Fortescue’s third quarter production is out and the details are worrying:
Record shipments of 41.5mt achieved during the September 2014 quarter, an annualised rate of 166 million tonnes per annum (mtpa)
• C1 costs continued to decrease to US$32.08/wmt in the September 2014 quarter, a six per cent improvement from the prior quarter
• Delivered cost to customers was US$45/wmt for the September 2014 quarter inclusive of C1, shipping,
royalties and administration
• CFR prices realised in the September 2014 quarter were US$71/dry metric tonne (dmt) based on an average 62% Platts CFR index of US$90/dmt
• Cash on hand increased to US$2.6 billion at 30 September 2014 reflecting the continued strength of operational cashflows, reduced capital expenditure and lower finance costs
• Net debt was US$6.9 billion, with an additional voluntary repayment of US$0.5 billion scheduled for payment on 17th October 2014
Volume is good but note the $71 sales price average, astonishingly, down from $103 in the second quarter. The MSM is reporting this as just breakeven:
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
