China-Australia relations: Australian iron ore giant Fortescue ‘well-placed’ to meet China’s strong demand
- Fortescue Metals Group reported a 4.7 per cent jump in iron ore shipments during the October to December quarter
- The average price it received for its iron ore during the quarter rose a 60.5 per cent to US$122 per dry metric tonne, realising 91 per cent of the 62 per cent Platts benchmark average
Fortescue Metals Group on Thursday reported a 4.7 per cent jump in iron ore shipments, in line with forecasts, as global miners benefit from soaring demand in top steel producer China.
The Perth-based miner maintained its full-year shipment target of 175 to 180 million tonnes, and said it was “well-placed” to meet the strong demand.
Record shipments of 90.7 million tonnes surpassed any half year since Fortescue’s inception, and we are very well placed to meet the sustained strength in demand from our customers
“Across the business, our entire team is achieving excellent operational performance while continuing to manage challenges associated with Covid-19, including border restrictions.
“These measures, to protect the health and safety of all of our employees and contractors, enables Fortescue to maintain its strong contribution to the Western Australian and national economies.”
Last week, Fortescue forecast half-year net profit after tax of between US$4 billion and US$4.1 billion, a solid jump from the US$2.45 billion recorded a year earlier.
“The recent big iron ore price tailwind, delivered big free cash flow and earnings [pre-released last week], which should in turn flow through to a big [first half of 2021] and [full year of 2021] dividend,” said Peter O’Connor of broker Shaw and Partners.
Rivals BHP Group and Rio Tinto also reported strong iron ore output for the period and sounded upbeat on the commodity’s outlook, banking on sustained demand from China.
Meanwhile, for the Eliwana mine in Pilbara, where the first ore was processed last month, Fortescue forecast a capital expenditure of about US$1.38 billion, up from an early estimate of US$1.28 billion.
The company is also undertaking a detailed review of the coronavirus impact and related construction costs at its Iron Bridge project, which is due to produce the first ore in the first half of 2022.
China remains heavily dependent on Australia for iron ore, having imported 60 per cent of its total from Australia for at least the past six years, with around 20 per cent comes from Brazil, according to Chinese customs figures.
