Fortescue cuts iron ore guidance amid surging price

FMG Nicola's maiden voyage into Port Hedland. Image: Fortescue Metals Group

Fortescue has posted a 47 per cent surge in its iron ore’s selling price upon higher benchmark iron ore prices, reaching $US71 ($98.92) a dry metric tonne, compared to $US48 a dry metric tonne in the December quarter.

The company’s total iron ore shipments in the March 2019 quarter were “in line with the prior comparable period”, according to a quarterly statement released today.

Fortescue delivered 38.3 million tonnes of shipments for the quarter – a 10 per cent drop from the December 2018 quarter after losing five days of shipments equating to 2.5 million tonnes.

A total 3.8 million tonnes were attributed to its West Pilbara Fines product, representing 10 per cent of shipments for the quarter.

Total West Pilbara Fines shipments are expected to be between 8–10 million tonnes for the 2019 financial year, with full year shipments to range between 165-170 million tonnes, down from an upper range of 173 million tonnes.

Chief executive Elizabeth Gaines called the March quarter result “excellent”, and mentioned the team’s continued focus on optimising Fortescue’s product mix.

“Long term contracts for off-take of our 60.1 per cent iron grade West Pilbara Fines product have now been finalised with nine customers, accounting for the majority of the product,” Gaines said.

“We recently announced the approval of the 22 million tonnes-a-year, $US2.6 billion ($3.6 billion) Iron Bridge magnetite project. Building on the success of the launch of West Pilbara Fines, the Iron Bridge product will increase our average grade, providing Fortescue with the ability to deliver the majority of our products at greater than 60 per cent iron grade.”

The Iron Bridge project in the Pilbara, Western Australia is targeted to produce 22 million wet metric tonnes a year once full operational capacity is achieved.

First ore will be delivered from Iron Bridge in the first half of 2022, with ramp up to full production within 12 months at an all-in sustaining cost of $US45–55 per dry metric tonne.

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