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https://thewest.com.au/business/min...shipments-record-despite-covid-ng-b881949405z

Fortescue Metals Group sets new shipments record despite COVID

Daniel NewellThe West Australian
Thu, 29 July 2021 7:01AM
Daniel Newell


An excavator loads ore into an autonomous dump truck at Fortescue Metals Group’s Solomon hub. Credit: Brendon Thorne/Bloomberg

Another record-breaking quarter for Fortescue Metals Group’s Pilbara iron ore operations has helped the Andrew Forrest-controlled miner set a new shipments benchmark and fill its coffers.

Fortescue shipped 49.3 million tonnes in the three months to the end of June, taking total exports for the year to a record 182.2mt — just over its forecast of 182mt and comfortably beating the previous year’s record of 178.2mt
It also cashed in on new record prices for the steel-making commodity in the period amid a booming Chinese market and supply constraint from producers in Brazil, realising record average revenue of $US168/t.
The average over the full year was $US135.32/t.

Costs in the fourth quarter were 2 per cent higher than the March period at $US15.23/t due to COVID-related costs and inflationary impacts but the full-year average of $US13.93/t was within guidance.

Rival BHP is yet to issue cost guidance for 2021-22, but its costs for the financial year just ended are expected to be within guidance of $US13/ and $US14/t.
Rio recently upgraded its 2021 calendar year cost outlook by 4 per cent to a range of $US18/t to $US18.50/t.

Fortescue chief executive Elizabeth Gaines said the June quarter was an outstanding performance given the impacts of the impact of wet weather and COVID-19 travel restrictions in the Perth and Peel regions which had left many staff stuck on site for extended periods.

“The strength of the operating performance, combined with record average revenue resulted in strong free cashflow generation in the June quarter as demonstrated by the movement from a net debt position at the end of March of $US1 billion to net cash of $US2.7b at 30 June,” she said.

The extra cash could deliver a huge dividend windfall for shareholders when the company reports its full-year financials next month.

Fortescue is tipping exports for this year to come in between 180mt and 185mt, but at higher costs of between $US15/t and $US15.50/t.


The company also gave an update on the troubled Iron Bridge magnetite project south of Port Hedland, where cost blowouts have pushed its share of the up to $US3.5 billion joint venture project budget to between $US2.5b and $US2.7b.
It said critical path items continued during a recent assessment period, including engineering, off-site fabrication, procurement activity and site-based civil works.
Concrete footings were poured for the wet and dry plant and the first modules were delivered to site during the quarter.
“Construction of the module offload facility at Lumsden Point in Port Hedland has started to address logistical constraints and underpin the project schedule,” it said.
Iron Bridge will deliver 22mt a year of high grade, 67 per cent magnetite concentrate, with first production due by December 2022 with a ramp up period of between 12 and 18 months.

Fortescue shares were up 1.4 per cent in early trade to $26.18.