FMG Results: Twiggy’s iron ore miner hits half-year record

Pic: Martin Ollman/Getty Images via Getty Images

Fortescue Metals Group heading towards 200Mtpa iron ore run rate with record first half
FMG shipped 49.4Mt in the December quarter and 96.9Mt in the first half, with guidance on track for 2023
Costs also fell 3% to US$17.17/wmt against prices of US$87/dmt, with price realisation of 88% to the Platts 62% IODEX

Andrew Forrest’s Fortescue Metals Group (ASX:FMG) backed up a strong September quarter with a 4% rise in iron ore shipments on both the quarter and the year in December to 49.4Mt.

The feat leaves FMG on track to hit or exceed the upper end of its iron ore guidance for FY23 of 187-192Mt, having exported a record 96.9Mt for the first half of the financial year.

FMG also bucked trends in inflationary pressures across the sector, with costs dropping 3% QoQ to US$17.17/wmt, at an average revenue of US$87/dmt, realising 88% of the Platts 62% CFR iron ore index.

That was up slightly from 85% in the September quarter, even ahead of the start of shipments this year from the Iron Bridge magnetite mine.

“We are now nearing the 200 million tonne annualised rate in our iron ore business even before we commission Iron Bridge,” executive chairman Forrest said.

Of course, it’s green energy ambitions were a feature of its December quarter numbers, with FMG spending US$226m in the first half operating its Fortescue Future Industries green energy division, alongside US$57m spend on behalf of FMG’s decarbonisation initiatives.

FMG received its first prototype battery system from its subsidiary WAE Technologies for integration into a battery electric haul truck in January, with its first prototype green ammonia locomotive also delivered to Port Hedland for testing before deployment in its rail ops.

“Our company has never performed better on the mining, exploration, green hydrogen and green energy development front, while leading the world as the first heavy industry company to achieve real zero with a fully costed plan,” Forrest exclaimed.

“Fortescue will step beyond fossil fuels this decade, saving shareholders approximately US$1 billion a year and setting the global stage for all environmentally responsible companies to follow.

“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, with significant interest in the Iron Bridge magnetite concentrate.

“This is further supported by the Belinga Project in Gabon, with engagement rapidly advancing and very positive geological assessments from ground mineral surveys. The initial drilling program is expected to commence in March 2023. We also continue to develop our rare earths division as announced at the 2022 Annual General Meeting.”

Money, money, money

FMG ended the quarter with US$4 billion in the bank, up from US$3.3b at September 30, with total capex of US$728m (US$1.4b for the half).

Its gross debt was unchanged at US$6.1b, with net debt falling from US$2.8b to US$2.1b.

Fortescue’s forecast numbers for FY23 remain unchanged, with iron ore shipments of 187-192Mt and C1 hematite costs of US$18-18.75/wmt, capex of US$2.7-3.1b and anticipated operating expenditure for FFI of US$500-600m along with US$230m of capex.

Its capex bill for Iron Bridge — a 69-31 JV with Formosa Steel — is expected to come in at the top end of its US$3.6-3.8b guidance range (US$2.7-2.9b from FMG).

The results come a day after US-based Plug Power revealed it had pulled out of a JV to develop a green hydrogen electrolyser manufacturing facility in Gladstone with FFI, originally announced in late 2021.