anketell Point port south west of Port Hedland.

Fortescue and coal and iron ore miner Aquila Resources Ltd are driving plans for the new port, just 10km from a major Rio Tinto Ltd export facility.

The state government gave the port proposal the nod last week and offered to contribute $3.5M for its construction, which is expected to cost several billion dollars.