Fortescue Metals Group says it expects to this year award contracts worth another $500 million on its $1.8 billion Eliwana iron ore project in the Pilbara.

Chief executive Elizabeth Gaines flagged the swag of contracts at an on-site sod-turning ceremony, attended by company founder and chairman Andrew Forrest, Premier Mark McGowan, Fortescue staff and other dignitaries.

Fortescue has already awarded $330 million worth of contracts for the 30 million tonne-a-year project, 80 per cent of which have gone to WA firms.

The company announced local indigenous firm PKKP and Action Industrial Catering for management and servicing of the project fly camp.

Eliwana is expected to generate 1900 jobs in construction and 500 full-time positions when it begins operating in December next year.

It is one of a trio of sustaining projects announced by the State’s big three iron ore miners (Fortescue, BHP and Rio Tinto) that collectively represent an investment of nearly $10 billion.

Eliwana includes 143km of rail from FMG’s Solomon Hub, a 30Mtpa dry ore processing facility and infrastructure.

The project will replace ore from the company’s depleting Firetail mine, maintaining Fortescue’s annual production rate at about 170Mt.

Strategically, the project is part of a broader strategy to boost the average grade of the company’s shipped ore to an iron content above 60 per cent.

Ore from Eliwana will be part of the company’s new 60.1 per cent West Pilbara fines product, which Fortescue will ultimately produce consistently at 40Mtpa.

The other component of the 60 per cent-plus strategy is the company’s $US2.6 billion Iron Bridge magnetite project, which will deliver 22Mtpa of a low-impurity, 67 per cent iron concentrate from the first half of calendar 2022. Steelmakers pay a premium for higher grade ores, though the discounts for Fortescue’s predominantly lower grade ores have been shrinking in recent months.

Eliwana has an 18-year minelife but Mr Forrest predicted the project would continue for decades longer with further discoveries, and as Fortescue opened up new projects on its sprawling Pilbara landholdings in the West Pilbara.