Fortescue H1 profit up 66pc, higher payout
Fortescue Metals boss Elizabeth Gaines expects iron ore prices will remain "very robust" for some time, after demand for the commodity helped the miner raise first-half earnings by 66 per cent.
Fortescue on Thursday reported a net profit after tax of $US4.1 billion, after sales rose by 44 per cent to $US9.3 billion.
Shareholders will receive a fully franked interim dividend of $1.47 per share, which is 93 per cent higher than the previous fully franked interim payout.
The company said its earnings and shipments were a record for any half year in its history.
Iron ore prices have surged since last year as the Chinese economy recovered from the pandemic and steel makers ramped up production.
Discussing earnings with media, Ms Gaines did not expect price falls soon.
"Our view is the market will remain very robust for some time," she said of iron ore.
"We're seeing continued elevated activity levels in China given that the usual slowdown at Chinese New Year hasn't happened."
Many workers have not been able to return home because of COVID-19 travel restrictions.
A tonne of iron ore was fetching $US159.50 (China Port) at the time of writing.
Ms Gaines named extreme weather as a risk to the company's fortunes.
Fortescue's work at Port Hedland in Western Australia had to stop a number of times recently due to weather conditions.
Ms Gaines also gave more details of a review of the Iron Bridge Magnetite Project, aimed at developing a mine south of Port Hedland.
The review has increased the capital estimate by about 15 per cent to $US3 billion.
On Tuesday, Fortescue revealed three executives, including chief operating officer Greg Lilleyman, resigned following project management failings in Iron Bridge.
Ms Gaines said staff were re-considering how to transport the magnetite concentrate.
The company had previously opted to use its concentrate and water pipeline.
However, Ms Gaines said the company's rail network was highly efficient and it was taking another look at options.
A technical and commercial assessment is expected to be completed in 12 weeks.
First production is expected in the second half of the 2022 calendar year.
The project is a joint venture between Fortescue and Formosa Steel.
Moody's Investors Service vice president Matthew Moore said Fortescue's increased costs at Iron Bridge, about $US250 million, were manageable.
He said Fortescue's first-half earnings were helped by supply disruptions in Brazil.
Major Brazilian iron ore miner Vale struggled with COVID-19 restrictions.
Fortescue shipped 90.7 million tonnes (mt) of iron ore, up two per cent on the previous first half.
The company raised its forecast for full-year shipments to 178 to 182 mt.
Shares were higher by 3.11 per cent to $25.17 at 1418 AEDT.
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