Fortescue says it can deliver the record shipments needed despite Iron Bridge output downgrade

Fortescue’s Iron Bridge magnetite project keeps delivering bad news and the company has again downgraded expectations amid a slip in overall shipments in the March quarter.

Fortescue Metals’ Iron Bridge magnetite project.

Fortescue will need to maintain close to record export rates to hit its full-year shipment guidance.

And its troubled Iron Bridge magnetite project has registered yet another production downgrade.

Fortescue has revealed the full effect of a derailment at its Pilbara iron ore operations, saying iron ore exports had slipped 6 per cent as a result of the significant outage at its rail line.

The company exported 43.3 million tonnes for the March quarter, down from 46.3 million tonnes for the same period in 2023, and down 11 per cent from the three months to the end of December.

The slip in exports also pushed up average C1 cash costs by 7 per cent, to $US18.93 a tonne.

Although Fortescue said it still expected to meet its annual export guidance, the company said it would likely come in towards the bottom of its 192 to 197 million tonne range.

But the company will need a significant performance to meet even that expectation. It will need to export 53.5 million tonnes in the June quarter as it has only shipped 138.5 million tonnes in the first half of the financial year.

Fortescue Metals boss Dino Otranto said the company was confident it could hit that rate, despite needing to ship at near-record rates of about 18 million tonnes a month for the June quarter, after shipping 18.7 million tonnes in March.

Fortescue Metals chief executive Dino Otranto. Picture: SoCo Studios

“You can hold a lot of confidence in the performance that we’ve had over the last six weeks – March was an all-time record. So we’re looking pretty good for the remainder of this quarter,” he said.

Fortescue again downgraded expectations from its troubled Iron Bridge magnetite project, saying it now only expected to ship 2 million tonnes of high grade concentrate from the massive mine and processing operations, down from the previous and already substantially revised guidance of 2 to 4 million tonnes.

The company shipped only 500,000 tonnes of concentrate from Iron Bridge in the March quarter as it struggles with water supply to the operation. Fortescue is spending about $US100m ($140m) to fix flaws in the water pipeline, which is leaking in high pressure sections.

The Iron Bridge processing plant is water hungry as it grinds hard magnetite ore into a fine paste, before separating iron from waste rock using revolving magnetic drums. When running at its full rate, Iron Bridge will need 20 gigalitres of water a year to support its full production rate of 22 million tonnes of concentrate.

Mr Otranto blamed the pipeline issue on quality control issues with a 65km section of the pipeline that now leaks under pressure.

He said Fortescue had elected to replace the pipeline section, but declined to comment on whether the company would be able to make an insurance claim for the replacement work or business interruption, or the status of any legal claims against the manufacturer.

“We do have a process under way, so I’m not going to get into too much detail on it,” he told analysts on Wednesday.

Mr Otranto said Fortescue expected to be able to replace the pipeline this year, and was confident the company would still be able to ramp up Iron Bridge to its nameplate capacity by September 2025, as previously forecast.

“All our focus is on getting the water supply back. And our September quarter 2025 guidance that we gave before is still unchanged, however it does depend on getting that water solution in play,” he said.

“The good news is that we’ve been able to identify some other source of water; we’re using our tailings facility to store some of the downpour that we have seen.

“So that’s getting us through to giving us a bit more confidence around having more than we thought for next year.”

Fortescue cut its capital spending guidance by $US300m-$US500m for the current financial year for its metals group, to $US2.5bn-$US2.7bn, and cut capital spending forecasts for its energy division by $US100m to $US700m.

Fortescue shares closed up 16c to $24.76 on Wednesday.

Originally published as Fortescue says it can deliver the record shipments needed despite Iron Bridge output downgrade