Pilbara is frontier land, bleak, inhospitable, dangerous, its vast ancient plains and mesas scarred by rust-red gorges. It’s hot, too, so searing that one of its few towns, Marble Bar, is said to be the hottest place on Earth.

Pilbara is also a battleground, a remote corner of the already remote Western Australia in which the giants of mining face a challenge from an ambitious upstart entrepreneur. Not so much David v Goliath as Andrew v the Goliath twins, BHP Billiton and Rio Tinto, in a nightmarish wrestling tag match.

In 2003 Fortescue Metals Group, founded by Andrew Forrest, the chief executive, was a junior explorer with A$8 million (£3.7 million) cash and one tenement in the Pilbara, which, with Brazil, is the source of most of the world’s exported iron ore.

However, with a market value of A$18.8 billion, Fortescue also has many believers. It is within a whisker of completing one of the world’s biggest iron ore mining projects and in less than two weeks the company is scheduled to ship its first ore to Baosteel, China’s biggest steelmaker and its principal customer.

It is a crucial step towards its ambition of becoming the next Australian mineral export heavyweight, lifting an iron curtain erected by BHP, Rio and Vale, of Brazil, which control three quarters of the global trade in iron ore.

“It’s exhilarating, to say the least,” Graeme Rowley, executive director of Fortescue, told The Times, “and I think the other part I would say is very grateful that we have managed to overcome some of the many challenges along the way.”

Mr Rowley joined Mr Forrest from a career with Rio Tinto after a meeting over a whisky five years ago this month. He says that one of the first appointments was a geologist who “effectively slept at the titles office” to stake out fresh tenements.

Fortescue has secured 40,000 sq km (15,400 sq miles) of tenements across an area the size of Texas, several times larger than its competitors, mostly dropped by BHP and Rio after they had decided that they were not economically viable. The interloper now has 4.2 billion tonnes of iron ore to show for its chutzpah, with 80 per cent of its territory still to explore.

Squeezing into five years what analysts say would typically take the majors seven, Fortescue has, from scratch, developed mining operations, a 265km (165mile) railway and a port to ship tens of millions of tonnes of rich red rock to a customer portfolio that includes the top ten steel mills in China. The next challenge for the Perth company’s A$2.8 billion venture is to meet its aggressive production schedule.

Fortescue has secured long-term sales agreements with 35 Chinese steelmakers to sell 55 million tonnes of iron ore annually for a minimum of ten years. However, it aims to ramp up production quickly, expanding to 100 million tonnes a year by 2009-10 and eventually to 200 million tonnes – double what BHP produced last year.

Fortescue’s foray coincides with prices and demand at record highs, helping to pay for expansion and fund its A$4 billion debt. Spot prices have more than doubled in two years and Merrill Lynch expects a further record 71 per cent lift when Rio and BHP Billiton strike a new deal with global steelmakers for benchmark contract prices.

Demand for iron ore, the key mineral used in blast furnaces to produce steel, is being driven by rapid growth in steel consumption in China and other emerging markets. Meanwhile, Morgan Stanley forecasts a shortage of supply for at least another five years. Some analysts fear unplanned production delays in what is a greenfield production and are anxious about rapid expansion when debt markets are nervous and labour and equipment are in short supply.

Len Eldridge, a Macquarie analyst, said: “They haven’t stepped back and said they’ll do 55 million tonnes into the market, then assess the expansion options. They’ve said we’re going to do 55, we’re going to 100, we’re going to 200. We’re not negative on the stock, but they’ve certainly set themselves expectations.”

However, Mr Rowley said: “You can’t expect to stay competitive in a mass-production business which is about volume, like this is, and stay small. The real value, the real return to investors in this game, is obviously volume.”

The company is a pure play on iron ore and a bet on China, which is the biggest steel producer, steel consumer, steel exporter and iron ore importer.

Mr Rowley said: “You’ve got China, very quickly followed by India. And at the moment we’re just talking about infrastructure.

“It is the growing market. It is the place where 1.5 billion consumers are coming into the commercial market of the world. That has not happened in my lifetime or my parents’ lifetime and I doubt it will happen again in my grandchildren’s lifetime. It is an amazing fundamental change to the industrial and commercial framework of the world.”

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