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Australia’s Fortescue Metals Group forecast higher iron ore shipments for the next fiscal year on hopes of a stronger performance at its Eliwana project, and logged record quarterly shipments despite a tight labour market and increased costs.
The world’s fourth-largest iron ore miner said on Thursday it expects to ship 187 million tonnes to 192 million tonnes of ore for fiscal 2023, including roughly one million tonnes from its delayed flagship Iron Bridge project.
In fiscal 2022, the Perth-based company exported 189 million tonnes of ore, surpassing the top end of the outlook of 188 million tonnes it provided in April.
Fortescue’s projection comes on the heels of peers Rio Tinto, BHP and a host of other miners flagging labour market issues in the state of Western Australia as new strains of covid-19 lead to worker absenteeism.
The miner lifted its annual cost guidance to $18.00-$18.75 per wet metric tonne, and said it expects capital expenditure costs for fiscal 2023 (excluding Fortescue Future Industries) to be between $2.7 billion and $3.1 billion, compared with $3.1 billion in fiscal 2022.
It said that the new cost forecast “reflected the lag effect of ongoing inflationary pressures, with the increase driven by diesel, labour rates, ammonium nitrate and other consumables together with mine plan driven cost escalation”.
The company also reported a third consecutive year of record shipments, reflecting strong performance across the entire supply chain and the successful integration of Eliwana, which commenced operations in January 2021, the miner said.
It shipped 49.5 million tonnes of the steel-making ingredient in the quarter ended June 30, higher than 49.3 million tonnes a year ago and beat a UBS estimate of 49 million tonnes.
“The maiden guidance implies that strong shipments will flow into fiscal 2023 but expectations of higher costs and capital expenditure could be a drag,” analysts at RBC Capital Markets said in a note.
(By Tejaswi Marthi and Harshita Swaminathan; Editing by Krishna Chandra Eluri and Uttaresh.V)
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