Fortescue Metals Group Ltd. (FMG.AU) said it expects to maintain iron-ore shipments close to record levels in the current fiscal year, while targeting a further reduction in production costs.
On Thursday, Fortescue said iron-ore shipments in the year through June, 2018, would likely be around 170 million metric tons. If achieved, this would be roughly in line with the 170.4 million tons that the world's No. 4 iron-ore miner produced in the 2017 fiscal year.
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Fortescue added that it's aiming to bring cash production costs down to between US$11 and US$12 per ton in the 2018 fiscal year, from a record-low US$12.16 a ton in the three months through June.
"Leading into FY18, we are well positioned to continue our focus on productivity and efficiency initiatives to improve costs, to invest in the long-term sustainability of our core iron-ore business and maintain production levels," said Chief Executive Nev Power. "Capital management, further strengthening the balance sheet and generating shareholder returns remain our key priorities."
Fortescue said its gross debt at the end of June totaled US$4.5 billion with cash on hand of US$1.8 billion, after using cash flow to repay loans early. In the three months through June, the Perth-based company extended the maturity of its nearest-term debt to 2022 by refinancing US$1.5 billion of existing debt through the issue of unsecured notes.
Fortescue said its iron ore sold for an average US$53.27 a ton in the three months through June, in line with guidance provided in the March quarter.
"The current spread in prices between iron ore grades is expected to continue in the short term while steel mill profitability and iron ore port stockpiles remain at current high levels," Fortescue said.
Still, the company expects average prices for iron ore to revert to historical levels as market conditions normalize and steel mills maximize the value in use of their operations.
-Write to David Winning at email@example.com
(END) Dow Jones Newswires
July 26, 2017 19:08 ET (23:08 GMT)