Fortescue (FMG) – Record Quarterly Output

Fortescue is Australia’s third-largest iron ore producer and is also exploring and developing interest in other minerals, including copper, gold, lithium and rare earths. In addition, the company is developing green energy projects to exploit opportunities in the clean energy transition. The company is headquartered in Perth.

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Fortescue (FMG) posted December quarter production and shipments for the period in line with market expectations, with production hitting a record high despite wet weather disruptions in the period, although realised prices for its hematite and concentrate products fell short of forecasts.

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Cost performance at the No.3 iron ore producer was strong, with a 10% quarter-on-quarter (QoQ) fall in cash costs (C1) driven by a fall in the strip ratio, i.e. the amount of overburden that needs to be removed to access the ore.

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Lower than expected capital expenditure over the first half of FY25 potentially suggests a tight rein on spending, most likely in its nascent and ambitious green energy division. We maintain our Buy recommendation on Fortescue in view of our expectation of a seasonable lift in iron ore prices and increased construction and steel demand in China’s spring, while our price target remains at $21.10.