FMG
Fortescue LTD
ASX
June 2024 Quarterly Production Report
Sentiment:
Quarterly Production Report
24 July 2024 6:28 PM
Fortescue Metals Group reports record iron ore shipments, improved safety performance, and progress in green energy projects for the June 2024 quarter.
Better than expected
The company achieved record iron ore shipments, indicating better than expected operational performance.
The company's Total Recordable Injury Frequency Rate (TRIFR) improved by 28% to 1.3, indicating better than expected safety performance.
Delay expected
The ramp up to full production capacity at Iron Bridge is still expected in the September quarter 2025.
Summary
- Fortescue achieved record iron ore shipments of 53.7 million tonnes in Q4 FY24, a 10% increase compared to Q4 FY23, contributing to a total of 191.6 million tonnes shipped in FY24.
- The company's Total Recordable Injury Frequency Rate (TRIFR) improved by 28% to 1.3 in the 12 months to June 30, 2024.
- Pilbara Hematite average revenue was US$92/dmt in Q4 FY24, representing 82% of the average Platts 62% CFR Index, and US$103/dmt for the full year.
- Pilbara Hematite C1 cost was US$18.53/wmt in Q4 FY24 and US$18.24/wmt in FY24.
- Iron Bridge Concentrate average revenue was US$127/dmt in Q4 FY24, 101% of the average Platts 65% CFR Index, and US$137/dmt in FY24.
- Fortescue is progressing with decarbonisation efforts, including commissioning a 100 megawatt solar farm and testing a hydrogen-powered haul truck.
- The Pecem Green Hydrogen Project in Brazil is advancing to the feasibility phase.
- Fortescue and Actis were awarded rights to develop green hydrogen projects in Oman.
- The company signed contracts for the sale of electrolysers from its Gladstone facility.
- Management and organizational changes were announced in July 2024 to simplify the company's structure and improve cost efficiency.
- Apple Paget was appointed as Group Chief Financial Officer and Shelley Robertson as Chief Operating Officer.
- FY25 guidance includes total shipments of 190-200Mt, including 5-9Mt from Iron Bridge, and a C1 cost for Pilbara Hematite of US$18.50-US$19.75/wmt.
Sentiment
Score: 8
Explanation: The report highlights strong operational performance, improved safety, and progress in green energy initiatives, indicating a positive outlook for the company.
Highlights
- Record iron ore shipments of 53.7 million tonnes in Q4 FY24, a 10% increase year-over-year.
- Total Recordable Injury Frequency Rate (TRIFR) improved by 28% to 1.3 for FY24.
- Pilbara Hematite C1 cost at US$18.53/wmt in Q4 FY24 and US$18.24/wmt in FY24.
- Iron Bridge Concentrate average revenue was 101% of the average Platts 65% CFR Index in Q4 FY24.
- Initial commissioning of the 100 megawatt solar farm at North Star Junction is underway.
- First operation of a hydrogen-powered battery electric haul truck prototype.
- Pecem Green Hydrogen Project in Brazil advanced to feasibility phase.
- Fortescue and Actis consortium awarded rights to develop green hydrogen projects in Oman.
- Fortescue signs contracts for sale of first electrolysers from its electrolyser facility in Gladstone, Queensland.
- FY25 shipment guidance is 190 200Mt.
Positives
- Record iron ore shipments indicate strong operational performance.
- Significant improvement in safety performance (TRIFR) demonstrates a commitment to employee well-being.
- Low C1 costs for Pilbara Hematite contribute to a strong cost position.
- Iron Bridge Concentrate achieving revenue above the Platts 65% CFR Index suggests effective marketing and product quality.
- Progress in decarbonisation initiatives aligns with sustainability goals and enhances the company's image.
- Advancement of green hydrogen projects positions Fortescue as a leader in the green energy sector.
- Strong cash balance of US$4.9 billion provides financial flexibility.
- Management and organizational update to simplify the Company's structure, remove duplication and deliver cost efficiencies.
Negatives
- Pilbara Hematite average revenue realisation of 82% of the Platts 62% CFR Index indicates potential pricing pressures or product mix issues.
- Gross debt increased to US$5.4 billion at 30 June 2024 from US$5.3 billion at 31 March 2024.
Risks
- Ramp up to full production capacity at Iron Bridge is still expected in the September quarter 2025.
- Fluctuations in commodity prices could impact revenue and profitability.
- Delays in green hydrogen projects could affect the company's decarbonisation targets.
- The company will focus hard only on those projects that are economic and deliver best value for shareholders.
- Uncertainty around the application of 45V could impact the Arizona Hydrogen Project.
Future Outlook
FY25 guidance includes iron ore shipments of 190-200Mt, including 5-9Mt from Iron Bridge, and a C1 cost for Pilbara Hematite of US$18.50-US$19.75/wmt. Energy capital expenditure is guided at approximately US$500 million and net operating expenditure at approximately US$700 million.
Management Comments
- Dino Otranto, Fortescue Metals Chief Executive Officer, highlighted the record iron ore shipments and improved safety performance.
- Mark Hutchinson, Fortescue Energy Chief Executive Officer, emphasized the company's commitment to green hydrogen and financial discipline.
Industry Context
Fortescue's focus on green hydrogen aligns with the global trend towards decarbonisation and renewable energy. The company's partnerships and project developments in various countries demonstrate a strategic approach to capturing opportunities in the emerging green hydrogen market. The company is focused on only those projects that are economic and deliver best value for shareholders.
Comparison to Industry Standards
- Fortescue's C1 cost for Pilbara Hematite of US$18.24/wmt is competitive compared to major iron ore producers like Rio Tinto and BHP.
- The company's progress in green hydrogen projects positions it ahead of some competitors in the mining industry.
Stakeholder Impact
- Shareholders will benefit from the company's strong financial performance and growth prospects.
- Employees will benefit from a safer working environment and opportunities in the growing green energy sector.
- Customers will benefit from a reliable supply of iron ore and potentially access to green hydrogen in the future.
- Suppliers will benefit from continued business opportunities with Fortescue.
- Creditors will be reassured by the company's strong cash balance and financial stability.
Next Steps
- Continue ramp up to full production capacity at Iron Bridge.
- Advance feasibility studies for green hydrogen projects.
- Progress drilling programs for mineral exploration.
- Continue commissioning of the 100 megawatt solar farm at North Star Junction.
- Transport the hydrogen-powered haul truck prototype to the Christmas Creek site for testing.
Key Dates
- December 2023: Ore car derailment that impacted efficiencies.
- November 2023: Final Investment Decision for the PEM50 Project.
- 31 March 2024: Cash balance was US$4.1 billion and net debt was US$1.2 billion.
- 30 June 2023: TRIFR for Metals was higher than the current year.
- 30 June 2024: End of FY24, cash balance was US$4.9 billion, gross debt was US$5.4 billion, and net debt was US$0.5 billion.
- July 2024: Management and organisational update announced.
- September quarter 2025: Expected ramp up to full production capacity at Iron Bridge.
Keywords
Iron Ore, Shipments, Green Hydrogen, Decarbonisation, TRIFR, C1 Cost, Fortescue, Production
FMG
Fortescue LTD
ASX
Sector: Materials
Filings with Classifications
Worse than expected
19 February 2025 4:18 PM
Half Year Results
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Better than expected
19 February 2025 4:18 PM
Half Year Results
- The record half-year iron ore shipments of 97.1Mt indicate better than expected operational performance.
Delay expected
19 February 2025 4:18 PM
Half Year Results
- The schedule for Iron Bridge operating at nameplate capacity of 22Mt per annum is under review, potentially delaying full production.
- The development timeframes of Fortescue's Arizona Project and Gladstone PEM50 Project are being reconsidered.
Delay expected
19 February 2025 4:17 PM
Half Year Report
- The final piece of work, the development of a Safety and Duress App, has been granted an extension until July 2025.
Worse than expected
19 February 2025 4:17 PM
Half Year Report
- The net profit after tax decreased compared to the prior period due to lower average revenue and increased costs.
Better than expected
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Merger Announcement
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Capital raise
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Better than expected
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Merger Announcement
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- The offer provides a significant premium to recent historical trading prices.
Capital raise
27 January 2025 5:59 PM
Merger Announcement
- Red Hawk's cash balance as at 31 December 2024 was $1.3 million.
- If shareholders do not accept the Offer, then there is a strong possibility that Red Hawk will need to conduct an equity raising in the near term and shareholders may be diluted.
Better than expected
27 January 2025 5:27 PM
Merger Announcement
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Better than expected
27 January 2025 5:22 PM
Takeover Bidder's Statement
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27 January 2025 4:59 PM
Merger Announcement
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Better than expected
22 January 2025 5:30 PM
Quarterly Production Report
- The company achieved record half-year shipments, indicating better than expected operational performance.
- The company's hematite C1 costs were 10% lower than the previous quarter, indicating better than expected cost control.
- The company's TRIFR was 44% lower than the previous year, indicating better than expected safety performance.
Better than expected
23 October 2024 6:04 PM
Quarterly Production Report
- The record first-quarter iron ore shipments of 47.7 million tonnes exceeded expectations, driven by strong performance at the Iron Bridge mine.
Better than expected
24 July 2024 6:28 PM
Quarterly Production Report
- The company achieved record iron ore shipments, indicating better than expected operational performance.
- The company's Total Recordable Injury Frequency Rate (TRIFR) improved by 28% to 1.3, indicating better than expected safety performance.
Delay expected
24 July 2024 6:28 PM
Quarterly Production Report
- The ramp up to full production capacity at Iron Bridge is still expected in the September quarter 2025.
Worse than expected
23 April 2024 6:31 PM
Quarterly Production Report
- Iron ore shipments were 6% lower than Q3 FY23 due to the ore car derailment and weather disruptions.
- Pilbara Hematite C1 cost increased by 7% compared to the previous quarter due to lower sales volumes.
- Pilbara Hematite average revenue realized only 85% of the average Platts 62% CFR Index due to timing of sales.
Delay expected
23 April 2024 6:31 PM
Quarterly Production Report
- Shipments are expected to be at the lower end of the FY24 guidance range due to the derailment and weather impacts.
Worse than expected
1 April 2024 6:34 PM
Project Update
- The lapse of the buyer condition precedent in the PPA with Fortescue introduces uncertainty to the project, making the results worse than expected.
Delay expected
1 April 2024 6:34 PM
Project Update
- The buyer condition precedent was not satisfied by the revised sunset date of 31 March 2024, potentially delaying the project's financial close.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.