Iron ore hopeful Fortescue Metals Group has moved forward in its quest for a $2.5 billion project in the West Australian Pilbara, by forming an alliance with Roche Mining, which will do most of the mining.

The five-year deal with renewable options, termed the Pilbara Mining Alliance (PMA), will see Roche, a division of Downer EDI, become responsible for mine planning, engineering and site establishment while Fortescue will provide the equipment for mine production.

Fortescue claims the deal is a natural fit, given Roche's intimate knowledge of Fortescue's geology, mineralogy and proposed mining systems. Fortescue hopes for exports of around 45 million tonnes of iron ore a year from its projects, with contracts for about 34 million tonnes secured so far.

Fortescue operations director Graeme Rowley said the alliance was a milestone for the company.

"Roche is a natural partner for Fortescue's project development to date, including the recent mining study, the reserve and resource delineation programs and metallurgical test work," Mr Rowley said.

"PMA will be able to commence its activities immediately with a fully informed core management team."

The PMA will also manage $1.9 billion of Fortescue's planned annual operating costs.

It is unclear how much the deal is worth to Roche, or how much the deal was signed for.

Roche Mining chief executive Robert Logan said it was a "significant contract" for his company.

"It demonstrates our ability to provide a comprehensive mining solution from the front-end consulting with Snowden through to full production," Mr Logan said.

The Roche alliance comes about two weeks after Fortescue signed an engineering, procurement and construction management deal with WorleyParsons.

Contracts to build the port, rail and mine processing infrastructure are still outstanding, as is the bulk of funding for the project.

It signed a $200 million credit facility in March but is still working on permanent project financing with Citigroup.

Fortescue, the brainchild of West Australian mining entrepreneur Andrew Forrest, wants to become a new force in iron ore production in Australia, and break the Rio Tinto and BHP Billiton stronghold in the region.

It is looking at a start-up date of late 2007 or early 2008.

Fortescue has negotiated significant hurdles – including Australian Securities & Investments Commission charges levelled at Mr Forrest, and a competition ruling by federal Treasurer Peter Costello that denied it access to BHP Billiton's rail network – to become a $1.83 billion company, despite not shipping any product.