Fortescue production costs fall to another record low

The Solomon stockyard. Image: Fortescue Metals Group

Fortescue Metals Group has hit another iron ore production costs record in the December 2017 quarter at its Western Australian operations.

The Pilbara iron ore miner, which shipped 40.5 million tonnes (Mt) during the three months, lowered its production costs to a record $US12.08/t, a slight fall from $US12.15/t achieved in the September quarter. Its production costs guidance for the 2018 financial year has been maintained at $US11–12/t.

Fortescue’s December quarter shipments fell 8 per cent from the 44Mt it offloaded in the first quarter of fiscal 2018, it outlined today in a quarterly report.

However, Fortescue chief executive officer Nev Power said the second quarter result supported production at an annual rate of 170Mt, its shipments guidance for the financial year.

“Our productivity and efficiency initiatives have continued to reduce the cost base offsetting higher strip ratios, exchange rates and fuel prices,” Power said.

“Our focus on improving safety continues, together with our clear market and product strategy to deliver value to our customers, generating strong cash margins and shareholder returns.”

Power is on the verge of handing over his leadership role at Fortescue to Elizabeth Gaines, who was announced as the miner’s next CEO in November.

Gaines said it was a privilege to follow on from Power, who led Fortescue on its journey to become the lowest-cost provider of seaborne iron ore to China.

“I welcome the opportunity to work with the highly-capable core leadership team to deliver ongoing success for our shareholders and key stakeholders,” Gaines said.

“We remain focused on growth and development, while maintaining our commitment to the long-term sustainability of our iron ore business, debt repayment, balance sheet strength and returns to shareholders.”