JOHANNESBURG (miningweekly.com) – Iron-ore producer Fortescue Metals has lowered its cash production costs (C1) to a record low of $12.08 a wet metric tonne (wmt).
The C1 compares with $12.15/wmt in the first quarter of the 2018 financial year and $12.54/wmt in the corresponding period of 2017, Australia’s third-largest iron-ore producer after Rio Tinto and BHP Billiton reported on Tuesday.
Fortescue’s shipment volumes decreased from 44-million tonnes in the September quarter to 40.5-million tonnes in the December quarter.
Fortescue mined 47.5-million tonnes of ore, compared with 45.7-million tonnes in the previous quarter and 50.1-million tonnes in the corresponding period of 2017.
Outgoing CEO Nev Power said that the second quarter production supported an annual rate of 170-million tonnes. Total shipments for the first half amount to 84.5-million tonnes.
Commenting on the record low C1, Power said that the group’s productivity and efficiency initiatives had managed to offset higher strip ratios, exchange rate impacts and higher fuel prices.
The average strip ratio was 1.5 for the quarter, with the Chichester Hub at 1.8 and Solomon Hub at 1.0. Fortescue stated that the strip ratios were expected to average at 1.4 in the 2018 financial year to the end of June.
Fortescue’s guidance for C1 costs is $11/wmt to $12/wmt.
Fortescue had cash on hand of $900-million at the end of December, with gross debt of $4.2-billion.
Elizabeth Gaines is succeeding Power as Fortescue CEO.