Good read below.Fortescue ekes out a profitJanuary 30, 2009 -...

Good read below.


Fortescue ekes out a profitJanuary 30, 2009 - 6:03PM
Fortescue Metals Group expects second-half iron ore production of 23.8 million tonnes, taking the output target for the full fiscal year to a downwardly revised 39 million tonnes.

Fortescue, which started mining last May and quickly became Australia's third-largest iron ore miner, promised to mine at an annualised rate of up to 45 million tonnes to supply the raw material to steel mills in China.

"It would be wrong of me to say we haven't been challenged,'' Fortescue executive director Graeme Rowley told reporters.

Mr Rowley said the company now hoped to mine ore at a rate of around 3.2 million tonnes per month starting in mid-year, steadily rising to more than 4 million tonnes.

Fortescue also reported a profit of $1.1 billion for the first half, with second-quarter profit rising 24% on the first quarter to $607 million.

"The company's production profile appears a bit tepid, but the margins are still pretty good given this market,'' said DJ Carmichael & Co analyst James Wilson.

Mr Rowley also said Fortescue's mining costs, which averaged $30.81 per tonne in the quarter ended December 31, 2008, rising to $33.90 delivered on board, against an average selling price of $92.31 a tonne, remained high but should fall as more ore is produced, improving economies of scale.

The company shipped 6.281 million tonnes of ore in the December quarter slightly under the 6.881 million tonnes shipped in the previous quarter, company figures showed.

The main reasons for the reduction included plant works during November as part of commissioning and general maintenance.

Processing of more moist ore over the period also contributed to the decline, Mr Rowley said, as did lower demand for lump ore, which led the company to reduce all material to "fines'' specification, requiring extra crushing.

Fortescue exported a total of 15 million tonnes of iron one between May 15, when mining started, and January 8, down from an earlier forecast of 19.8 million tonnes in calendar 2008.

Reuters