Fortescue lifts iron ore production, cuts costs

Fortescue Metals Group has increased its yearly iron ore shipments by 33 per cent.

During the June 2015 quarter Fortescue shipped 42.4mt of ore which was five per cent higher than the previous quarter, taking total FY15 shipments to 165.4mt.

The miner has also delivered significant cost cutting measures as promised.  During the June 2015 quarter C1 reduced to US$22/wmt, a 14 per cent reduction from the previous quarter and a 35 per cent reduction from the prior comparable period.

As a result of lower C1 costs, total delivered costs to customers inclusive of shipping, royalty and administration costs, decreased to US$31/wmt (US$34/dmt), nine per cent lower than the prior quarter.

C1 costs for June were US$19/wmt, with Fortescue targeting FY16 C1 cost guidance of US$18/wmt.

Meanwhile the company said it wold target a further $US4.1 billion of costs savings from improvements in mining productivity and efficiencies.

 Fortescue reaffirmed it would keep production flat, with FY16 shipping guidance at 165mtpa.

"We are choosing to maintain our production at about 165 million tonnes to maximise our margin. We don't see any point in just continuing to drive additional production through debottlenecking or other means into a market that is already fully supplied," Fortescue’s chief financial officer Nev Power said.

The company said its break-even price on 62% Platts CFR basis remains at US$39/dmt.

Commenting on the world  iron ore market, Fortescue said the average 62% Platts CFR price was US$58 per dry metric tonne (dmt) during the June 2015 quarter.

The miner said market remains high, driven by speculation associated with the threat of additional supply driving iron ore futures, together with market concerns over the Chinese economy and the Greek economy.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.