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Fortescue trims iron ore guidance over TC Veronica

Mining News - Published on Thu, 18 Apr 2019

Image Source: SteelGuru
Fortescue has released its March 2019 quarterly production results, reporting total shipments of 38.3 million tonnes and cash production costs (C1) of USD 13.51 per wet metric tonne. Fortescue CEO Ms Elizabeth Gaines said “Closure of the Port Hedland Port, combined with localised flooding in the area caused by Tropical Cyclone Veronica in late March, resulted in the loss of five days of shipments equating to 2.5 million tonne. This volume impact has seen C1 costs increase to USD 13.51 per wmt for the quarter. We are now expecting full year shipments of 165-170 million tonne and C1 costs in the range of USD13-13.50 per wmt.”

HIGHLIGHTS

Average price received increased to USD 71 per dmt compared to the December quarter of USD 48 per dmt representing a 47% increase and outperforming the benchmark increase of 16%

Total shipments of 38.3 million tonne including 3.8 million tonne of West Pilbara Fines

Impact of Tropical Cyclone Veronica limited to 2.5 million tonne of shipments lost due to closure of the Port Hedland Port for five days

C1 cost of USD 13.51 per wmt

Approval of the development of Stage 2 of the Iron Bridge Magnetite Project announced on 2 April

Eliwana Mine and Rail Project progressing on schedule and budget

Fortescue Future of Mobility Centre launched in Karratha, Western Australia

OPERATIONS

Mining, processing, rail and shipping combined to achieve total shipments of 38.3 million tonne in line with the prior comparable quarter. Shipments compared to the December 2018 quarter were 10 per cent lower primarily due to the impacts of Tropical Cyclone Veronica which closed the port for five days and caused localised flooding to the railway in the immediate vicinity of the Port operations. Ore mined and overburden removed increased by 15% and 11% respectively compared to the prior comparable quarter maintaining inventory to support delivery of the enhanced product mix.

The average strip ratio was 1.4 consistent with the prior comparable quarter.

West Pilbara Fines shipments for the quarter were 3.8 million tonne, 10% of the total for the quarter with FY19 total shipments expected to be between 8-10 million tonne.

C1 costs were higher than the prior quarter at USD 13.51 per wmt, due to the impact of Tropical Cyclone Veronica on shipments.

MARKETING

Chinese crude steel production remains strong, reaching 231 million tonnes in the first quarter of 2019, an increase of 9.9% YoY, with finished steel inventories remaining stable. Since the end of the quarter the draw down on steel inventories has accelerated in line with increased demand.

Demand for Fortescue’s products in the quarter was strong reflecting continued moderation of steel mill margins, resulting in a significant reduction of Fortescue products at Chinese ports.

Fortescue’s average price received during the quarter increased to USD 71 per dmt, a 47% improvement compared to the prior quarter, outperforming the 16 per cent increase in the average Platts 62 CFR Index price of USD 83 per dmt. This reflects the success of Fortescue’s integrated operations and marketing strategy. The actual price realisation achieved by Fortescue for the quarter was 86% of the average 62 CFR Index price.

The implied US dollar price for Fortescue’s products at ports in China on an equivalent seaborne basis, compared to the seaborne spot prices for 62% and 65% Platts CFR products is set out in the chart below:

Non-China markets accounted for 7% of total shipments during the quarter, with reduced shipments to India given strong demand and higher price realisations from the Chinese market.

PRODUCTION SUMMARY
(millions tonnes)Q3'FY19Q2'FY19QoQQ3'FY18YoY
Ore mined4849.2-2%41.615%
Overburden removed67.372.5-7%60.411%
Ore processed4342.51%39.110%
Total ore shipped38.342.5-10%38.7-1%
C1 (US$/wmt)13.5113.024%13.143%
 

Note: Tonnage references are based on wet metric tonnes. Fortescue ships product with approximately 8–9% free moisture.

Source :

Posted By : Rabi Wangkhem on Thu, 18 Apr 2019
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