The Fortescue Metals Group Limited (ASX: FMG) share price is in focus this week after the iron ore giant released its Q4 update.
Fortescue is a major iron ore miner, alongside BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
Fortescue’s FY22 Q4 highlights
Let’s look at some of the main takeaways:
- Record iron ore shipments of 49.5 million tonnes (mt) for the quarter and 189mt for FY22, beating guidance
- Average revenue of US$108 per dry metric tonne (dmt) for the quarter
- C1 (production) cost of US$17.19 per wet metric tonne (wmt) for the quarter
- It finished the quarter with net debt of US$0.9 billion, an improvement from the net debt of US$2.4 billion at 31 March 2022
- Total FY22 capital expenditure of US$3.1 billion
Fortescue’s CEO said the final quarter (and whole FY22) was achieved in a challenging operating environment as COVID-19 impacted operations. Despite headwinds, “Fortescue’s unique culture and values has delivered these exceptional results”
FY23 guidance
Fortescue said that it’s expecting between 187mt to 192mt of iron ore shipments in FY23, including approximately 1mt from the new high-quality project Iron Bridge.
Excluding Fortescue Future Industries (FFI), Fortescue is expecting to spend between US$2.7 billion and US$3.1 billion on capital expenditure.
FFU’s FY23 anticipated expenditure is US$600 million to US$700. That’s around US$100 million on capital expenditure and US$500 million to US$600 million on operating expenditure.
Iron Bridge
The new Iron Bridge project is expected to deliver 22mt per annum of high grade iron, with first production scheduled for the March 2023 quarter.
During the quarter, six module ships unloaded at Port Hedland, with the last one unloaded in July 2022. All critical path items have now been delivered to the site. Progress is being made on various parts of the hub.
FFI
The green division of Fortescue, Fortescue Future Industries, wants to be a leader in green energy, green technology, particularly with green hydrogen.
During the quarter, it announced a memorandum of understanding with Firstgas Group to identify opportunities to produce and distribute green hydrogen in New Zealand.
Firstgas describes itself as New Zealand’s largest gas network with over 2,500km of high-pressure transmission pipeline and 4,800km of distribution pipeline in the North Island. It has a plan to decarbonise its gas pipeline network, which includes using hydrogen.
Summary thoughts on the Fortescue share price
It’s good to see that Fortescue is making progress on several fronts and continues to achieve with its current main task of iron ore operations.
The Fortescue share price has jumped higher since mid-June, so I wouldn’t call it great value today. But, I do think the green energy initiatives are very compelling, which is why I’m a shareholder.
