Fortescue profit slips despite record iron ore shipment

Andrew Forrest’s iron ore miner Fortescue shipped a record 96.9 million tonnes in the second half of 2022, but net profit after tax dropped 15 per cent to $3.4 billion due to a falling price for the steel-making ingredient.

A tight labour market in Western Australia, expensive maintenance materials from suppliers still recovering from COVID-19 interruptions and more expensive diesel to power its trucks and trains pushed Fortescue’s cost of producing a tonne of iron ore up 14 per cent to $US17.43 ($25.19) a tonne.

At the same time, the average realised price for ore shipped from the Pilbara dropped almost 10 per cent to $US87 a tonne.

Forrest, who is Fortescue’s executive chairman, said Fortescue had maintained its position as the world’s lowest-cost iron ore producer.

Fortescue’s green energy arm Fortescue Future Industries spent $US283 million in the six months to December, up almost 160 per cent from a year before.

FFI chief executive Mark Hutchinson would not reveal the list of five green energy projects FFI plans to sanction by December but indicated a green hydrogen project in Texas to replace the existing use of hydrogen made from gas was likely.

Hutchinson said this would be backed by offtake contracts with countries such as Germany, Singapore, Japan or Korea that would support project financing.

Forrest, who is vociferous in his opposition to fossil fuels that he aims to rid Fortescue of by 2030, would not comment on the federal government’s proposed change to the safeguard mechanism to reduce emissions from industry but was clear he wanted a significant response to climate change.