By Rachel Dally-Watkins
17 April, 2015
FORTESCUE Metals Group will increase output by as much as 10 million tonnes by the end of the 2015 financial year, just weeks after publicly calling out majors BHP Billiton and Rio Tinto for flooding the market.
In its March quarter report, Fortescue’s shipping guidance was upgraded to between 160mt and 165mt, to reflect “the strong operational performance for the year to date”.
The new target would result in a substantial increase to the 124mt shipped in the previous financial year.
The move prompted criticism, given Fortescue chairman Andrew Forrest’s recent infamous call for iron ore majors to cap their production to ease the pressure of plunging iron ore prices.
“Rio is competing with BHP to smash global investment returns for their shareholders as well as tax and royalty receipts for the federal and state governments,” Mr Forrest told The Australian in early April.
“Their statements that they will expand at any price drives down that price in their endeavour to drive everyone else out of business.”
Paradoxically, Fortescue has added more iron ore tonnes to the market than any other Australian producer in the four years to the end of 2014.
However in its latest report the company indicated this production boost was likely the last for now, with the company to focus on maintaining current production levels.
Fortescue reported its ongoing cost saving initiatives drove down its C1 costs in the March 2015 quarter to US$25.90 per wet metric tonne – a 9 per cent improvement from the previous quarter and 26 per cent lower than at this time last year.