Fortescue leads iron ore rivals

FORTESCUE Metals Group has made a strong start to the financial year, boosting iron ore shipments in the first quarter as larger rivals BHP Billiton and Rio Tinto have struggled to keep pace.

Fortescue, the world’s fourth biggest iron ore exporter, shipped 43.8 million tonnes in the three months to September, up 5 per cent from 41.9 million tonnes a year earlier. The company also trimmed cash production for the 11th straight quarter and repaid $906 million in debt.

The performance contrasts with a flat iron ore output by BHP in the same period, and a 5 per cent decline in shipments by rival Rio Tinto that forced it to trim annual guidance.

The company made a higher than expected profit in the 2015/16 financial year, topped its production guidance and slashed costs by more than 40 per cent.

Fortescue has maintained its 2016/17 shipment guidance of 165-170 million tonnes and said it was on track to lower cash production costs to $US12-$US13 (A$15.50-$17) per wet metric tonne by the end of the financial year. “We are not intending to invest in any fresh production capacity. Any tonnes we increase will come from natural efficiencies,” Fortescue chief executive Nev Power said.

Iron ore prices slumped to a decade low of $US38 a tonne late last year, but have since recovered and currently trade at $US58 a tonne.