Fortescue plans to lower costs even further from record mark

Fortescue Metals Group has hit its iron ore shipments target for the 2017 financial year, while also reducing its cash costs to a record low.

The miner today reported shipments of 44.7 million tonnes (Mt) for the fourth quarter of fiscal 2017, giving it 170.4Mt for the year.

Fortescue’s cash production costs dropped to $US12.16 per wet metric tonne (wmt), a 15 per cent improvement on the June 2016 quarter and 7 per cent lower than the March 2017 quarter.

The company has outlined its guidance for the 2018 financial year, with it targeting another reduction in cash costs to $US11-12/wmt, while maintaining shipments of 170Mt.

Fortescue Chief Executive Officer, Nev Power, said the results demonstrated the continued excellent performance being achieved by our teams in safety, production and operating cost improvement.

“In financial year 2017, we delivered on our targets by shipping 170.4mt of iron ore, improving our cash production cost by 17 per cent to US$12.82/wmt and generating strong cash margins during a period of volatility in the iron ore price,” Power said.

“Leading into financial year 2018, we are well positioned to continue our focus on productivity and efficiency initiatives to improve costs, to invest in the long-term sustainability of our core iron ore business and maintain production levels.”

A key focus for Fortescue during the quarter was adding more diversity to the company, which it achieved on several fronts.

The value of contracts and sub-contracts awarded by Fortescue to Aboriginal businesses and joint ventures rose to almost $2 billion during the quarter.

Fortescue’s Aboriginal employment increased to 15 per cent of the workforce by the end of June, while its female participation rate rose to 17.3 per cent.