Fortescue Metals Group will need to spend an extra $US100 million to repair a faulty water pipeline at its Iron Bridge project but has otherwise reported strong half-year production results.
Fortescue Metals Group will need to spend an extra $US100 million to repair a faulty water pipeline at its Iron Bridge project but has otherwise reported strong half-year production results.
The company achieved iron ore shipments of 48.7 million tonnes in the December quarter, contributing to a half-year total of 94.6mt.
This was down 2 per cent year on year but represents the second highest first-half shipments in the company’s history.
“We achieved this while continuing to grow our green technology, energy and metals businesses, keeping costs low and maintaining our safety performance,” chief executive Dino Otranto said.
Guidance for FY24 total shipments is unchanged at between 192mt and 197mt.
This includes magnetite shipments from the Iron Bridge project of 2mt-4mt, down from previous guidance of 5mt and, before that, 7mt.
The company said Iron Bridge shipments guidance had been revised due to performance of the Canning Basin raw water pipeline, with further leaks detected during the quarter.
The company plans to spend $US100 million ($130 million) to replace a 65-kilometre section of high-pressure pipeline where the leaks have occurred.
Mr Otranto said the new section would be built parallel to the existing pipeline, and therefore he anticipated this work would not materially impact Iron Bridge’s ramp-up schedule over the next two years.
Iron Bridge produces a high-grade magnetite concentrate that attracts a premium price.
The one concentrate shipment in the quarter achieved revenue of $US144 per tonne, which was 104 per cent of the Platts benchmark price for iron ore.
Fortescue also reported a good pricing outcome for its lower grade hematite ore, with average revenue of $US116/t, or 91 per cent of the benchmark.
Its C1 cost for producing Pilbara hematite was $US17.62 per wet metric tonne, illustrating the very strong profit margins in the sector.
Mr Otranto said operations were not materially affected by the ore car derailment occurred on December 30, due to a heat buckle.
There were no injuries, and rail operations resumed on January 3 2024.
The company said an operational recovery plan has been implemented to optimise rail inload and shipments, with a focus on supply chain improvements, reduced rail cycle times and product mix optimisation.
Fortescue Energy chief Mark Hutchinson said the group now employed 1,000 people in the UK as it expanded its green energy operations.
During the quarter, the company made a final investment decision on two green energy projects: the Phoenix Hydrogen Hub in the US and the Gladstone PEM50 Project in Queensland.
This fell short of its target of FID on five projects.
Mr Hutchinson said the next cab off the rank would probably be the Holmaneset project in Norway, which had secured a government grant of €204 million.
The planned green ammonia project aims to capitalise on the surplus renewable energy from the Norwegian transmission grid.
Fortescue is also working on priority green energy projects at Pecem in Brazil and Project Chui in Kenya.
The company also announced a $US35 million investment to start building an Advanced Manufacturing Centre in Michigan.
The centre is expected to become a major hub for Fortescue’s production of automotive and heavy industry batteries, hydrogen generators, fast chargers and electrolysers.
