Iron ore price, page-39116

Hi Mac.
I don't have brilliant knowledge of costs. Just the basics. I find it easiest to keep it simple. If you go to the FMG annual reports you get total revenue and total tonnes and total production. I fine these numbers the most useful because they are simple.
Tonnes shipped was 182.2m wmt
Revenue was $22.3B or an average of USD122.50 per wmt
The stated C1 cost was USD13.93 per wmt but that is not the total cost.
The stated total delivered cost is USD31 per wmt or USD34 per dmt. Refer to page 34 of the annual report.

FMG as an investment has risks. As you can see it's production is low cost and it makes a fortune. I reckon the greatest risk is grade. The quoted IO price is generally for 62% Fe product. FMG receives a penalty because it's ore is lower grade at 58%. The good news is IBO production of 20mtpa will recieve a premium due to it being 67% Fe. But right now all sales receieve the penalty and even going forwards the bulk of sales recieve the penalty. The size of the penalty for grade varies. A rule of thumb in the past has been 15% but that penalty could increase. I think a key reason Andrew Forrest talks about onshore steel making is actually because he wants to make a premium product as a way of protecting the FMG revenue against the grade penalty.