Fortescue is positive about former Rio asset Nyidinghu

Rio Tinto previously held the deposit in Western Australia's Pilbara region but found the levels of contaminants that had to be removed, including phosphorous, were too high.

Fortescue director of development Peter Meurs said Australia's third largest iron ore miner was bullish on Nyidinghu, which contains a two billion tonne iron ore resource and lies about 35 kilometres from its flagship Chichester Hub operation.

Meurs said the miner would need to blend iron ore from Nyidinghu with Chichester Hub ore to create a saleable product.

"Nyidinghu is a fabulous ore body," Meurs told reporters at an iron ore conference in Perth on Tuesday.

"It's a medium-phosphorus product but the Chichester is zero phos (phosphorous), so if you put the two together you get a wonderful blend.

"So for us, it's an ideal deposit located in exactly the right place."

Fortescue previously had problems with contaminants at its first mine, Cloudbreak, forcing it to build a de-sand plant to remove excess silica and alumina.