Fortescue record dividend expected as exports hit a high
Peter KerResources reporterJul 30, 2020 – 8.56amFortescue Metals Group has beaten its upgraded export target and says it can sustain its record breaking performance in the year ahead.
But a cost blow out of up to $US1 billion on Fortescue's next iron ore mine has put a dampener on the result.
The miner shipped 47.3 million tonnes over the past three months, which was slightly better than analysts had expected.
Full year exports of 178.2 million tonnes were better than the 177.9 million tonnes expected by UBS.
The result smashed Fortescue's previous export record of 170.4 million tonnes set in fiscal 2017.
Fortescue said on Thursday it expected to ship between 175 million and 180 million tonnes in fiscal 2021.
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The strong operational performance was marred by news that development of the Eliwana mine would cost up to $US1 billion more than previously thought.
Fortescue said Eliwana would now cost between $US1.325 billion and $US1.375 billion, up from the previous budget $US1.275 billion.
Fortescue said the blowout was caused by coronavirus delays and other access delays.
The company is now racing to meet its promise of producing first ore from Eliwana before the end of 2020.
Fortescue typically sells ore with lower iron content than rivals BHP and Rio Tinto, and therefore fetches prices below the ''benchmark'' price for ore with 62 per cent iron.
The discount applied to Fortescue's ore over the past year was 16 per cent.
That is a much better outcome than Fortescue was getting in late 2017, when its product was selling for 34 per cent less than benchmark iron ore.
The strong export volumes and strong iron ore prices suggest Fortescue shareholders will receive another record dividend next month.
Fortescue founder, chairman and major shareholder Andrew Forrest took home $1.24 billion of dividends in fiscal 2019.
His companies earned $828.4 million worth of dividends at Fortescue's half year results in February.
Iron ore miners in Western Australia are benefitting from the absence of the coronavirus in that state at a time when widespread community transmission in Brazil is causing higher than normal rates of absenteeism at the iron ore mines run by Vale.
Fortescue record dividend expected as exports hit a highPeter...
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