By Rhiannon Hoyle
SYDNEY--Fortescue Metals Group Ltd. said it shipped record annual volumes of iron ore as it benefited from sky-high prices for the steel ingredient, but that it continued to face pressure from rising costs.
Fortescue, the world's No. 4 iron-ore exporter, reported shipments of 182.2 million metric tons for the 12 months through June, up 2% on a year earlier. That followed fourth-quarter shipments of 49.3 million tons, which were 4% higher on a year ago and also a record level for Fortescue.
"This was an outstanding performance despite the impact of wet weather, as well as Covid-19 restrictions requiring many of our team members to remain on site for extended periods during WA's lockdowns," Chief Executive Elizabeth Gaines said, referring to pandemic-related restrictions in Western Australia state where Fortescue's iron-ore mines are located.
Fortescue expects shipments to be broadly steady in the year ahead. The miner said it expects to ship between 180 million and 185 million tons of the commodity in the year through June, 2022.
Iron-ore prices hit a record high in May, largely because of red-hot Chinese steel output. China's first-half steel output was up 12% on the year-earlier period, while steel production elsewhere in the world has also been largely rising.
Fortescue said average full-year revenue totaled $135.32 a ton, up 72% on the year prior. That reflected "strong market conditions and sustained demand for Fortescue's products," the company said. It reported record average revenue for the fourth quarter of $167.95 a ton.
That windfall led to a net cash balance of $2.7 billion at the end of June versus net debt of $1.0 billion at March 31.
Still, Fortescue said it is grappling with cost increases, reporting a 17% year-on-year jump in so-called C1 costs for the quarter, to $15.23 a ton. Full-year C1 costs--which don't include expenses such as royalties, shipping and overheads--were up 8% at $13.93 a ton.
The company, like its peers, is battling rising costs linked to the pandemic as well as broader inflationary pressures, it said.
"Productivity gains through innovation and technology remain a focus to mitigate mine-plan cost escalation, materials and consumables inflation and a strong labor market," said Fortescue.
The miner forecast costs of between $15.00 and $15.50 a ton in its current fiscal year.
Write to Rhiannon Hoyle at firstname.lastname@example.org
(END) Dow Jones Newswires