The Fortescue Ltd (ASX: FMG) share price is down 4% after the ASX mining share gave its FY27 first quarter update.
Fortescue is one of Australia’s and the world’s largest iron ore miners. One of its main ambitions is to decarbonise its operations with electric trucks and other equipment.
FY27 first quarter update
The ASX mining share reported that its total iron ore shipments were 46.8mt, including 2.5mt from Iron Bridge. Quarterly shipments were down 7% year on year and down 11% quarter on quarter.
Fortescue said that iron ore sales were 42.9mt, lower than shipments. This reflects “impacts from ongoing negotiations with China Mineral Resources Group (CMRG)”. CMRG is a major Chinese buyer of iron ore, representing a number of iron ore users in the country.
It said that the hematite C1 unit cost (iron ore production costs) were US$21.98 per wet metric tonne (wmt). Higher diesel prices increased C1 unit costs by approximately US$1.40 per wmt, relative to the first quarter of FY26.
Hematite realised price (the iron ore sold price) was US$80 per dry metric tonne (dmt) for the quarter. Fortescue reported that the Iron Bridge concentrate revenue was US$111 per dmt for the quarter.
It finished the quarter with US$3.2 billion of cash and net debt of US$2.8 billion at 30 September 2026 after payment of the FY26 final dividend of US$1 billion and capital expenditure of US$916 million during the first quarter.
Other initiatives
Fortescue also reported that the Blacksmith project’s mineral resource increased by 153% to 615mt and reported a maiden ore reserve of 196mt at an average Fe grade of 58%.
It also revealed that the first hot metal was produced at Fortescue’s green metal project at Christmas Creek, marking the first successful operation of its electric smelting process.
The company said the first turbine components arrived for the 133MW Nullagine wind project, to help deliver its Pilbara green grid.
Fortescue also said that it sold more than 40 tonnes of copper concentrate cleaned using its Toowong process, demonstrating the technology’s potential to make high-arsenic copper deposits marketable.
It said it spent a total of US$106 million of capital expenditure in the first quarter of FY27, including for drilling and upcoming drilling in Kazakhstan, Canada, Australia and Argentina.
In Peru, engagement continued with communities and government progress drilling permits and approvals for the Canariaco copper project.
Final thoughts on the Fortescue share price
The Fortescue share price has fallen around 30% in the past six months. It’s a lot cheaper, but it’s difficult to say what the outcome of the negotiations will be with CMRG for iron ore.
I think it’s a good move for Fortescue to now look at copper and diversify away from purely iron ore.
At this lower Fortescue share price valuation, it could now be an underrated opportunity, though it could fall further, depending on how much margin a deal with CMRG could take off.
With this much uncertainty, there are other ASX dividend shares I’d rather buy.
