Fortescue runs hard with high-grading

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FMG’s quarterly production report is out:

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A few points. Cost are falling fast and in line with guidance, not least because the miner is removing so much less dirt to get its best ore out of the ground – that is, high-grading. Two quarters ago it was removing 91mt of overburden per quarter. One year ago it was 107mt. Now it’s 41mt. Not sustainable over the long run but impressive for now.

Prices achieved rose in the quarter from $48 to $52 but discounts widened by $1 per tonne. Cash on hand rose $600m so it was clearly a profitable quarter. It looks like all-in break even is now running at around $38-40.

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About the author
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.