Fortescue announces 44% increase in iron ore shipments

Pushes ahead with expansion plans for its mining and export activities

FORTESCUE Metals announced a 44% year-on-year increase in iron ore shipments for the 12 months ending in June, as it pushes ahead with expansion plans for its mining and export activities, writes Liz McCarthy.

The Australian mining company — which uses the tagline ‘The new force in iron ore’ — saw the volume of ore shipped in the full year 2009-2010 reach a record 40.1m tonnes, up from 27.8m tonnes in the 12 months to June 2009.

The volume of iron ore it mined also increased from 31m tonnes in 2009 to 41.3m tonnes this year.

“A strong performance across the integrated mine, rail and port supply chain during the 12 months to June 30, 2010, has resulted in record production levels at all facilities,” the Australian-listed company said today in a financial results statement.

“In line with the broader iron ore industry, the company moved to a new index pricing regime following the demise of the long-standing benchmark system,” it added.

The company noted that the spot price of iron ore had increased by 70% during the 12 months ending June 30.

However, despite positive results at Fortescue Australian iron ore major BHP Billiton unnerved the market by warning of short-term weakness for the commodity as steel output currently exceeds demand.

“BHP warned that the current global surplus of steel would likely dampen demand for iron ore, but reiterated its positive medium-term outlook for iron ore due to lack of low-cost supply,” Norwegian investment bank Arctic Securities said today in its daily shipping note.

In its interim financial results on Wednesday, dual-listed BHP Billiton added that the overall short-term outlook for commodities was mixed.

However, in the medium term BHP expects commodity demand “to remain heavily dependent on emerging market demand as the gradual withdrawal of government stimulus is expected to constrain growth in the developed world”.

BHP added: “While China’s rapid growth is expected to slow from recent highs, domestic consumption is expected to remain strong and investment spending is likely to remain commodity intensive.” 

Source: www.lloydslist.com