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Fortescue posts record shipments, invests in new energy infrastructure

Fortescue posts record shipments, invests in new energy infrastructure

Photo by Bloomberg

30th January 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Iron-ore major Fortescue Metals has reported record shipments for the six months ended December, driven by a 9% increase in quarterly shipments, which reached 46.4-million tonnes.

Iron-ore shipments in the six months to December reached a record 88.6-million tonnes.

“Once again, the Fortescue team has achieved outstanding results, demonstrated by multiple records across the operations, including record shipments of 88.6-million tonnes during the first half of the 2020 financial year, while maintaining our industry leading cost position below $13/t,” said CEO Elizabeth Gaines.

“Excellent operational performance across all mines, rail and port was maintained during the quarter to deliver shipments of 46.6-million tonnes, a 9% improvement on the corresponding period last year, with C1 costs reducing to $12.54/t.”

The quarterly shipments reflected the record performance of the ore processing facilities over the quarter, which was up 9% on the previous corresponding period and 2% higher than the first quarter of the 2020 financial year.

The December quarter also benefitted from the development of new mining areas during the first quarter of the financial year, with the strip ratio slightly lower at 1.3, and the year-to-date strip ratio tracking at 1.5.

Meanwhile, Gaines noted that customer demand across all products resulted in Fortescue’s price realisation averaging 86% of the benchmark 62% cost and freight index price during the quarter.

Average revenue received during the quarter reached $76/t, which was up 58% on the $48/t received in the previous corresponding period, Fortescue said.

Cash on hand at the end of the second quarter was $3.3-billion, with Fortescue holding gross debt of $4-billion and net debt of $0.7-billion.

“Based on Fortescue’s strong performance in the first half, we expect shipments to be at the upper end of our guided range of between 170-million and 175-million tonnes, and C1 costs guidance is lowered to a range of $12.75/t to $13.25/t,” Gaines said, looking to the full 2020.

Meanwhile, the miner on Thursday also announced a further $450-million investment into the next stage of its Pilbara Energy Connect Programme, bringing total investment to $700-million.

The newly announced Pilbara Generation project will complement the $250-million Pilbara Transmission project, which was announced in October last year, and will provide low cost power to the energy efficient Iron Bridge magnetite project.

While the Pilbara Transmission project consists of 275 km of high voltage transmission lines connecting Fortescue’s mine sites, the Pilbara Generation project will include 150 MW of gas-fired generation, along with 150 MW of solar photovoltaic generation, which will be supplemented by large-scale battery storage.

The transmission system will be constructed, owned and operated by Fortescue.

“Mining is a 24/7 operation and efficient, reliable, competitive energy generation remains an important consideration for the mining sector in Western Australia. The lack of an integrated transmission network in the Pilbara has been a key barrier to entry for large-scale renewables and Fortescue’s investment will address this issue,” Gaines said.

She noted that the company’s commitment of $700-million in electricity generation and transmission infrastructure would complete the integration of Fortescue’s stationary energy requirements in the Pilbara into an efficient network, while lowering the overall cost of electricity to existing and future sites.

Modelling has also indicated that the Pilbara Generation project would avoid up to 285 000 t/y of carbon emissions, compared with generating electricity solely from gas.

Edited by Creamer Media Reporter

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