Forrest’s Fortescue slashes export guidance for its troubled new Iron Bridge project

Over budget and late, Fortescue Metal’s new mine is continuing to deliver pain for the iron ore major.

Andrew Forrest’s Fortescue Metals Group has slashed shipment guidance from its Iron Bridge magnetite project, as the company shipped 45.9 million tonnes of iron ore in the September quarter.

Shipments were in line with the same period in 2022, in what is usually a slower period for iron ore miners as major maintenance programs are carried out.

Fortescue said it received an average $US99.75 a dry metric tonne for its sales of direct shipping ore in the period, about 87 per cent of the average benchmark price for 62 per cent iron ore.

But while Fortescue left its ­annual export guidance unchanged at 192 to 197 million tonnes in total, the company stripped 2 million tonnes from its expected shipments of high-grade ­concentrate from the troubled Iron Bridge project, saying it now expected to ship 5 million tonnes for the year.

Fortescue chairman Andrew Forrest. Picture: Jacquelin Magnay

Fortescue sent its first 40,000 tonnes shipment of Iron Bridge concentrate to customers in the quarter, but said it was still struggling to ramp up production due to issues with the project’s water supply and the need to rectify flaws in the plant’s construction.

Sales of concentrate from the project fetched $US131 a dry metric tonne, the company said.

Fortescue slashed $US1bn from the value of the mine in its annual financial report, delivered in August, citing the blowout in construction costs, as well as an increase in the operation’s long-term operating costs.

The company upped the total cost of delivering the 22 million tonnes a year mine to $US4bn in its annual financial, from a previous estimate of about $US3.9bn – and its initial guidance, when the project was approved in 2019, of $US2.6bn. At the time, Fortescue said the project’s operating costs for concentrate delivered to the port would now come in at about $US45 a tonne. In 2019, that figure was the bottom end of Fortescue’s estimated all-in cost of delivering Iron Bridge magnetite to China, including sustaining capital, as well as royalties, administration costs and sea freight.

Fortescue did not give an expected operating cost per tonne for Iron Bridge for the current financial year on Thursday, but said its operating expenditure – excluding shipping and royalties – was expected to be about $US400m.

Fortescue flagged average operating costs for its direct shipping mines of $US18 to $US19 a tonne for the full financial year.

The company in August paid a $1 a share dividend on the back of the result, with the payout 65 per cent of the company’s underlying $US5.5bn underlying net profit, the mid-point of the company’s policy of paying 50 to 80 per cent of underlying NPAT.

Its shares rose 0.9 per cent or 19c to $22.21.

Originally published as Forrest’s Fortescue slashes export guidance for its troubled new Iron Bridge project