‘Twiggy’ Forrest’s Fortescue says China key to nation’s recovery
Andrew “Twiggy” Forrest-backed mining group Fortescue Metals Group has raised its export target in a sign that sales of Australian iron ore have been largely unaffected by pandemic lockdowns and suggesting demand could grow as China’s recovery builds.
The nation’s third-largest miner on Thursday reported a strong operating performance in the first three months of the year despite the impact of cyclones in the Pilbara region of Western Australia and the coronavirus crisis halting activity across large parts of the Chinese economy.
Chief executive Elizabeth Gaines said Fortescue, which is on track to meet its yearly export target, had now raised expectations it could ship a further 2 million tonnes for the financial year and had raised its guidance to between 175 million tonnes and 177 million tonnes.
“Fortescue is a core supplier of iron ore to China and we see strong ongoing demand for our products and anticipate a steady recovery in economic activity in that market,” Ms Gaines said.
“While the global economic outlook remains uncertain, our balance sheet has never been stronger and we continue to generate sustained cash flows and jobs, invest in growth and focus on delivering returns to our shareholders.”
Mr Forrest – Fortescue’s billionaire founder, chairman and largest shareholder – addressed a media conference yesterday to announce he had secured 10 million coronavirus testing kits from China and urged closer ties between Canberra and Beijing. The calls came amid signs of rising diplomatic tension as the Morrison government seeks a global review into the origin of the outbreak in China. “Australia needs to walk that line where we have a best friend in America, a best friend in China, best friends across South-East Asia,” Mr Forrest said.
The market for iron ore, Australia’s top export, has remained strong this year with prices remaining above $US80 a tonne as China’s steelmakers kept on producing through the lockdowns and supply disruptions emerged in other iron ore-exporting nations. Fortescue said it had shipped 42.3 million tonnes of iron ore in the three months to March 31, ahead of market expectations.
Fortescue and rival miners BHP and Rio Tinto so far have been largely spared from the brunt of virus-related restrictions at their mining operations in the Pilbara, regularly meeting with authorities and introducing strict protocols at their airports and mines to bolster hygiene, ensure physical distancing and minimise infection.
However, Fortescue, like many of Australia’s big resources companies, announced it would scale back its investment spending budget for the 2020 financial year. The miner had initially targeted spending up to $US2.4 billion, but on Thursday revised down the figure to $US2.2 billion.
Ms Gaines said Fortescue had introduced a series of measures to prevent the spread of infection to any of its worksites, including extending operational rosters to reduce staff movement.
“The health and safety of our people, their families and the broader community is our priority, and we have been responsive to the unprecedented global COVID-19 health pandemic and economic crisis,” she said.
Business reporter for The Age and Sydney Morning Herald.
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