The Fortescue Ltd (ASX: FMG) share price is down 3% after providing its September 2024 quarter update.
Fortescue is one of the world’s largest iron ore miners.
Fortescue FY25 Q1 update
The iron ore miner said its total iron ore shipments was 47.7 million tonnes (mt) in the first quarter of FY25, which was 4% higher than the FY24 first quarter and a record for a first quarter, including 1.6mt from Iron Bridge.
Fortescue said its mining costs (Hematite C1) were US$20.16 per wet metric tonne (wmt) was up 12% year on year, impacted by a higher strip ratio in the quarter and inflationary pressures. That compares to average revenue of US$83 per dry metric tonne (dmt) for the quarter (which was 83% of the average Platts 62% CFR Index (the normal iron ore price)). The Fortescue share price and profit is heavily dependent on what happens with the iron ore price.
Iron Bridge concentrate revenue was US$111 per dmt (which was 97% of the average Platts 65% CFR Index).
The business said that it finished the period with cash of US$3.4 billion and net debt (debt and cash combined) of US$2.1 billion at 30 September 2024.
Other highlights
Fortescue noted that it signed a US$2.8 billion partnership with Liebherr to jointly develop and validate a range of zero emission mining solutions, which includes the supply of battery power systems by Fortescue Zero.
It also revealed that works have commenced on the green metal project at Christmas Creek.
Work continues on Fortescue’s four green hydrogen projects in Australia, the US, Norway and Brazil. Feasibility studies continue to advance at the Holmaneset project in Norway, while the Pecem project received approval by the Brazilian National Council of Export Processing Zones.
Management commentary
The Fortescue Energy CEO Mark Hutchinson said:
It has been an extremely successful quarter for our green technology team, as we unveiled our autonomous battery-electric T 264 truck to the world. We topped off the milestone by also signing one of the biggest equipment deals on record, a US$2.8 billion partnership with Liebherr to jointly develop and validate a range of zero emission equipment solutions for mining and heavy industry. Under the agreement, the equipment will be powered by the battery power system developed by Fortescue Zero.
We continue to progress our green energy projects globally in a disciplined manner as we wait for the appropriate policy settings to support the market development.
Final thoughts on the Fortescue share price
Fortescue said it’s on track to meet its FY25 market guidance. Its iron ore shipments guidance for FY25 is between 190mt to 200mt, including 5mt to 9mt for Iron Bridge.
Resource businesses are notoriously cyclical. The lower the Fortescue share price, the better an opportunity it could be.
Fortescue shares are more appealing to me under $20, but being under $18, or $17 would be even better. It depends what happens with the iron ore price, but the lower Fortescue goes, the better margin of safety we can get.
At the current Fortescue share price, there are other ASX dividend shares that I’d prefer, but I think Fortescue is becoming more attractive.
