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Category: Iron Ore / Mining Industry / Company News

Fortescue Metals boosts production by 14pc

Wednesday, 27 Jul 2016 09:03:21 | Sue Lannin

Fortescue chief executive Nev Power says cost cutting remains his focus. (ABC News)

Iron ore miner Fortescue Metals said production increased at its Pilbara iron ore mines in Western Australia over the June quarter and it plans to keep ramping up output in 2017.

FMG mined 47.8 million wet metric tonnes of the steel making ingredient in the fourth quarter, a rise of 14 per cent from the same a year ago.

Output also increased from the March quarter to the June quarter.

Exports rose by 3 per cent over the June quarter compared to the same time last year, with 43.4 million wet metric tonnes of iron ore shipped, including ore from other companies.

Fortescue said it received an average realised price of $US48.79 per dry metric tonne in the quarter, after adjustments for its lower grade iron ore, compared to the average benchmark price of $US55.66 per dry metric tonne for ore with 62 per cent iron content.

FMG said its cost of production at its mines had dropped by more than one third to $US14.31 a tonne from the June quarter in 2015.

That figure does not include the cost of freight, royalties, capital expenditure, dry metric tonne conversion or other add-ons which are used to compare the overall cost of production for iron ore miners.

FMG said it was targeting shipments of between 165 to 170 tonnes of iron ore for the 2017 financial year.

Fortescue cuts debt, slashes costs

Strong iron ore prices this year helped the miner lower its net debt to $US5.2 billion at the end of June 2016.

It repaid nearly $US3 billion dollars last financial year.

A supply glut saw iron ore prices slump below $US40 a tonne in December, but robust demand from China saw prices rally by one third this year to just above $US70 a tonne.

Ore with 62 per cent iron content is currently priced at $US58.08 a tonne at Qingdao port in China according to the Metal Bulletin.

Chief executive officer Nev Power said the miner was focused on continuing to reduce costs and debt.

"Our June quarter result demonstrates the consistent delivery of outstanding operational performance across all aspects of our business," he said.

"Costs have been lowered for the tenth consecutive quarter and our continued focus on productivity and efficiency measures will drive C1 costs even lower in financial year 2017."

FMG shares have rallied by more than half over the past year.

FMG shares were up nearly 6 per cent to $4.35 at 10:40am (AEST).

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