Fortescue’s flagship iron ore division made a slow start to the new financial year, meaning the company will need to raise its export rate over the next nine months to achieve a fifth consecutive export record.
The weak start to the year in Australian iron ore came as Fortescue said it remained on track to start selling ore from Gabon this year, despite a military coup sparking a regime change in the African nation this year.
Fortescue has vowed to ship between 192 million and 197 million tonnes of iron ore in the year ending June 2024, but only managed an annualised rate of about 182 million tonnes in the last quarter.
Fortescue shipped 45.9 million tonnes of iron ore through Port Hedland in the three-month period, down from 48.9 million tonnes in the previous quarter and 47.5 million in the same period of last year.
The weak output comes after Fortescue’s bitter rival, Mineral Resources, blamed “unplanned port maintenance and congestion” at Port Hedland for weaker than expected lithium exports from the Wodgina mine.
Fortescue also blamed “maintenance” for its export performance, and said it had been working with low stockpiles of ore at Port Hedland after the very strong export rate achieved in April-June. But Fortescue refused to give up on its full-year export target on Thursday, suggesting the miner believes it can ramp up productivity over the next nine months.
Fortescue received an average of $US100 ($158) a tonne for its product over the past three months; a relatively healthy 87 per cent of the average price achieved for “benchmark” ore with 62 per cent iron.
While Fortescue’s ore typically contains between 56 per cent and 59 per cent iron, the company shipped its first batch of Iron Bridge magnetite concentrate containing about 67.8 per cent iron in August.
Fortescue originally promised Iron Bridge would ship 7 million tonnes of magnetite concentrate in the year to June 2024, but announced on October 12 that the asset would instead export 5 million tonnes. Fortescue mining boss Dino Otranto said the ramp up of production at Iron Bridge would be “back ended” but he assured investors that “technically it works”.
Fortescue said its first shipment from Iron Bridge fetched $US131 a tonne, 4 per cent higher than ore with 65 per cent iron according to Platts. UBS expects Iron Bridge product to sell at 9 per cent above Platts’ index price for 65 per cent ore in the next few years.
UBS expects Iron Bridge’s premium to rise to 12 per cent after 2030.
Mr Otranto said early engagements with the new leaders of Gabon suggested they were very supportive of the project going ahead and first sales from the Belinga project were expected before the end of 2023.
The US government has reduced the amount of foreign aid it gives to Gabon in response to the coup. “We will resume our assistance alongside concrete actions by the transitional government toward establishing democratic rule,” a US State Department statement said on October 24.
The coup leader now claiming to be president of Gabon, General Brice Oligui Nguema, has reportedly vowed to return the African nation to democratic rule but declined to provide an exact timeframe.
The most recent reports from Gabon suggest a return to democratic rule will come after a “national dialogue” that will run until at least June 2024; suggesting democratic elections are unlikely to be held for at least a year.
Mr Otranto said he would travel to Gabon in the near future to hold further discussions with the new Gabonese leaders.
“We see that to be a non-violent coup that took place,” he said.
“The new government has committed around full and democratic election process in the ensuing time period. We stay committed to the project and working with all stakeholders in that area.”
Rio Tinto is facing a similar situation in the African nation of Guinea where a military coup in September 2021 sparked regime change. The new leader of Guinea has vowed not to participate in democratic elections when they resume, but has not clarified exactly when those elections will be held.
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