The Good Times Roll on for Fortescue Metals

Fortescue Metals Group (ASX:FMG) has posted record iron ore shipments for the June quarter.

In its quarterly production report released today (July 26), the Australian iron ore company said that in the most recent quarter it shipped 46.5 million tonnes of the mineral and had cash production costs of US$12.17 per wet metric tonne.

With the June quarter reported, the company has now hit its full 2018 financial year target of 170 million tonnes shipped.

The June quarter’s total shipments represent a 20 percent increase on the previous quarter, and a 4 percent increase year-on-year.

Fortescue CEO Elizabeth Gaines said that the quarter’s results represented a “strong finish to FY2018 … to achieve our target of 170 million tonnes for the full year. Importantly, this was delivered while maintaining our focus on costs, which decreased by 7 percent compared to the March quarter.”

On the balance sheets, cash on hand was US$863 million, US$160 million in debt was repaid over the quarter, annual borrowing costs were down US$130 million and total capital expenditure for the financial year was US$890 million.

It’s been a busy quarter for the company, which in May approved the Eliwana iron ore replacement project at a cost of US$1.275 billion.

According to Fortescue, the Eliwana project will deliver first ore by December 2020, and is key to the company’s target of 60 percent iron-content in ore to appeal to buyers in China.

“Fortescue has delivered on key strategic initiatives, which position us for the next phase of growth while improving safety and productivity, ensuring we remain the lowest cost producer of seaborne iron ore,” said Gaines.

Other achievements in the quarter included more progress in converting over 100 trucks to autonomous haulage at the Chichester Hub, with 19 in operation so far.

The company also commissioned a relocatable conveyor at the Cloudbreak mine, reduced gross debt and said that it had “continued development of low cost growth options through exploration activities in Australia and overseas.”

By its own reporting, the company owes its fortunes to the Chinese market, which soaked up 91 percent of all shipments of iron ore thanks to the Asian powerhouse’s thirsty steel industry.

The company is showing signs of diversity though, with exploration in the lithium space in the Pilbara. The company spent US$67 million in the financial year searching for iron ore and lithium in Western Australia and said that it was continuing to drill copper–gold targets in central New South Wales.

The Australian miner is also moving into the South American space, reporting that it has opened offices in Quito and Buenos Aires to support exploration and development opportunities in Ecuador, Colombia and Argentina.

Having now closed out the 2018 financial year, the company posted its 2019 financial year guidance at 165-173 million tonnes of iron ore shipments.

It wasn’t all victories for the company though, having in the quarter been locked in a battle with Gina Rinehart’s company Hancock Prospecting over the purchase of Atlas Iron (ASX:AGO), which Fortescue had already stepped in to block Mineral Resources (ASX:MIN) from buying. The most recent news was that the company of Australia’s richest woman would be acquiring the smaller iron ore miner.

On the Australian Securities Exchange in Sydney, Fortescue closed at AU$4.39 on Wednesday (July 25), down 3.73 percent.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.