Fortescue third-quarter shipments flat as weather issues weigh

Fortescue Metals Group Ltd on Thursday reported flat third-quarter iron ore shipments and higher costs, missing analysts’ forecasts, as it was hit by wet weather in Western Australia and a stronger Australian dollar.

Cyclone season similarly dented output for Fortescue’s bigger iron ore mining rivals Rio Tinto and BHP Group , but they have all benefited from soaring prices for the steelmaking ingredient.

Fortescue’s average revenue nearly doubled from a year ago, though it came in below forecasts.

Tight supply from Australia and Brazil has driven iron ore prices to record highs amid robust demand from China’s steelmakers, with infrastructure spending driving brisk growth in the world’s second-largest economy.

“We’re just seeing constraint on supply, and we’re seeing very strong demand. So those conditions continue to support the current iron ore price,” Fortescue Chief Executive Elizabeth Gaines told reporters.

The world’s fourth-largest iron ore miner shipped 42.3 million tonnes (Mt) in the three months to March 31, on par with a year earlier but below analysts’ forecasts around 43.3 million tonnes.

Nevertheless it maintained its outlook for 2021 shipments between 178 Mt and 182 Mt.

Cash costs rose 12% from a year earlier to $14.90 per wet metric tonne (wmt), against analysts’ forecasts of $14.20 per wmt, but Fortescue maintained its annual cash cost outlook between $13.50 and $14 per wmt.

Covid-19 border restrictions in Australia have raised costs for skilled labour such as train drivers and excavator operators, Gaines said.

Fortescue hiked its capital spending outlook to between $3.5 billion and $3.7 billion, up as much as 9% from the top end of its previous estimate, due to a stronger Australian dollar, clean energy projects and work on its Iron Bridge project.

Average revenue of $143 per tonne was nearly double the average it achieved a year earlier, but it missed brokers’ forecasts around $149 per tonne.

Fortescue’s shares fell as much as 3.5% after the quarterly report, but recovered to trade down 0.7%.

(By Sonali Paul and Shashwat Awasthi; Editing by Devika Syamnath and Ana Nicolaci da Costa)