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Fortescue (ASX:FMG) approved for increased exports

Fortescue Metals Group Limited (ASX: FMG) shares are down 2% despite the business being approved for more exports.

Fortescue is one of the country’s largest iron ore miners.

Fortescue licensed for an increase

Fortescue announced today that it has received approval from Western Australia to increase the material handling capacity of its Herb Elliot Port facility from 175 million tonnes per annum (mtpa) to 210mtpa on a staged basis. This includes provisions for 188mtpa of hematite ore and 22mtpa of magnetite concentrate.

The high-grade magnetite product will be produced from the Iron Bridge Magnetite operations, with first ore on shop from Iron Bridge scheduled for mid-2022.

This licence will utilise the capacity of Fortescue’s existing port infrastructure, comprising five berths and three ship loaders, and supports the company’s FY21 iron ore shipments guidance of 175mt to 180mt.

Fortescue CEO Elizabeth Gaines said: “Fortescue’s port operations are world leading and we have continually demonstrated our capacity to optimise the efficiency and productivity of our port infrastructure to deliver iron ore to our customers. 

The increase in the licensed capacity of Fortescue’s Herb Elliot Port from 175mtpa to 210mtpa is in line with our strategy to deliver growth through investment, including the US$2.6 billion investment in the Iron Bridge project. This significant project will deliver 22mtpa of high-grade magnetite product, enhancing the range of products available to our customers through our flexible integrated operations and marketing strategy.

We will continue to ensure that Fortescue remains a significant long-term contributor to the State and National economies through growth and development of our iron ore assets, job creation and investment.”

Fortescue tried to reassure people who are worried about increased levels of dust. The miner said it maintains a high level of vigilance over its management of dust in Port Hedland, with installation and implementation of additional controls ensuring no net increase in dust emissions as a result of the progressive increase in throughput capacity at Herb Elliot Port.

Summary

Fortescue has been a very strong performer for shareholders over the past – the share price has more than doubled – and the dividend has been very big too. Increased exports would help maintain and hopefully help grow earnings. Is it a buy? I’m not sure, the iron ore price is high. I think it would be better to buy Fortescue shares when the iron ore price (eventually) goes lower. However, it’s a nice option for dividends in good times. However, I like the idea of more dependable ASX dividend shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

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At the time of publishing, Jaz owns shares of WHSP.