Photo by: Bloomberg
PERTH (miningweekly.com) – A 9% reduction in C1 cash costs for the March quarter, compared with the previous quarter, has allowed iron-ore major Fortescue Metals to significantly lower its full-year cost guidance for the next financial year.
During the quarter under review, Fortescue achieved a C1 cost of $25.90/t, compared with the $28.48/t achieved in the second quarter of the 2015 financial year. The March quarter C1 cash costs were also 26% below the C1 costs achieved in the previous corresponding period.
The lower cash costs resulted from Fortescue’s continued cost saving initiatives, which saw the miner recently reshuffle its fly-in, fly-out rosters to save cash.
As a result of the continued savings, Fortescue on Thursday told shareholders that the company was aiming to achieve a C1 cash cost of $18/t during the 2016 financial year, significantly down from the $26/t to $27/t estimated for the 2015 financial year.
The guided cash costs for the 2015 financial year were also an improvement on the previously estimated $28/t to $29/t.
Meanwhile, Fortescue has also reported a 19% decline in ore mined during the quarter, compared with the period ended December, as the miner reduced mining activities in order to draw down on excess mined iron-ore stocks, to reduce working capital levels and release cash from the balance sheet.
As a result, Fortescue mined only 35.5-million tonnes during the quarter, with 37-million tonnes of ore being processed. A total of 40.4-million tonnes of ore was shipped during the quarter, down 2% from the 41.1-million tonnes shipped in the previous quarter.
For 2015, Fortescue expects to increase its shipped ore to between 160-million and 165-million tonnes, reflecting the strong operational performance achieved by the company’s Pilbara operations.