Fortescue Metals Group could boast the lowest unit costs in Australia's iron ore sector within months, as the miner's extraordinary cost-reduction journey pushes it to the brink of toppling the traditional industry benchmark, Rio Tinto.

Fortescue shares surged to a 23-month high on Wednesday after the company said unit costs would continue falling in a year when exports are forecast to remain steady between 165 million and 170 million tonnes.