Cash flowing for Fortescue as iron ore prices lift
The cash keeps rolling in for Fortescue Metals Group, with the Pilbara iron ore player receiving more than $US105 a tonne in the September period.
The cash keeps rolling in for Fortescue Metals Group, with the Pilbara iron ore giant receiving more than $US105 a tonne for its product in the September period, a lift of more than $US20 a tonne in the June period.
Fortescue said on Thursday it shipped 44.3 million tonnes in the September quarter, down from 47.3 million tonnes in the June period, but a record for its first quarter of the year – traditionally when iron ore majors conduct major maintenance shutdowns ahead of the Pilbara’s wet season.
The company said its cash costs fell to $US12.74 a wet metric tonne in the quarter, as realised prices soared on the back of strong demand from China’s steel mills.
Fortescue finished June with net cash of $US1bn after paying down a revolving credit facility worth $US1bn, finishing September with $US5.1bn cash on hand ahead of October’s bumper $US2.2bn dividend payment.
And the company is well set to continue strong shareholder returns when it delivers its February half-year financial results, booking average revenue of $US105.77 a dry metric tonne for its product as the iron ore price surged, and more than 30 per cent up on the average price it received in the June quarter.
Fortescue chief executive Elizabeth Gaines said the company was on track to meet annual production targets of 175 to 180 million tonnes, with Fortescue’s new Eliwana mine still scheduled to deliver its first ore to the port by the end of the year.
“Robust demand from our customers contributed to an increase in revenue realisation, 31 per cent higher than the June Quarter and above the 27 per cent increase in the average Platts 62 per cent CFR Index,” she said.
“We have successfully grown and diversified our distribution channels, with portside sales in China by FMG Trading Shanghai now exceeding 10mt since sales commenced in June 2019.”
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