Quarterly highlights

•      Total Recordable Injury Frequency Rate (TRIFR) of 2.2 at 31 March 2021, compared to 2.1 at 31 December 2020 and 2.4 at 30 June 2020

•      Iron ore shipments of 42.3 million tonnes (mt), in line with record third quarter shipments last year. Year-to-date shipments of 132.9mt are 2 per cent higher than the comparable period in FY20

•      Average revenue of US$143/dry metric tonne (dmt) increased 17 per cent compared to the previous quarter with revenue realisation at 86 per cent of the average Platts 62% CFR Index

•      C1 cost of US$14.90/wet metric tonne (wmt) increased 16 per cent compared to Q2 due to seasonally lower volumes and the strength of the Australian dollar, with year-to-date C1 cost of US$13.45/wmt

•      Net debt of US$1.0 billion at 31 March 2021 after payment of the FY21 interim dividend of US$3.5 billion and capital expenditure of US$909 million in the quarter

•      Capital structure further optimised with the issue of US$1.5 billion Senior Unsecured Notes to refinance debt, extend the debt maturity profile and lower the cost of capital

•      Announced a revised target to achieve carbon neutrality by 2030, ten years earlier than the previous target

•      Guidance for FY21 shipments and C1 cost remains unchanged, with capital expenditure guidance revised to a range of US$3.5 to US$3.7 billion.

Fortescue Chief Executive Officer, Elizabeth Gaines, said “Fortescue’s excellent operating performance continues to drive strong results, with shipments of 42.3mt in the third quarter contributing to a record shipping performance for the first nine months of the financial year.

“The commissioning of the Eliwana mine has contributed to an increase in both ore mined and processed during the quarter, despite the impact of significant rainfall across our operations in the Pilbara.

“Our focus on safety and a commitment to zero harm continues, with TRIFR improving by eight per cent from 2.4 at the start of the financial year to 2.2 at 31 March 2021.

“Significantly, Fortescue announced during the quarter a target to achieve carbon neutrality by 2030, positioning us as a global leader in the battle against climate change. We have set out clear priorities for our pathway to decarbonisation, including the establishment of a green mining fleet through the development and assessment of hydrogen and battery electric solutions.

“Fortescue Future Industries continues to assess a range of renewable energy and green hydrogen opportunities and is advancing projects internationally and across Australia.

“Against the backdrop of the record performance in our iron ore business and our clean energy focus, Fortescue is well-placed to finish the financial year strongly, as we continue to meet demand from our customers and deliver value for all stakeholders,” Ms Gaines said.

Operations

Volume references are based on wet metric tonnes (wmt). Product is shipped with approximately 9 per cent moisture.

Volume references are based on wet metric tonnes (wmt). Product is shipped with approximately 9 per cent moisture.

•      Fortescue’s 12 month rolling Total Recordable Injury Frequency Rate (TRIFR) was 2.2 at 31 March 2021, compared to 2.1 at 31 December 2020, eight per cent lower than 2.4 at 30 June 2020. Importantly, the injury severity rate continues to trend lower. Hazard identification and the implementation of the “Identify Then Rectify” program was a key focus during the quarter.

•      A comprehensive COVID-19 risk management strategy and key measures remain in place to safeguard Fortescue team members and communities. There have been no cases of COVID- 19 across Fortescue’s operational sites.

•      Fortescue’s strong operating performance continued, with mining, processing, railing and shipping combining to deliver shipments of 42.3mt in Q3 FY21, in line with the record third quarter shipments achieved last year. The performance benefited from commissioning of the Eliwana mine in December 2020, which contributed to an increase in ore mining and processing during the quarter, despite the impacts of significant rainfall across Fortescue’s Pilbara operations.

•      The Eliwana mine transitioned to the Operations team in January 2021 with the focus on the commissioning and ramp up of the ore processing facility.

•      C1 cost of US$14.90/wmt was 16 per cent higher than the previous quarter due to seasonally lower volumes and the strong AUD:USD exchange rate. The year-to-date C1 cost is US$13.45/wmt.

Marketing

•      Chinese crude steel production was 1,065mt for calendar 2020 and 271mt in the first quarter of 2021, an increase of 15.6 per cent compared to the same period in 2020. Underlying demand for iron ore remains strong and in conjunction with seasonally weaker supply, index prices strengthened during the March quarter.

•      Average revenue for Q3 FY21 of US$143.12/dmt increased by 17 per cent over the previous quarter and represented revenue realisation of 86 per cent of the average Platts 62% CFR Index of US$166.90/dmt. The Platts 62% CFR Index closed at US$164.75/dmt at 31 March 2021, compared to US$159.20/dmt at 31 December 2020.

•      Fortescue’s Chinese sales entity, FMG Trading Shanghai Co. Ltd sold 2.6mt in Q3 FY21 from regional ports in China, with sales of 8.4mt in the nine months ended 31 March 2021.

Iron Bridge

•      The technical and commercial assessment of the Iron Bridge Magnetite project commenced during Q3 and is scheduled for completion in late May 2021. Critical path works have continued through this period.

•      Key areas of focus include an assessment of the concentrate transport solution, utilisation of Fortescue’s port and rail infrastructure, contractor strategy and selection, as well as the logistics infrastructure for the delivery of modular components through Port Hedland.

•      The project is an unincorporated joint venture between FMG Iron Bridge Ltd, via subsidiary FMG Magnetite Pty Ltd (69 per cent), and Formosa Steel IB Pty Ltd (31 per cent). The project will deliver production capacity of 22mtpa of a 67% Fe content, low impurity concentrate suitable for pellet feed or blending with sinter fines.

FY21 guidance

•      Iron ore shipments of 178 - 182mt

•      C1 costs of US$13.50 - US$14.00/wmt

•      Capital expenditure revised to US$3.5 - US$3.7 billion reflecting the ongoing strength of the Australian dollar, continuation of critical path works at Iron Bridge and investment by FFI in decarbonisation initiatives.

Guidance for C1 costs and capital expenditure is based on an assumed FY21 average exchange rate of AUD:USD 0.75.