Fortescue First-Quarter Shipments Miss Estimates on DelaysDavid Stringer and Elisabeth Behrmann
Fortescue Metals Group Ltd., Australia’s third-biggest iron ore exporter, said first-quarter shipments rose 60 percent, missing analyst estimates after delays to production.
Shipments were 24.7 million metric tons in the three months ended Sept. 30, from 15.4 million tons a year earlier, the Perth-based company said today in a statement. That compares with the median estimate of 28 million tons from three analysts surveyed by Bloomberg.
Ore processing output was “impacted by the significant time taken to thoroughly investigate and respond” to the death of a worker in an incident at its Christmas Creek operation in August, Fortescue said in the statement. Some other production delays occurred as a result of conveyor belt tears at the Firetail and Cloudbreak operations. The total impact on production was 2 million metric tons, the company said.
Rio Tinto Group, the second-biggest iron-ore shipper, this week reported record ore production at its mines in Australia’s Pilbara region, where Fortescue also operates. Australia, the largest iron ore exporter, this month raised its price estimates as demand surges from steel mills in China.
Fortescue fell 3 percent to A$5.24 in Sydney trading. Its shares have advanced 13 percent this year.
Talks which began in December for the sale of a stake in Fortescue’s port and railroad assets, that JPMorgan Chase & Co. estimated could raise $3 billion, failed to produce an acceptable offer, Chief Executive Officer Neville Power told reporters on a conference call.
“Those talks are pretty much to an end, because those value and terms expectations haven’t been met,” Power said today. “It’s not that we’ve shut the process down, or wouldn’t entertain discussions in the future, it’s just that set of talks didn’t bear fruit.”
Power had said in August that the sale of a minority stake in the assets would only take place if the price was attractive and the terms didn’t lead to inefficient use of the Western Australian infrastructure network.
Iron ore companies in the Pilbara region depend on access to rail and port facilities to bring their product to market. BHP Billiton Ltd. and Rio Tinto, Australia’s two biggest exporters, don’t allow other groups to use their infrastructure. Under a Western Australia state rail access code, companies can seek to ship on railways built after 2000.