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Mar.29.2024 1USD=7.0948RMB
  SteelHome >>Raw Material>>Market Info>>Special Studies
 
FMG Announces 2019 Q3 Iron Ore Production Report

https://en.steelhome.com [SteelHome] 2019-10-24 10:18:14

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Fortescue has released its September 2019 quarterly production results, reporting shipments of 42.2 million tonnes (mt) and cash production costs (C1) of US$12.95 per wet metric tonne (wmt).

Quarterly highlights

1.      Safety TRIFR of 2.7, an improvement of four per cent compared to 30 June 2019

2.      Shipments of 42.2mt, five per cent higher than Q1 FY19

3.      C1 costs of US$12.95/wmt, two per cent lower than Q1 FY19

4.      Average revenue received of US$85 per dry metric tonne (dmt), 89 per cent higher than Q1 FY19 of US$45/dmt

5.      Repayment of US$200 million and re-financing of the balance of the US$1.4 billion Term Loan on improved terms

6.      Net debt of US$0.5 billion at 30 September 2019, compared to US$2.1 billion at 30 June 2019

7.      Sod turning ceremony for the Eliwana Mine and Rail project on 5 July 2019

8.      Commencement of towage operations at the Port of Port Hedland on 5 September 2019

9.      Renewal of the A$500 million share buy-back program for a further 12 months to October 2020

Fortescue Chief Executive Officer, Elizabeth Gaines, said “The Fortescue team has delivered a strong performance across all aspects of the business in the first quarter of FY20, building on our record results in FY19. Importantly, our safety performance has maintained its positive trend with a four per cent improvement in TRIFR to 2.7.

“Fortescue’s outstanding operational performance across mining, processing, rail and port delivered shipments of 42.2mt, a five per cent improvement on Q1 FY19, at a C1 cost of US$12.95/wmt. Through the quarter we maintained our enhanced product mix with strong demand for our range of products, including our 60.1% iron content West Pilbara Fines. This is reflected in Fortescue’s contractual price realisation which averaged 89 per cent of the benchmark 62% CFR Index price during the quarter.

“The combination of operational performance and realised price has generated exceptional operating cashflows and lowered net debt to US$0.5 billion at 30 September 2019. This has provided the capacity to further strengthen the balance sheet through debt reduction and refinancing of the Term Loan on improved terms.”

Operations

The Total Recordable Injury Frequency Rate (TRIFR) reduced to 2.7 on a rolling 12-month basis (2.8 at June 2019).

Fortescue remains focussed on improving safety performance through sustained risk reduction activities and projects. Initiatives such as the “Take Control” program are delivering improvements in safety culture and performance across the business.

Mining, processing, rail and shipping combined to achieve quarterly shipments of 42.2mt, five per cent above Q1 FY19 and nine per cent lower than the record performance in the June quarter, reflecting seasonal maintenance activity. Full year shipping guidance remains at 170-175mt.

During the quarter a number of new mining areas were developed, resulting in an increase in overburden removal, ensuring Fortescue is well positioned to deliver on its product strategy. As a result, strip ratios were slightly higher at 1.7 during the quarter and are expected to average 1.5 for FY20.

Ore processing was five per cent higher than Q1 FY19, and the variance to the June quarter reflects seasonal maintenance activity.

C1 costs of US$12.95/wmt reflect disciplined cost management, mining and processing performance. Total Australian dollar cash costs were consistent with the June quarter with C1 costs benefitting from the lower Australian dollar and changes to the accounting treatment of leases.

Marketing

Crude steel production in China reached 745 million tonnes[1] for the nine months ended 30 September 2019, 8.4 per cent higher than the prior comparable period, underpinning demand for seaborne iron ore. Iron ore stocks at Chinese ports at the end of the quarter were 120 million tonnes, five million tonnes higher than the prior quarter, representing approximately 42 days of inventory. Iron ore demand is supported by continuing high levels of steel production, decreased use of scrap and mill restocking.

Demand for Fortescue’s products in the quarter remained strong with Chinese steel mills focussed on raw material costs in response to current steel margins.

Fortescue’s average revenue was US$85/dmt in the quarter. The average contractual price realisation increased to 89 per cent of the average 62 CFR Index price of US$102/dmt during the quarter. The closing Platts 62 CFR Index price at 30 September was US$93/dmt (US$118/dmt at 30 June).

Iron ore projects

The Eliwana Mine and Rail Project reached an important milestone in July with the official sod turning ceremony and is progressing in line with expectations to achieve first ore on train on schedule and budget in December 2020.

The US$2.6 billion Iron Bridge Magnetite Project is on schedule and budget to produce premium 67% iron grade concentrate product in the first half of 2022.

Preliminary site works have commenced including road upgrades, earthworks and village construction, with key long lead procurement contracts placed.

FY20 guidance

      170-175mt in shipments, inclusive of 17-20mt of West Pilbara Fines product

      C1 costs expected to be in the range of US$13.25 - 13.75/wmt

      Average strip ratio 1.5

      Total capital expenditure of US$2.4 billion

      Depreciation and amortisation of US$7.70/wmt

      Total dividend pay-out ratio between 50 and 80 per cent of full year net profit after tax

T1: PRODUCTION SUMMARY

Million tonnes

Q1 FY20

Q4 FY19

Var %

Q1 FY19

Var %

Ore mined

50.6

57.6

-12%

51.9

-3%

Overburden removed

88

79

11%

85

4%

Ore processed

45.1

48.5

-7%

42.9

5%

Total ore shipped

42.2

46.6

-9%

40.2

5%

C1 (US$/wmt)

12.95

12.78

1%

13.19

-2%

Related Link: Official Document


(To contact the reporter on this story: cody.wang@steelhome.cn or 86-555-2238837)
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