Australia's third largest iron ore producer Fortescue Metals Group Ltd (Fortescue) has announced its production highlights for the fourth quarter of 2010, stating that its output levels followed a steady trend during the quarter as expected, with the company's operating margins rising in line with rocketing iron ore prices.
According to the Perth-based company's statement released on January 18, in the fourth quarter of 2010, Fortescue's iron ore production at its Cloudbreak and Christmas Creek operations increased by 21 percent year on year but dropped 0.2 percent quarter on quarter to 11.04 million metric tons. Meanwhile, in the last quarter of 2010, Fortescue's shipments increased by 12.6 percent year on year and 3.2 percent over the previous quarter, reaching 10.6 million mt.
Record sales prices
In the quarter in question, Fortescue's production costs increased by 19.75 percent over the previous quarter reaching US$38.01/mt, while its total direct costs rose by 19.15 percent quarter on quarter to US$41.5/mt. "Strong iron ore prices are reflected in Fortescue's record quarterly average CFR sales price of US$150/mt (dry), which has generated very strong operating margins over the quarter," Fortescue said in its statement, pointing out that increase in costs did not affect its profit much.
In the quarter in question, Fortescue's production costs increased by 19.75 percent over the previous quarter reaching US$38.01/mt, while its total direct costs rose by 19.15 percent quarter on quarter to US$41.5/mt. "Strong iron ore prices are reflected in Fortescue's record quarterly average CFR sales price of US$150/mt (dry), which has generated very strong operating margins over the quarter," Fortescue said in its statement, pointing out that increase in costs did not affect its profit much.
Expansion projects continue
Fortescue also indicated that the Chichester Hub will continue to operate at its steady state rate of about 40 million mt of iron per year until the completion of commissioning of the expanded Christmas Creek operation, which is scheduled to commence at the end of February. Following this development, iron ore production will ramp up to the 55 million mt per year target.
As previously reported by SteelOrbis, Fortescue's iron ore operations at Christmas Creek, which produced 40 million mt of iron ore a year earlier, is soon expected to reach 55 million mt, and with further expansion will reach 95 million mt of iron ore.
As also previously disclosed, Fortescue approved plans to expand its annual iron ore production from 55 million mt to 155 million mt, through an investment of US$8.4 billion. Preparatory work still continues for the project.