Fortescue Metals Group Ltd., Australia’s third-biggest producer of iron ore, said first- quarter shipments rose a better-than-expected 6 percent as production increased. The company’s share of shipments was 10.1 million metric tons in the three months ended June 30, from 9.5 million tons a year ago, Perth-based Fortescue said today in a statement. It had forecast 9.5 million tons.
Fortescue said this week it had agreed a $2.04 billion loan to refinance debt in order to pursue expansions. Production will continue to operate at an annual rate of 40 million tons until February, when it will rise to 55 million tons, the company said.
The shipments beat company guidance “despite a number of scheduled major maintenance” shutdowns at the company’s port and the mine, Fortescue said in a statement. “Fortescue continued to diversify its customer base with three shipments made to new customers in Japan and Australia.”
Fortescue closed up 1.3 percent to A$6.38 on the Australian stock exchange. The stock has risen 44 percent so far this year.
The company has outlined plans to expand production to 155 million tons by fiscal 2014 through development of the Solomon and Western Hub projects, as well as a longer-term expansion to 355 million tons.
Solomon’s initial production start is scheduled for June 2012. The company’s board will discuss a feasibility study for Solomon, as well as the Chichester expansion and funding proposals, around the time of its Nov. 19 annual general meeting.
“It’s in our interest to accelerate our expansion plans as rapidly as we can” while iron ore prices are high, Executive Director Russell Scrimshaw told reporters on a conference call, adding that Solomon’s timing was “already quite aggressive.”
Total production costs increased to $34.83 a ton, from $32.25 during the previous three months, partly because of the stronger Australian dollar, the company said. It received an average price of $125 a ton, including cost and freight, in the quarter for its ore.
Source: Bloomberg
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