Fortescue's Q4 results: Iron ore shipments soar to new heights

Fortescue (ASX: FMG) on Friday posted its highest ever iron ore shipments for the December quarter and half-year – before the commissioning of its giant Iron Bridge Magnetite project. The company’s shares are up 3.3% in early trade to a fresh six month high of around $23.20.  

“We are now nearing the 200 million tonne annualised rate in our iron ore business … Our company has never performed better on the mining, exploration, green hydrogen and green energy development front,” noted Executive Chairman, Dr Andrew Forrest.

“Demand for Fortescue’s suite of iron ore products remains strong and our entry into the higher grade segment of the market has been well received.” 

December quarter at a glance

Fortescue’s December quarter highlights versus StreetAccount estimates:

• Average revenue of US$87 per dry metric tonne – unchanged against the September quarter and US$74.4 a year ago 

• Ore mined 60.0 wet metric tonnes (wmt) vs. est 55.0 wmt

• Total ore shipped 49.4 wmt vs. est 47.5wmt

• C1 costs US$17.17/wmt vs. est $17.5/wmt

• Cash increased to US$4.0bn with net debt of US$2.1bn

Encouragingly, the results noted that Chinese steel production reached 1,013m tonnes in 2022, down just 2.1% year-on-year despite ongoing Covid-related impacts.

Guidance remains unchanged

Fortescue reaffirmed its FY23 guidance including:

• Iron ore shipments of 187 - 192Mt

• C1 cost of US$18.00 - US$18.75/wmt

• Capital expenditure of US$2.7-3.bnB

• FFI's FY23 anticipated expenditure comprises US$500-600m of opex and $230m of capex

The Iron Bridge Magnetite Project is expected to come online by the end of the March quarter. Although its contribution to FY23 will be minimal, its expected to deliver 22m tonnes per annum of high grade 67% Fe magnetite. 

To add some perspective about grades, Champion Iron (ASX: CIA) released its December quarter results on Friday. The company produced a 66% iron ore product that received an average selling price of C$130.4/dmt.