Fortescue costs fall further
Fortescue Metals has forecast continued reductions in operating costs as it ramps up output and throughput at its beneficiation plants, while it continues to seek customers to pre-pay for iron ore, which is helping to alleviate cash pressures.
In the June quarter, cash costs fell to $US36.01 a tonne, down 17 per cent and coming in at the bottom end of market expectations of a range between $US36 and $US38 a tonne.
The decline here was booked against a rise in June quarter shipments of iron ore to 25 million tonnes, which lifted fiscal 2013 volumes by 41 per cent to 80.9 million tonnes, it said.
In the month of June alone, the "shipping run rate" hit an annualised 120 million tonnes, which was 5 million tonnes ahead of expectations, it said.
"We'd like to think we will do better than that," Fortescue's chief executive, Nev Power, said of the cost performance.
During the quarter, production from the Firetail deposit was ramped up, with the focus now shifting to tapping the Kings deposit which may lift costs for a time, ahead of the benefits flowing from the higher output, he said.
But the addition of further completed processing facilities will allow a further reduction in operating costs, he said. Fortescue was critical of the pressure from smaller operators such as Brockman Resources, which has been seeking access to its railway network.
"We welcome third parties on our network," Mr Powers said, pointing out that it has already shipped more than 11 million tonnes of ore of other miners. But at the same time, there is a need to de-bottleneck the railway network to handle these shipments.
"Therefore any third party must pay their way," he said. "We're not proposing to subsidise uneconomic projects to get them up and provide a solution for them."
Fortescue maintained its optimism over the outlook for the iron ore price, which it expects to range between $US110 and $US130 a tonne. No minerals resource rent tax (MRRT) was payable during the June quarter, the company said.
"We're not seeing any MRRT in our future... we haven't even booked the tax benefit that's available to us," a company official said.
Fortescue continued to hose down speculation of any imminent sale of equity in its port and transport assets, saying that it has "nothing further to add" on the sale.
At the same time, it is continuing to seek pre-payments from customers, which is helping to lift its cash stockpile, which stood at $2.2 billion at the end of June.
"A particular take-out was the fact that the cash cost at $US36.01 a tonne was lower than guidance," one institutional analyst said of the June quarter production report.