Interesting from the AFR:
Former Helloworld chief executive Elizabeth Gaines will replace Nev Power at the helm of Fortescue Metals Group, and looks set to preside over a period of strategic change at the iron ore miner.
Upon announcing Ms Gaines elevation to the position of chief executive, Fortescue chairman and major shareholder Andrew Forrest revealed the company would seek to ensure the majority of its product had iron grades above 60 per cent.
The vow to lift the quality of Fortescue’s iron ore appears to be a concession to the trend for Chinese steel mills to prefer higher quality ores, and comes after Fortescue’s product (which typically has iron grades below 60 per cent) has attracted larger than normal price discounts in recent months.
“A change in marketing focus directly related to flexible operations and new markets will also lead to greater penetration in global iron ore markets. Complementing this is our target that in the future a majority of Fortescue’s production will be (more than) 60 per cent (iron) competing head to head in the higher grade markets,” said Mr Forrest in a statement.
“This strategic target will be achieved through the Firetail replacement project without losing the company’s focus on minimum mine lives of 20 years.”
FMG blends its various quality ores to reach its high volume output of 58%. If it’s going to aim for 62% then by definition it’s salable volumes are going to fall as higher quality ore can’t be cut with lower.
Either that, or it’s going to have to dig a lot harder and deeper and that implies higher costs.
At least it’s rid itself of the great debt pile so it perhaps has time to shrink to a smaller and higher quality outfit?
