Fortescue’s Record Shipments and Cost Cuts Face Future Market and Regulatory Tests

Operational Excellence Drives Record Shipments

Fortescue Metals Group (ASX: FMG) has reported a landmark performance for the first half of fiscal year 2025, achieving record iron ore shipments totaling 97.1 million tonnes. This milestone, representing a 3% increase over the prior corresponding period, was propelled by a strong second quarter output of 49.4 million tonnes despite challenging wet weather conditions in the Pilbara region.

The company’s operational resilience was further reflected in a 12% increase in total ore mined to 61.9 million tonnes in Q2 FY25, with processing volumes also up 5% year-on-year. Iron Bridge, Fortescue’s key concentrate project, contributed 3.2 million tonnes in H1 FY25, successfully completing a major shutdown and ramping up production activities.

Cost Efficiency and Safety Improvements

Fortescue’s hematite C1 cash cost fell 10% quarter-on-quarter to US$18.24 per wet metric tonne, driven by higher mining volumes, a favorable strip ratio, and a stronger Australian dollar against the US dollar. This cost reduction aligns with the company’s FY25 guidance range of US$18.50 to US$19.75 per wet metric tonne, underscoring disciplined cost management amid volatile market conditions.

Safety performance also improved significantly, with the Total Recordable Injury Frequency Rate (TRIFR) dropping 44% compared to December 2023, reaching a record low of 1.0. This reflects Fortescue’s ongoing commitment to workplace safety as a core operational priority.

Strategic Decarbonisation and Green Energy Initiatives

In a notable step towards sustainability, Fortescue awarded a contract to Chinese manufacturer XCMG for over 100 zero emissions heavy mobile equipment units, advancing its goal to transition its diesel mining fleet to zero emissions by 2030. This move complements the company’s broader decarbonisation strategy and highlights its leadership in integrating green technologies within mining operations.

Fortescue Energy continues to progress feasibility studies for green energy projects in Norway and Brazil, while also benefiting from a A$10 million federal grant to develop fast charger technology for battery electric trucks. The company is actively assessing the impact of new US clean hydrogen tax credits on its projects, signaling a strategic focus on emerging energy markets.

Financial Stability Supports Growth Outlook

Fortescue’s financial position remains robust with a cash balance steady at US$3.4 billion and net debt slightly reduced to US$2.0 billion as of December 31, 2024. Capital expenditure for the quarter reached US$1.0 billion, contributing to a half-year total of US$1.8 billion, in line with the company’s FY25 guidance of US$3.2 to US$3.8 billion.

Revenue metrics showed strong pricing, with hematite average revenue at US$87 per dry metric tonne, realizing 85% of the Platts 62% CFR Index, and Iron Bridge concentrate revenue achieving 99% of the Platts 65% CFR Index. These figures demonstrate Fortescue’s ability to maintain competitive pricing amid fluctuating global demand.

Looking ahead, Fortescue maintains its FY25 shipment guidance of 190 to 200 million tonnes and continues to invest in exploration across the Pilbara and international critical minerals projects, positioning itself for sustained growth and diversification.