Iron ore shipments, costs up for Fortescue Metals Group

FORTESCUE Metals Group boosted its iron ore shipments by 15pc in the March quarter but its costs also rose in the same period.

A Fortescue Metals Group freight train connecting its mine to Port Hedland. FMG has recor

PILBARA iron ore miner Fortescue Metals Group boosted its iron ore shipments by 15 per cent in the March quarter.

Fortescue shipped 30.8 million tonnes of iron ore in the three months to March, up from 26.7 million tonnes in the preceding quarter.

Shipments were up 59 per cent from 19.4 million tonnes in the same quarter a year earlier.

However, Fortescue’s costs rose six per cent in the quarter to $US34.88 per wet metric tonne, from $US32.99 in the December quarter.

Increased costs reflected the ramp-up of operations at the Kings Valley project and seasonal wet weather across the Chichester and Solomon Hubs in the Pilbara.

Costs were down by 20 per cent from 12 months earlier, though, due to the lower cost Solomon operations, operating efficiencies and a lower Australian dollar.

Fortescue said the completion of the Kings Valley project during the March quarter lifted the company’s production capacity to 155 million tonnes per annum.

“Fortescue plans to ship 41.6 million tonnes in the June 2014 quarter to achieve 127 million tonnes in fiscal 2014,” the company said.

Fortescue shares were down 0.5 cents at $5.325 at 1205 AEST.

Fortescue achieved a realised iron ore price of US$107 per dry metric tonne in the March quarter.

“Whilst there was short term volatility in the March 2014 quarter, China’s demand for iron ore remains strong with the government committed to continued economic growth and urbanisation,” the company said.

The addition of 100 million tonnes of capacity completed in record time had allowed the company to supply increased tonnes into a strong iron ore market and to reduce debt, it said.

Fortescue has made debt repayments of US$3.1 billion to date and said it will reduce gearing to 40 per cent.

Fortescue’s net debt position on March 31 was US$7.7 billion, including finance leases of US$0.3 billion.

A total of US$5.8 billion is available for voluntary repayment in advance of maturity.

Cash on hand was $US1.9 billion ($A2.04 billion) at the end of March, due to continued strength of operational cash flows, disciplined capital management and lower finance costs following debt repayments, the company said.