Fortescue Reports 6% Drop in Iron Ore Shipments in Q1 2024

Fortescue Metals Group Ltd, the world's fourth-largest iron ore miner, reported a 6% drop in iron ore shipments in the first quarter of 2024 compared to the same period a year earlier. The company shipped 43.3 million tonnes of iron ore in Q1, down from 48.7 million tonnes in the previous quarter. Fortescue attributed the decline to an ore car derailment in December 2023 and weather disruptions in Australia.

Despite the challenges, Fortescue set a new record for monthly shipments in March 2024 at 18.7 million tonnes, contributing to the quarterly total. The company also improved its safety performance, with its Total Recordable Injury Frequency Rate (TRIFR) improving by 17% compared to the end of 2023. "The health and safety of the Fortescue family is our highest priority and our TRIFR of 1.8 at the end of March 2024 was an improvement of 17 per cent compared to 31 December 2023," said Fortescue CEO Elizabeth Gaines.

Fortescue maintained its full-year shipment guidance of 192 million to 197 million tonnes, but expects its annual iron ore shipments to be at the lower end of this range due to the impact of the derailment and weather disruptions. The company's production costs increased by 7% compared to the previous quarter, reaching US$18.93 per wet metric tonne.

Why this matters: The drop in iron ore shipments and rising costs at Fortescue highlight the ongoing challenges faced by major mining companies. Supply chain disruptions, operational incidents, and weather issues can significantly impact production and profitability in the industry. As a key player in the global iron ore market, Fortescue's performance has implications for the broader mining sector and the economies of iron ore-producing countries like Australia.

Fortescue's decarbonization plan is progressing, with the first operational electric excavator moving over one million tonnes of material and the battery electric haul truck prototype completing its first phase of testing. The company's energy business also achieved several milestones, including the opening of its Gladstone Electrolyser Facility in Queensland and a landmark joint venture with OCP Group in Morocco to supply green hydrogen, ammonia, and fertilizers. Despite the near-term challenges, Fortescue remains focused on its long-term goals of diversifying its business and becoming a major producer of clean energy.

Key Takeaways

• Fortescue's Q1 2024 iron ore shipments fell 6% YoY to 43.3 million tonnes.
• Fortescue set a new monthly shipment record of 18.7 million tonnes in March 2024.
• Fortescue maintained its full-year shipment guidance but expects lower end of range.
• Fortescue's production costs increased 7% to $18.93/wet metric tonne in Q1 2024.
• Fortescue's decarbonization efforts progressed with new green energy projects.